20.1 Groundwater Global Over Extraction and Shortage
20.1.1 Groundwater Features
20.2 GroundwaterPolicy Frameworks
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users should pay the full cost of water;
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water markets should be established;
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the community should be involved in the decision making process
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water use should be more efficient; and
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the environment must be recognized as a legitimate stakeholder (Sitarz 1993).
20.2.1 Water Market Conditions
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A fixed limit to resource availability (set consumptive pool) that is ideally: (i) credible and based on accurate science; (ii) monitored and enforced; and (iii) consistent with sustainable levels of extraction;
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Users are provided with secure property rights in the form of an access entitlement to a share of that consumptive pool;
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These shares, and the water allocated to them each season, are tradeable under low transaction costs and entry/exit barrier conditions, such that ownership, control and use can change over time; and
20.2.2 Difficulties in Establishing Groundwater Markets
20.2.2.1 Property Right Issues
20.2.2.2 Externalities
20.3 Actual Groundwater Trade
20.3.1 Australia
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improving knowledge of ground-surface water connectivity;
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returning all over-allocated systems to sustainable levels of extraction;
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improving understanding of what is a sustainable extraction rate; and
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improving understanding of the relationship between groundwater and groundwater dependent ecosystems (NWC 2008).
Jurisdiction | Number | Volume (GL) |
---|---|---|
New South Wales (NSW)
| 47,835 | 2,056 |
Queensland (Qld) | 8,153 | 1,008 |
Victoria (Vic) | 8,956 | 950 |
Western Australia (WA) | 11,400 | 1,713 |
South Australia (SA) | 4,911 | 620 |
Tasmania (Tas) | 0 | 0 |
Northern Territory (NT) | 232 | 125 |
Australian Capital Territory (ACT) | 262 | 76 |
Total
|
81,719
|
6,596
|
Qld
|
NSW
|
Vic
|
SA
|
WA
|
NT
|
Tas
|
ACT
| |
---|---|---|---|---|---|---|---|---|
Entitlement (no) | 0 | 208 | 304 | 202 | 68 | 0 | 0 | 0 |
Entitlement volume (ML) | 0 | 84,377 | 35,325 | 15,725 | 11,004 | 0 | 0 | 0 |
Allocation (no) | 62 | 134 | 97 | 41 | 29 | 0 | 0 | 0 |
Allocation volume (ML) | 3,688 | 26,972 | 7,524 | 2,147 | 4,255 | 0 | 0 | 0 |
20.3.1.1 Murray-Darling Basin (MDB) Groundwater Trade
(GL) in 2011–12 | Water entitlements |
---|---|
MDB regulated | 1,065 |
MDB unregulated and groundwater | 153 |
Other water systems | 218 |
Australia
total
| 1,437 |
2007–08
|
2008–09
|
2009–10
|
2010–11
|
2011–12
| |
---|---|---|---|---|---|
MDB Regulated | 1,376 | 1,663 | 2,118 | 3,340 | 4,127 |
MDB Unregulated and groundwater | 17 | 290 | 183 | 76 | 89 |
MDB total | 1,393 | 1,953 | 2,301 | 3,417 | 4,216 |
Other water systems | 201 | 205 | 194 | 77 | 81 |
Total Australia | 1,594 | 2,158 | 2,495 | 3,493 | 4,297 |
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high demand for groundwater;
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water sharing plans for aquifers based on sound scientific knowledge;
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access to perpetual licenses for users;
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transparent trading rules;
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efficient approval processes; and
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a system for metering and monitoring is in place (NWC 2011).
