Design and Implementation of Markets for Groundwater Pumping Rights

  • Nicholas Brozović
  • Richael Young
Part of the Global Issues in Water Policy book series (GLOB, volume 11)


Groundwater is an important resource for agricultural and urban water users. In a number of regions around the world, there is rapid change in water management institutions as a result of the impacts of groundwater use on neighboring wells, streams, and groundwater-dependent ecosystems. Increasingly, regulations are based on quantification, monitoring, and enforcement of irrigation rights. Under these conditions, allowing water users to trade pumping rights is a cost-effective mechanism to reduce the costs of regulations on water users. Indeed, despite high transaction costs, nascent markets for tradable groundwater pumping rights have emerged. This chapter describes the history, current institutional context, and economic framework of markets for groundwater pumping rights. In particular, we compare key differences in design and management between groundwater pumping rights markets and surface water markets. We provide a case study that compares groundwater trading to alternate water allocation systems in the Republican River Basin in the United States, an area with active interstate water conflict.


Tradable permits Environmental management Monitoring Enforcement Transboundary conflicts Spatial externalities 



This material is based upon work supported by the National Science Foundation under grant No. EAR-0709735, by USDA grant No. AG 2012-67003-19981, and by USDA-NIFA Hatch project number #ILLU-470-369


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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Department of Agricultural and Consumer EconomicsUniversity of Illinois at Urbana-ChampaignUrbanaUSA

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