Collective management of shared water resource is easier said than done.
By Silke Schmidt
For years, California has struggled with diminishing groundwater resources due to frequent droughts. In response, the state’s Sustainable Groundwater Management Act (SGMA) became effective in September 2014. Its goal is to replace the historically unconstrained right to pump for all surface property owners with some form of collective management.
But history shows how daunting it is to get a group of people to agree on how to manage a common-pool resource like groundwater, says CEnREP affiliate Eric Edwards, an assistant professor of agricultural and resource economics at NC State. That’s why he and co-authors Andrew Ayres and Gary Libecap decided to analyze in more detail the factors that make the process so difficult.
The results of their study, published in the Journal of Environmental Economics and Management, show that contracting costs, the procedural fees for defining and enforcing property rights, are a significant barrier to collective action.
The researchers assembled a unique and novel dataset. Unlike the Midwest, where eight prairie states meet most of their water needs with a single resource (the Ogallala aquifer), California has 445 groundwater basins with highly variable hydrologic and economic properties: Most of them (69%) provide unconstrained access rights while some are controlled by groundwater management plans (GMPs; 24%) or by adjudicated property rights (7%).
Adjudication, the strongest form of management, is an expensive and time-consuming court-based process for achieving a legal change in property rights for all landowners, who need to be notified in writing. A single owner who disagrees with that outcome may file an appeal. In contrast, a GMP is based on a statute passed by the state legislature and only requires a majority agreement by a group of basin users.
“Less change from the status quo means much less opposition to GMPs, but also reduces their effectiveness to manage water depletion problems,” Edwards says. “The new legislation tries to combine the greater procedural ease of a GMP with an end result closer to adjudication in terms of the legal authority to control pumping.”
Consistent with the idea of collective action emerging where it is valuable, basins which adopted GMPs or adjudicated rights typically see larger expected gains from management, on
average, than basins that had maintained unconstrained access. For example, before adopting management, these basins were at greater risk of depletion due to less natural precipitation, lower well yield or greater population growth in the area.
However, there were exceptions, basins referred to as “critical” by the state, which did not have adjudicated rights but were experiencing severe problems, such as rapidly declining water tables. To better understand obstacles to management, the researchers examined factors that typically influence contracting costs. For example, basins with more heterogeneous and/or more numerous well users—some interested in agricultural irrigation, others in providing drinking water for residents— are less likely to agree on a management plan.
The Salinas Valley, an agricultural area east of Monterey, perfectly illustrates the role of heterogeneous users. Monterey experienced water table depletion and was concerned about contaminating its municipal water supply with ocean saltwater; however, the farmers further inland didn’t agree to pumping restrictions for the basin they shared with the city. This resulted in management fragmentation, an imperfect compromise: Monterey’s adjudication process applied only to a small fraction of the basin.
Edwards notes that these kinds of disputes may be easier to resolve in specialized water courts—already existing in Colorado—whose judges have acquired substantial hydrologic expertise.
“If the new legal framework of the SGMA is able to reduce the complexity of the adjudication process, our analysis suggests that the unconstrained, critically over-drafted basins will see benefits, just like those with already adjudicated rights,” Edwards says. “That provides a strong incentive for the collective management of California’s groundwater basins.”