2006–07 | 2007–08 | 2008–09 | 2009–10 | 2010–11 | 2011–12 | |
---|---|---|---|---|---|---|
Groundwater allocation trade | 12,155 | 12,543 | 10,210 | 9,102 | 6,096 | 3,997 |
Surface water allocation trade | n.a. | 5,598 | 12,581 | 12,151 | 17,516 | 23,462 |
20.3.1.2 Western Australia
20.3.2 United States of America (US)
20.3.2.1 California
20.3.2.2 Nebraska
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Upper Republican Natural Resource District (URNRD): The URNRD was an early adopter of groundwater regulation. This primarily rural district, located in southwest Nebraska, initially required all irrigation wells to install flow meters in 1979. Use restrictions were also implemented in the same year, although the initial allocation levels were sufficiently high that users were not constrained. Allocations are determined for a multi-year period (typically for 5 years) and the allocations have gradually decreased. Initial water allocations were set at 5,610 m3/year/hectare and current allocations are 3,315 m3/year/hectare (RRB 2013). The expansion of acres is controlled, setting a cap on total water use. The allocation rights are allocated to each field based on the size of the field. Given the binding allocations and history of monitoring, the URNRD is well-suited for groundwater trading.In the URNRD, an irrigator can transfer part of his/her water allocation to another irrigator if the water will be used within a confined geographical region (9,324 hectares). This constraint has advantages and disadvantages. The advantages are that it reduces regional economic impacts associated with the transfer of groundwater and can reduce the chance of cones of depression, where groundwater pumping is concentrated in a small area. Disadvantages accrue from limiting potential trading partners, reducing the potential economic benefits of trade. Relative to surface water, groundwater transfers have few technical impediments since the right to pump is transferred as opposed to the wet water. One impediment to groundwater transfers has been high transaction costs. There is no mechanism to help prospective buyers and sellers find trade partners. In addition to formally transferring allocation, the URNRD also allows an irrigator to combine the pumping rights to all of his/her land in a limited geographical area. This creates a defined set of fields (referred to as a “pool”). Total groundwater use is limited for the pool of fields, but the irrigator can choose how to distribute the total allocation between fields. This allows flexibility to move water from one field to another due to differences in soil type or crop choice. Many producers use pools to help manage their water allocation, and this suggests that reducing the transaction costs for formal trading would lead to more trades and greater economic benefits. In a recent analysis, Juchems (2013) found that indicators of profitability such as soil type, depth to groundwater, and pumping capacity are strong indicators of the direction of trade in both formal trades and within-pool transfers.
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Lower Republican Natural Resource District (LRNRD): As with the URNRD, the LRNRD establishes multi-year groundwater allocations for irrigators. Due to changes in state law, the NRD began metering and limiting groundwater allocations in 2005. Unlike the URNRD, transfers of groundwater allocation are not permitted. Research suggests that modifying the rules to allow groundwater transfers would have economic benefits, and would allow the NRD to reduce overall groundwater use at a very low cost (Palazzo and Brozović 2014).
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Central Platte Natural Resource District (CPNRD): The motivation for improved water management is different in the Platte River Basin than in the Republican River Basin. Both are interstate rivers and restrictions on hydraulically connected groundwater in the Republican River Basin have been necessary to provide enough water to Kansas (the downstream state). In contrast, restrictions on hydraulically connected groundwater in the Platte River Basin are designed to improve instream flow for endangered species. A series of interstate agreements and legislative changes between 1997 and 2006 led to the current restrictions and water management plan for the CPNRD.The CPNRD has developed a number of tools to help groundwater users manage their water allocation. First, the CPNRD allows groundwater users to transfer (trade) the right to pump groundwater to another location. Transfers are permitted between the NRD and other NRDs as long as the transfer is approved (CPNRD 2012). The permitting process is designed to ensure that any transfer does not lead to additional depletion from the river. As seen in the URNRD, one-to-one transfers can have high transaction costs due to the difficulty of finding a trading partner. In addition to one-to-one transfers, the CPNRD has developed a water bank. To date most of the water bank activities have been permanent buyouts of irrigated land (both groundwater and surface water). However, the water bank has been designed to also permit some flexibility, with individual producers able to purchase water. While the program is still fairly new, the centralized system is expected to lead to lower transaction costs, more trades, and higher economic benefits from water use.