About the report

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, the Sustainable Groundwater Management Act (SGMA), was well overdue by 2014. Nonetheless, many Californians who depend on groundwater worry that SGMA will weaken their water security in the near-term.

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 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.

It’s not done overnight, though.


A 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 suggests to:

  • Set clear objectives and 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

Read the full report

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