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Is Groundwater Trading the Future of California Water?

Is groundwater trading the future of California water

Is groundwater trading the future of California water

Water scarcity is a pressing issue in California, particularly in the American West, where the megadrought has become a stark reality. However, a recent summit held in Fresno has brought a glimmer of hope to the region.

This summit, hosted at Fresno State’s Resnick Center, discussed a potential solution to the water crisis: groundwater trading. In this blog post, we will delve into the concept of groundwater trading, its potential benefits, and the challenges it faces.

Understanding the Water Crisis in California

Before we explore the concept of groundwater trading, it’s crucial to understand the severity of the water crisis in California. T

he San Joaquin Valley’s groundwater aquifers have been under immense stress due to overuse, making them a symbol of unsustainable water practices in the region. However, at the summit, policymakers and water district managers painted a surprisingly optimistic picture of the future, even in the face of climate change and stringent regulations.

The Vision of Water in the Valley

At the heart of the summit was a new vision for water management in the San Joaquin Valley. The idea revolves around harnessing the forces of free markets to make the most out of the wild swings of droughts and floods induced by climate change. This ambitious plan aims to create a multi-billion-dollar bonanza through an expanded groundwater trading market.

How Groundwater Trading Works

Groundwater trading primarily involves converting captured floodwater during wet years into groundwater credits. These credits can then be used during periods of drought when water is in high demand.

While this approach holds significant economic potential, it also presents certain challenges. One major concern is the risk it poses to small farmers, who might be tempted to sell their water to larger agribusiness corporations.

Benefits and Challenges

The potential benefits of groundwater trading are substantial. It could boost the Valley’s agricultural economy by $1 billion by 2040, counteracting the estimated $4 to $6 billion shrinkage that might occur without such a system in place. However, the dominance of larger organizations in the water trading market raises concerns about equitable access to this resource.

Critiques and Concerns

In the past, California’s groundwater banks have faced criticism for favoring the state’s wealthiest growers. A larger water market in the Valley could potentially exacerbate this issue, benefiting primarily the nut empire. Furthermore, the question of landfallowing is a significant concern, particularly for smaller farmers who might opt to sell their water to larger corporations.

Environmental and Political Considerations

Groundwater trading is not without its risks and complications. Stanford professor Paul Milgrom has pointed out that water is unique, and the ecological consequences of trading water are still not fully understood. Moreover, political risks loom large, as the fate of farming communities may hang in the balance.

Community Voices

Sonia Sanchez, a senior community development specialist, emphasizes the need for agribusiness to work closely with low-income communities to balance groundwater trading with environmental and social concerns. She highlights the potential dangers of concentrating toxic chemicals in local groundwater supplies as floodwater is redirected underground.


The concept of groundwater trading presents both promise and challenges for California’s water future. It holds the potential to bolster the state’s agricultural economy while mitigating the impacts of droughts.

However, careful consideration of environmental, social, and political implications is essential as California explores this innovative approach to water management. The road ahead may be fraught with complexities, but the pursuit of sustainable water solutions remains vital for the prosperity of the Golden State.

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