Groundwater extraction control with economic instruments

What is it about?

Groundwater can be considered as a common-pool resource, is often overexploited and, as a result, there are growing management pressures. This chapter starts with a broad presentation of the range of economic instruments that can be used for groundwater management, considering current practices and innovative approaches inspired from the literature on Common Pool Resources management. It then goes on with a detailed presentation of groundwater allocation policies implemented in France, the High Plains aquifer in the USA, and Chile. The chapter concludes with a discussion of social and political difficulties associated with implementing economic instruments for groundwater management.

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Why is it important?

Groundwater abstraction has increased considerably over the last few decades for both agricultural and urban uses. Groundwater development has taken place in an institutional setting that placed no or few limits on groundwater use, leading to overdraft and associated environmental impacts (e.g. sea water intrusion, declining water tables, impacts on dependent ecosystems). This calls for the design of innovative institutional frameworks, involving the redistribution of responsibilities between the State and user communities, and an increased use of economic instruments providing incentives and theoretically leading to higher water use efficiency.

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