Lessons to be learned from groundwater trading in Australia and the United States

This chapter provides an overview of the issues and challenges facing policy makers intending to establish groundwater markets. It studies in detail two developed countries that have introduced groundwater trading and have some experience in its implementation-Australia and the United States of America- and draws out lessons from these countries that need to be considered for the development of groundwater markets around the world. The key lessons that this chapter stresses are: the importance of establishing institutions and regulations; investing in high quality economic and scientific research; that opportunities arise from crises; and that social concerns are not always the most important considerations to be aware of for efficient and effective groundwater markets.Sarah Ann Wheeler, Karina Schoengold, and Henning Bjornlun

Commodity Prices, Climate and the High Plains Aquifer

Crop prices and energy prices can affect the water level in an aquifer? Absolutely, yes, because over time, they affect the amount withdrawn for irrigation. Our recent research confirms that effect and provides estimates of the size of the effect on the High Plains Aquifer (HPA). The HPA underlies parts of eight states and 208 counties in the west-central United States (see Figure 1). This region produces more than 9% of US crop sales and relies on the aquifer for irrigation. These withdrawals for irrigation have contributed to a diminished stock of water in the aquifer that varies considerably across counties, as indicated in the figure. Our research examined the relative contributions of prices and weather on HPA groundwater levels (Silva, et al, 2019). Since that article was published, petroleum price has increased by about 90% and the average of corn, soybean and wheat prices have increased by about 80%. Here we report how those price changes and climate change could be expected to affect groundwater levels in the HPA over the next decades

The Effects of Irrigation and Climate on the High Plains Aquifer: A County-Level Econometric Analysis

The High Plains Aquifer (HPA) underlies parts of eight states and 208 counties in the central area of the United States (U.S.). This region produces more than 9% of U.S. crops sales and relies on the aquifer for irrigation. However, these withdrawals have diminished the stock of water in the aquifer. In this paper, we investigate the aggregate county-level effect on the HPA of groundwater withdrawal for irrigation, of climate variables, and of energy price changes. We merge economic theory and hydrological characteristics to jointly estimate equations describing irrigation behavior and a generalized water balance equation for the HPA. Our simple water balance model predicts, at average values for irrigation and precipitation, an HPA-wide average decrease in the groundwater table of 0.47 feet per year, compared to 0.48 feet per year observed on average across the HPA during this 1985– 2005 period. The observed distribution and predicted change across counties is in the ( 3.22, 1.59) and ( 2.24, 0.60) feet per year range, respectively. The estimated impact of irrigation is to decrease the water table by an average of 1.24 feet per year, whereas rainfall recharges the level by an average of 0.76 feet per year. Relative to the past several decades, if groundwater use is unconstrained, groundwater depletion would increase 50% in a scenario where precipitation falls by 25% and the number of degree days above 36° C doubles

The Effects of Irrigation and Climate on the High Plains Aquifer: A County-Level Econometric Analysis

The High Plains Aquifer (HPA) underlies parts of eight states and 208 counties in the central area of the United States (U.S.). This region produces more than 9% of U.S. crops sales and relies on the aquifer for irrigation. However, these withdrawals have diminished the stock of water in the aquifer. In this paper, we investigate the aggregate county-level effect on the HPA of groundwater withdrawal for irrigation, of climate variables, and of energy price changes. We merge economic theory and hydrological characteristics to jointly estimate equations describing irrigation behavior and a generalized water balance equation for the HPA. Our simple water balance model predicts, at average values for irrigation and precipitation, an HPA-wide average decrease in the groundwater table of 0.47 feet per year, compared to 0.48 feet per year observed on average across the HPA during this 1985– 2005 period. The observed distribution and predicted change across counties is in the ( 3.22, 1.59) and ( 2.24, 0.60) feet per year range, respectively. The estimated impact of irrigation is to decrease the water table by an average of 1.24 feet per year, whereas rainfall recharges the level by an average of 0.76 feet per year. Relative to the past several decades, if groundwater use is unconstrained, groundwater depletion would increase 50% in a scenario where precipitation falls by 25% and the number of degree days above 36° C doubles

Water resource management and the poor

Water allocations as well as water quality and health concerns are often due to inadequate policies and institutions, which pose major challenges for policy reform. The necessary ingredients of such reform include four elements: rules to improve the decision-making process about water projects, principles to improve water allocation, incentives for water conservation, and incentives to improve water quality. The paper shows that improved policies and incentives can address many of the global water problems and lead to environmental sustainability while addressing distributional issues. Some of the reforms may hurt the poor in the short run through higher water prices, but may provide them better access to water and reduce the toll of unsustainable water use in the long run. The direct and indirect implications of increasing prices of energy for water reforms are also discusse

Water resource management and the poor

Water allocations as well as water quality and health concerns are often due to inadequate policies and institutions, which pose major challenges for policy reform. The necessary ingredients of such reform include four elements: rules to improve the decision-making process about water projects, principles to improve water allocation, incentives for water conservation, and incentives to improve water quality. The paper shows that improved policies and incentives can address many of the global water problems and lead to environmental sustainability while addressing distributional issues. Some of the reforms may hurt the poor in the short run through higher water prices, but may provide them better access to water and reduce the toll of unsustainable water use in the long run. The direct and indirect implications of increasing prices of energy for water reforms are also discusse