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Economic policy approaches to water allocation in California

March 04, 2019
Headshot of Ellen Bruno.

Ellen Bruno was interviewed for the Blog of the California Institute for Water Resources about her research on the role of economic policy and regulations on water resources within the state.

You are currently working on the changing regulatory structure of groundwater in California, and in particular groundwater trading. Can you tell us a little more about your work?

At the end of 2014, the California legislature passed a major statewide water regulation, the Sustainable Groundwater Management Act or SGMA, requiring groundwater agencies throughout California to correct the over-extraction of groundwater. In my work, I answered some economic questions that are relevant to the implementation of this new law. For my dissertation research at UC Davis, I estimated groundwater demand curves for agricultural users in Southern California, quantified the economic impacts of groundwater trading, and then considered the potential for players in the market, such as big vertically integrated agribusiness firms, to influence market outcomes. This is considered to be one potential unintended consequence of water marketing.

My research in general is inspired by concerns about climate change, its impacts to our water supply, and finding ways to adapt. I focus on understanding incentives and the impacts of regulation and policy. For example, I have been studying the potential of water marketing as a strategy to adapt to a changing water landscape by simulating water trade between agricultural and urban users in the face of water supply curtailments. We want to understand the extent to which urban suppliers can buy water from agriculture in order to ease the economic burden of drought. Additionally, I am researching how water prices influence the adoption of water-saving agricultural technology, such as more efficient irrigation systems and less water-intensive crops.

My research is very policy-oriented, interdisciplinary, and defined by collaborations with state and regional government agencies. All of the work I just described has been conducted with support from water agencies such as the Coachella Valley Water District in Riverside County and the Pajaro Valley Water District in Santa Cruz and Monterey counties. I am also now beginning a collaboration with UC Davis researchers and the State Water Resource Control Board to understand the costs and benefits of regulating water leakage in the distribution systems of urban water retailers. Finally, I am helping the California Department of Water Resources to catalogue the economic costs and benefits of artificial groundwater recharge using floodwater.

Read the full article on The Confluence