About the report

The Environmental Defense Fund and Mammoth Trading have just released a report describing how groundwater trading can be a compelling and cost-effective tool in achieving the goals of California’s Sustainable Groundwater Management Act (SGMA). While trading is not a panacea, done right, it can reward conservation, create new revenue streams for groundwater users, boost a community’s drought resilience, and improve aquifer conditions.


Groundwater was the primary lifeline for Californians during the State’s recent drought. When surface water resources in rivers, canals, and reservoirs dwindled, groundwater filled the gap. However, unregulated groundwater pumping led to other concerns: seawater intrusion, shallow wells running dry, land subsidence, and depletion of connected and already stressed surface waters. The passage of comprehensive groundwater management policy was well overdue by 2014. Nonetheless, many Californians who depend on groundwater worry that SGMA will weaken their water security in the near-term.


A groundwater trading program is only as good as its rules and its trustworthiness. While there’s no one-size-fits-all approach, there are transferable lessons for new GSAs considering trading programs. Experience from California and elsewhere across the US West suggests to:

  • Set clear objectives and measurable outcomes
  • Work closely with stakeholders to define and track allocations
  • Develop consistent, transparent accounting mechanisms
  • Incorporate hydrologic relationships into the design of trading rules
  • Avoid conflicts of interest in the rules and platform management


This report was funded with support from the Water Foundation. It was informed from dozens of interviews with experts in California water and agricultural policy. We are grateful for their time and insights.

Want to learn more about how groundwater trading can be used as a tool under SGMA? Check out the full report.

Read the full report

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Photo credit: Jacques Descloitres, MODIS Rapid Response Team, NASA/GSFC