USA: Economic tradeoffs in groundwater management during drought
By Kathleen Stone and Rob Gailey
Domestic well users in some areas were greatly impacted by additional agricultural groundwater pumping during California’s 2012-2016 drought, which substantially compensated for reduced surface water supplies. Implementation of the 2014 Sustainable Groundwater Management Act (SGMA) should improve long-term groundwater availability during drought for all system users by requiring groundwater management to avoid significant and unreasonable impacts of decreased groundwater levels.
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Using hydrologic and crop production data from the drought, agricultural surface water deliveries, crop water demands, and groundwater usage were estimated for much of the Tulare County valley floor. With these data, an agricultural-groundwater profit maximization model was created to relate groundwater use, agricultural profit, and resulting agricultural costs from potential groundwater use regulations. A similar relationship for domestic groundwater users was obtained from an existing domestic well costs model. By defining alternative groundwater policies as depth-to-groundwater (DTGW) pumping limits, the models estimated agricultural opportunity and domestic well costs, respectively.
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The collection of these policy-related economic impacts on users forms a trade-off curve of impacts to the agricultural and domestic well users (a Pareto curve) for the range of drought drawdown policies. The groundwater policy which maximizes the total economic welfare for the region (both groups) was then identified.
Limiting drought-related drawdown increases agricultural costs and reduces domestic well user costs. Agricultural costs increase because reduced groundwater availability reduces crop production and profits. Domestic well costs decrease because supply shortages and accompanying costs from groundwater drawdown are reduced. With increasing groundwater recovery costs, the agricultural cost curves and welfare-maximizing policies reach thresholds in which the recovery costs to pump more groundwater exceed the profit gained from additional groundwater pumping. With SGMA implementation, represented by a penalty for excess groundwater pumping, drawdown and domestic well costs are reduced substantially and the historical ratcheting-down of groundwater levels over the series of droughts is avoided.
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