Controlling Groundwater Exploitation Through Economic Instruments: Current Practices, Challenges and Innovative Approaches

Groundwater can be considered as a common-pool resource, is often overexploited and, as a result, there are growing management pressures. This chapter starts with a broad presentation of the range of economic instruments that can be used for groundwater management, considering current practices and innovative approaches inspired from the literature on Common Pool Resources management. It then goes on with a detailed presentation of groundwater allocation policies implemented in France, the High Plains aquifer in the USA, and Chile. The chapter concludes with a discussion of social and political difficulties associated with implementing economic instruments for groundwater management

Decentralization and Economic Incentives to Manage Groundwater Withdrawals for Irrigation: from Theory to Practice

Abstract. France is currently embarking upon a drastic reform of quantitative water resources management. This reform relies on two principles: the definition of an upper limit to water abstraction per water body and the decentralization of the responsibility for allocating water among users, in particular in the agricultural sector. This paper looks at possible institutional arrangements and incentive-based economic instruments which could be used to implement this reform. It particularly focuses on issues and options related to the enforcement of water allocation within the agricultural sector. We present three water management scenarios relying on four levers: economic incentives, transparency, negotiation, joint liability. Scenarios were evaluated through 16 scenario workshops in five French case studies, gathering 124 farmers and agricultural stakeholders in total. This paper presents the results of the workshops through a semi-quantitative analysis of the arguments given by the participants.

Environ. Resour. Econ.

This article analyzes the sustainability of market-based instruments such as tradable permits for the management of a renewable aquifer used for irrigated agriculture. In our dynamic hydro-economic model, a water agency aims at satisfying a food security constraint within a tradable permit scheme in the presence of myopic heterogeneous agents. We identify analytically the viability kernel that defines the states of the resource yielding inter-temporal feasible paths able to satisfy the set of constraints over time and the associated set of viable quota policies. We then illustrate the theoretical results of the paper with numerical simulations based on the Western La Mancha aquifer