Policy Note: Economic Tools to Achieve Groundwater Sustainability for Nature: Two Experimental Case Studies from California

Groundwater is a critical water supply around the world and is increasingly under threat from pumping that exceeds natural replenishment. California is taking on this challenge with the Sustainable Groundwater Management Act (SGMA) of 2014, which seeks to reliably manage groundwater to meet current and future water needs for the economy, communities and environment. Successful implementation of SGMA depends on the ability of local agencies to work with stakeholders to develop plans and implement projects that reduce groundwater use, increase recharge and efficiently allocate pumping. With more than 250 local agencies undertaking actions to address groundwater overdraft, California serves as a unique laboratory for testing new ways to achieve groundwater management. At the same time, economic tools are increasingly being utilized to secure or deliver water to the environment. For the past several years, The Nature Conservancy has been testing ways that economic tools can help achieve groundwater sustainability. This paper presents case studies that illustrate how two forms of Payment for Ecosystem Services (PES) - a groundwater market and a multi-benefit recharge incentive program - are being used in California to achieve groundwater sustainability to simultaneously meet the water needs of people and nature.