Chasing your tail

Today's NYT piece on water use in southern Spain points out the problem with many backstops: they are themselves reliant to some degree on the primary resource.

The hundreds of thousands of wells — most of them illegal — that have in
the past provided a temporary reprieve from thirst have depleted underground
water to the point of no return. Water from northern Spain that was once
transferred here has also slowed to a trickle, as wetter northern provinces are
drying up, too.

This suggests that whether modeling alternative energy resources, or water
backstops, a degree of endogeneity is called for. As an example, the cost of
photovoltaics might be given by:

where k, a, and b are constants, N is the installed capacity (learning by doing assumed), t is time (proxy for technical change) and p is the price of oil (because of embedded energy use in manufacturing and installation of PV systems).