Groundwater Sustainability Agencies could use a manual for developing their intra-basin Cap-and-Trade markets

I need strong convincing before I support water markets, but it strikes me that internal cap-and-trade systems might work well for the new Groundwater Sustainability Agencies.  The State should develop a manual or guidebook for creating a cap-and-trade system for GSAs that must allocate newly limited annual groundwater withdrawals.  It should make that guidebook publically available for free.

Unbundling Water Rights listed a simple groundwater basin conversion to a market system as its first example.  I am sure the State has other expertise from its carbon trading system.  This would be real concrete assistance to locals and could be done by the time they finish getting their governance set up in a couple years.

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2 responses to “Groundwater Sustainability Agencies could use a manual for developing their intra-basin Cap-and-Trade markets

  1. Matt H

    Agreed. In addition, it would be more useful to look at what other states have done with groundwater cap-and-trade. It’s not usually called that, but several states or regions have put in place basin caps which say, “no increase in groundwater withdrawals,” but allow trading. E.g. Deschutes River in Oregon, Edwards Aquifer in Texas, and parts of New Mexico. There are things to both emulate and avoid in these examples. My colleagues and I wrote about this in a report for TNC a few years ago:

    http://pacinst.org/publication/policy-options-for-water-management-in-the-verde-valley-arizona/

    You have to scroll down to Section 4 starting on page 91 to get to the case studies.

  2. Yes, there is a very rich literature on setting up cap and trade systems. The most popular incentive for growers to participate in a floodwater recharge program is gaining tradable pumping rights within a groundwater management area. As for export, almost all water trades have been district to district, not at individual farmer levels, so a district would buy water out of the capped pool before selling it, if that was the source.