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Sustainable Groundwater Management Using Market-Exchange Platforms

Abdel Alfahham, Aaron McGarvey, Spencer Harris

Department of Earth and Environmental Science

University of Pennsylvania

Presented at Global Water Alliance - 11th Annual Conference

Penn I-Corps.jpg


Increasing regulation of the world’s groundwater resources is prompting many governments and municipalities to make difficult decisions concerning groundwater management. By switching to an allocation-based approach and utilizing a market-inspired digital exchange system, water managers can achieve sustainability while creating a fair and equitable system for the distribution of groundwater.

the problem

For decades, California’s groundwater sustainability problem has been characterized by declining groundwater levels, land subsidence, saltwater intrusion and extreme drought. In 2014, the state passed the Sustainable Groundwater Management Act (SGMA) requiring 127 groundwater basins to halt overdraft and return to balanced levels of pumping. The SGMA act allows for the use of groundwater markets to manage this problem. In a groundwater market, stakeholders are given an allocation they can either use or trade to a neighboring stakeholder in the same basin.

Credit: - Land Subsidence in the United States, USGS USGS Fact Sheet-165-00

Freshwater and saltwater mix in the zone of dispersion by the processes of diffusion and mechanical dispersion. A circulation of saltwater from the sea to the zone of dispersion and then back to the sea is induced by mixing within this zone. (Figure modified from Cooper, H. H., 1964, A hypothesis concerning the dynamic balance of fresh water and salt water in a coastal aquifer: U.S. Geological Survey Water-Supply Paper 1613-C, p. 1-12).

is California heading into another extreme drought ?


Our investigation focused on two things: 


(1) Understanding the water sustainability problems that exist in the Western US.

As a part of the Penn Center for Innovation I-CORPs program Phone and in-person interviews were conducted with over 20 individuals in an attempt to gain insight into the problem of GW sustainability and the viability of water markets as a solution.

(2) Examining the feasibility of using Water markets to solve the sustainability crisis.

We conducted an extensive Evaluation of existing models for the implementation and operation of water markets around the world.


Contacted 100+ geologists, water managers, consultants, entrepreneurs, state government, tribal government, federal government representatives.


what did they say ?

Monitoring and enforcement are extremely important for sustainability but it also require funding which is not currently available.

Technical Expert

Accountability is important considering the [local water] agency was formed after a drought with the intention of ensuring sustainability and accountability of water use.

Central Valley Water Manager.

Water markets do a really nice job responding to local economic conditions. As the value of water changes over space and time, so does the behavior of the stakeholders/users. – Water Trading Expert

The [water] transfer process is extremely complicated, we have short term and long term transfers. Water transfers occur under the oversight of regional agencies, state regulatory bodies and federal agencies.

Water Agency Manager

California water rights are extremely outdated and confusing to research.

Bay Area Water Agency Manager


1.  The demand for using water markets as a GW management tool for complying with the SGMA act is substantial

2.  Water markets must have proper metering and enforcement in place to function

3.  Water markets should only be used in cases of agricultural or municipal groundwater, not domestic water

4.  Water markets must be fair and balanced and avoid outside speculators

5.  With the proper constraints and boundary conditions, water markets could be an effective tool for managing GW pumping under the SGMA act

6.  No standard exists for performing water transactions and few tools exist for facilitating groundwater markets

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