Economic instruments for groundwater management : using incentives to improve sustainability

Abstract

The importance of economic considerations in groundwater management, and protection lies in that economics deals with the allocation, and use of scarce resources. As long as a resource is abundant, there is little need to take such decisions. As the resource becomes more scarce (due to quantity or quality constraints), questions about how to utilize, and protect it (preferably for the best of society) arise. Therefore, economic considerations can help the decision-making process, and promote more efficient resource use. While economic instruments that manage surface water and groundwater may be similar, they are not so much the same, due to certain peculiarities of the groundwater resource: relatively high cost and complexity of assessing groundwater (Briefing Note 2); highly-decentralized resource use, which increases management monitoring costs; invisibility of groundwater to the general public, and time-lags with regard to resource impacts; varying impacts of contaminant load depending on aquifer vulnerability (Briefing Note 8); and, long time-lags, and near irreversibility of most aquifer contamination. These peculiarities explain why groundwater management tools are generally less developed, and applied than those for surface water. However, with increasing water scarcity the economic value of groundwater, and thus the benefit to investment in management, is increasing. This Briefing Note focuses on economic considerations as one important part of the groundwater management equation-specific social, environmental and technical considerations are dealt with in other Briefing Notes.