As more agencies develop groundwater allocations, it’s important to understand how allocation design affects economic and environmental outcomes.

You’ve heard by now that our groundwater resources are disappearing. We’ve pumped so much, so fast, for so long. Decades later, we’re witnessing the effects of drawing from this invisible resource. In Kansas, wells are pumping air. In Texas, streams are drying up. In California, the ground is sinking.

Image for post

It’s the consequence of us, collectively as consumers, consuming more than is replenished each year. We’ve been poor stewards of our natural wealth. Our debts have added up.

The good news is that we’re waking up to this reality. Several western states have adopted comprehensive groundwater management reform. Others are navigating the legal process to do so, but are making positive steps.

One of those positive steps — arguably the most important — is the development of allocations. Allocations limit the amount of water that can be used over a period of time. Allocations are a fundamental piece of surface water rights in the western US, and are becoming more common for groundwater as well.

Not all allocations are created equal

After a decade of working on water management, I’ve come to appreciate the variability in allocation design. It may seem trivial, but the way in which we design allocations has consequential trade-offs between environmental and economic outcomes.

Image for post

Some allocations limit the total amount of water that can be pumped in a single year. For example, my parents, like others in Active Management Areas in Arizona, have a single-year allocation. Others limit the total amount of water that can be pumped over a multi-year period. The North Platte and South Platte Natural Resources Districts (NRDs) in Nebraska are examples, with 5- and 3-year allocations, respectively. There are even instances of both single-year and multi-year allocations on individual groundwater wells, as is the case in Northwest Kansas Groundwater Management District’s Local Enhanced Management Areas.

As more agencies develop groundwater allocations, as many are in California, it’s important to understand how allocation design affects economic and environmental outcomes.

Single- and multi-year allocations involve trade-offs

Our research, recently published in Water Resources Research, evaluated the trade-offs between single- and multi-year allocations. We specifically examined an application involving groundwater-fed irrigation that caused stream depletion.

Even for allocations that appear to be equivalent, such as a single-year allocation of 12 inches per year and a multi-year allocation of 60 inches per 5 years, we found that the optimal irrigation decisions at the farm-level end up being quite different. The question that follows is: how do these farm-level decisions impact overall economic and environmental outcomes?

As expected, a multi-year allocation provides more flexibility, and therefore smooths income for farmers. Why is that? A multi-year allocation allows a groundwater user to pump more in drought years, and less in wet years. That inter-annual flexibility to respond to climate, crop, and market conditions results in higher and stabler income. However, it comes at a cost. Multi-year allocations result in higher average and peak pumping rates and resultant stream depletion. That could be bad news for surface water users and fish.

The 2012 drought in Nebraska is a great example. Temperatures soared while rainfall plummeted. Crops were at risk of failure. In the Upper Republican NRD, farmers pumped an average of 1.5 times their annualized allocation that year, made possible by their multi-year allocation, which doesn’t restrict how much they can pump in a single year. Conversely, if they had been under a single-year allocation, they would have pumped less, resulting in less steam depletion but at the risk of crop failure and severe economic damages.

There’s more work to be done

Allocations can take on a number of provisions that provide flexibility in how groundwater is used in space and/or time. While we only explored the trade-offs between single- and multi-year allocations, several other designs are worth investigating. For example, a blended approach where both single-year and multi-year allocations are implemented could help reap the benefits of both allocation types. In Northwest Kansas Groundwater Management District, several growers have their original single-year allocation (e.g. 24 inches/year) as well as a smaller multi-year allocation (e.g. 75 inches/5 years, or an annualized 15 inches/year). Such an allocation policy requires that growers pump less over the long term, while giving them limited short-term flexibility to pump more — though not too much more — if and when needed.

In addition to a blended allocation, many other provisions are worth investigating: carryover of excess allocation, borrowing of allocation against future allocation periods; pooling of allocations across wells; transfers of allocations between wells; among others. Such provisions allow more spatial and temporal flexibility to groundwater users. That flexibility, however, relaxes the ability to control pumping patterns, and therefore the related externalities, such as land subsidence, seawater intrusion, or stream depletion.

Conclusions

Allocation design has important implications for economic and environmental outcomes. The right allocation design will depend on the unique circumstances of the groundwater basin: human needs, economic demands, aquifer characteristics and dynamics, and the environmental systems it supports. Allocations should be thoughtfully desired to address local needs, which often involve a careful balance between socioeconomic and environmental needs for water.

Let’s hear from you

  • Do you have experience with a groundwater allocation? How do our findings compare with your experience? We’d love to hear your thoughts.
  • Do you need help evaluating an allocation policy? Send me a message on LinkedIn — we’d be happy to help.

Acknowledgments

Many thanks to my all-star co-authors: Timothy Foster (University of Manchester), Taro Mieno (University of Nebraska-Lincoln), Albert Valocchi (University of Illinois at Urbana-Champaign), and Nicholas Brozović (Water for Food Global Institute at the University of Nebraska).