To address water scarcity and achieve groundwater sustainability, groundwater markets are being developed in California that allow groundwater pumpers to buy and sell a limited amount of groundwater. Successful groundwater markets are designed to encourage the highest and best use of groundwater while avoiding unintended consequences such as market dominance by a limited number of players, environmental impacts, impacts to disadvantaged communities, and disparities in the distribution of economic benefits. The Kaweah Subbasin groundwater market provides a recent example where Montgomery & Associates has helped develop rules on how much groundwater can be traded by any person or entity and the technical limitations on those trades.
How Much Water Can Be Traded?
Groundwater market participants must have a regulated and clearly defined amount of water to be traded. This amount is determined by Water Accounting Frameworks (WAFs). WAFs are based on detailed groundwater budgets, often derived from groundwater models. In California, WAFs commonly assign groundwater to 1 of 3 categories: native water, foreign or imported water, and salvaged water, which is water that was not imported but would have left the groundwater basin if it had not been captured. Native groundwater is divided proportionally among all groundwater users in a basin. Imported and salvaged water belongs to the entity that spent money to import or salvage the water. The figure below shows how the different groundwater sources are apportioned amongst the 3 categories in the Kaweah Subbasin.
Kaweah Subbasin Water Allocation Framework Categories
Groundwater ownership is not dictated by groundwater location. An entity that imports water and recharges it many miles away still owns the water, even if they have no viable way to access the water or pump it out of the ground.
WAF are based on technical analyses, and allocations are the agreed upon amounts that can be traded. WAFs form the basis of groundwater allocations, but GSAs have the flexibility of deviating from the WAF if all GSAs in the subbasin agree.
Developing a Groundwater Market Strategy
A groundwater market facilitates the transfer of groundwater pumping allocations/rights among users. This administrative process allows individuals with surplus water allocations to trade them to those in need. Participation in the water market is entirely voluntary for both sellers and buyers. Sellers can only trade water that they have been allocated through the allocation.
Generalized Process for Developing a Groundwater Market
M&A helped the Mid-Kaweah GSA (MKGSA) develop a Water Market Strategy that set rules to avoid unintended consequences from water trading by implementing spatial and geographic limitations on groundwater trading. This strategy relied heavily on a custom webmap developed by M&A to visualize the geographic trading limitations. Important aspects of the strategy included establishing the following:
- Trading zones
- Triggers to protect disadvantaged communities
- Triggers to avoid exceeding minimum thresholds
Establishing Trading Zones
Based on parcel boundaries, trading zones establish boundaries that limit or prevent trading under certain circumstances. Trading zones established for the Kaweah Subbasin are shown on the custom webmap below and were developed based on GSA boundaries, hydrogeology, land use, and depth to groundwater.
If either of the 2 triggers discussed below exists in a trading zone, trades within and between trading zones may be curtailed. Triggers will be evaluated after fall groundwater levels across the Subbasin have been measured. Notification of any triggers will be provided in December prior to the first auction of the water year. Triggers may be lifted following spring groundwater level measurements (or anytime, should growers cover the cost of mitigation to alleviate the trigger).
Establishing Triggers to Protect Disadvantaged Communities
The Disadvantaged Communities (DAC) trigger is linked to a protective depth set in the wells on which the DAC rely and is monitored using the closest unconfined aquifer representative monitoring well. If groundwater levels fall below a specified protective well depth, the DAC trigger is activated in the trading zone, and no additional pumping credits can be traded into the trading zone.
Establishing Triggers to Avoid Exceeding Minimum Thresholds
To protect basin sustainability, GSAs established a Minimum Threshold trigger to be activated once groundwater levels fall to within 12 feet of a Minimum Threshold groundwater level in the closest representative monitoring well. If groundwater levels fall below that depth, trading in the affected trading zone ceases until groundwater levels recover to greater than 12 feet above the Minimum Threshold.
Kaweah Subbasin Trading Zones Viewed on Custom Webmap
Groundwater trading is relatively new in California, and the policies and practices are being refined in individual basins, based on the best approach that works locally. To assess the effectiveness of the groundwater market, each of the 3 GSAs in the Kaweah Subbasin will form a Review Committee that includes at least one representative from each of the following groups: GSA leadership, agriculture, environmental stakeholders, and disadvantaged communities. The Review Committee will meet at least semi-annually to evaluate the performance of the market and provide recommendations regarding policy adjustments.
Water markets and the associated WAFs are increasingly important tools groundwater managers have for controlling how much groundwater is pumped and where it is used. These tools are crucial for avoiding the undesirable results specified in Groundwater Sustainability Plans (GSP)-defined undesirable results. Rules that govern the market must be robust, based on a sound WAF, and integrated with knowledge of the sustainable management criteria included in GSPs.
Montgomery & Associates has worked with more than 20 GSAs throughout California supporting them with technical, strategic, and policy advice, and has a thorough understanding of each subbasin’s needs and challenges on the path to achieving sustainability. Our expert modeling and data management team develops complex water budgets and related graphics and maps to visualize important components needed for stakeholder engagement during the development of water accounting frameworks leading to water markets.
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About the Authors
Georgina King, P.G., C.Hg., is a principal hydrogeologist in M&A’s Oakland office who specializes in groundwater basin management, water resource planning, and managing technical hydrogeologic studies. She has led the development of several Groundwater Sustainability Plans and annual reports.
Derrik Williams, P.G., C.Hg., is a principal hydrogeologist in M&A’s San Luis Obispo office who worked closely with the California Department of Water Resources to develop the Sustainable Groundwater Management Act implementation process and has overseen work on several GSPs.
