| Keywords |
geothermal, economics, property rights, access policy, sustainability, depletion, renewable, free market |
| Abstract |
Geothermal resources are often described as ‘renewable’. However, this needs qualification. At low levels of exploitation of a geothermal field, the energy resource can last indefinitely and any associated natural features may not be noticeably affected, depending on the proximity of wells to the features. However, large-scale developments effectively mine heat from the resource, and the amount of heat available to the development and any natural features associated with the field will decline over time. If all production is stopped, the energy resource will usually recover over a long period, but is likely to suffer some permanent changes. Well-defined and enforced property rights can encourage sustainable growth and keep actors accountable for their actions. Although there is a body of literature on the sustainability of geothermal resources, there is little focusing on access policies, especially in the case of multiple landowners with limited access to the same geothermal reservoir. This paper analyses multiple-access policy when utilising geothermal resources and whether it leads to higher net present value of profit and lower depletion rates when the solution is left to the free market. The findings demonstrate that, in a fragmented land ownership system with multiple access to resources, lack of available space leads to faster depletion of resources and lower economic benefits for all rights holders when they do not agree to work together. Firms enter a non-cooperative game that leads to undesirable outcomes. |