May 19, 1996
Georgia's Groundwater: Own It or Lose It
By Terry L. Andersonand Pamela S. Snyder
The days of cheap, plentiful groundwater are over for Savannah. Heavy pumping in the city and surrounding Chatham County is affecting wells as far away as Hilton Head Island. Both areas share groundwater from the Floridan aquifer underlying parts of South Carolina, Georgia and Florida. South Carolina says Georgia is using more than its share of the aquifer, and threatens to sue. In response, Georgia's Environmental Protection Division (EPD) wants to force industries in Savannah to cut back on groundwater withdrawals. Fortunately, there is another way to ease the pressure on the aquifer.
The problem facing Savannah is severe. As Chatham County has grown, groundwater pumping has increased. The water level in the aquifer has dropped, forming a huge inverted cone under the city. Water is being pulled into the cone from other parts of the aquifer. As freshwater retreats toward Savannah, saltwater follows it, intruding into wells on Hilton Head and threatening tourism.
Unfortunately, Georgia groundwater law treats the Floridan aquifer like an English commons. Everyone has a right to use it within reason and the "rule of capture" applieswhat you pump is what you own. As a result, everyone races to the pumphouse knowing that if they don't pump the water someone else will. In this setting, individuals are not likely to reduce their groundwater withdrawals voluntarily.
But it doesn't have to be that way. Georgia's current groundwater allocation scheme was adopted in a time when groundwater was abundant and its subterranean movement was largely beyond the understanding of judges and other decision-makers. Modern science and technology, however, enable us to create accurate models of groundwater aquifers. With this knowledge comes the ability to define property rights in groundwater and allow the people who own those rights to trade them. With ownership comes the incentive to use this resource wisely.
Californians have been doing this for years. Prior to 1966, water levels in the Tehachapi basin dropped as much as 100 feet, pumping costs increased dramatically and some wells ran dry. Pumpers in the basin asked the courts to establish property rights to groundwater, and since 1971, these groundwater rights have been leased and sold locally. The results speak for themselves. Wells have recovered by 50 feet and water levels are no longer declining.
The Tehachapi isn't alone. Transfers are allowed in other California basins where groundwater rights are established, including San Fernando and Mojave. Water markets can be an effective alternative to government regulation.
EPD's proposal calls for costly regulations that would force industrial users to reduce their groundwater pumping. According to Chatham County's Metropolitan Planning Commission, complying with the regulations could cost as much as $285 million in the next ten years, $40 million in lost jobs and economic opportunity.
We at the Georgia Public Policy Foundation and PERC (Political Economy Research Center) are offering a market-based solution to the problems caused by scarcity in the Floridan aquifer. We propose that the state privatize the aquifer and facilitate a groundwater market.
Initially, Georgia should work with South Carolina and Florida to establish the amounts of groundwater available to users in each state. Once Georgia's allocation is determined, the state should divide it among sub-basins or regions. Using pumping records from the past decade, each sub-basin could be given a pro rata share of the total allocation. The state could then encourage each region to submit its own plan for defining groundwater rights. As regions are dominated by agricultural, industrial, or municipal users, a different method for defining rights may work better in each case. And, cooperation is more likely with smaller groups whose members have a lot in common.
The key is to establish individual rights to a specified amount of groundwater. With the certainty provided by such rights, groundwater users will no longer race to the pump house to "capture" their water. Instead, they will have an incentive to take into account both the current and future value of the groundwater. Allowing groundwater rights to be bought, sold and otherwise exchanged will provide users with information about the most highly valued uses of groundwater that only prices can provide.
The state's role in such a system would be radically different from its current one, but no less important. Agencies such as the EPD are in the best position to estimate groundwater storage, recharge, historic use and consumption. Once groundwater rights are defined, the state can maintain a good hydrological and property rights data base. Recording title, enforcing rights and facilitating exchange are services that governments already provide for real estate transactions. Privatization would reduce the state's regulatory burden and place it in a more positive light as protector of rights.
Savannahans must reduce their groundwater use. The question is how? Will the EPD impose reductions? Or, will privatization and a market in groundwater rights reduce usage? It's time for Georgia to step out of the past and allow a market approach to achieve what regulation hasn't.
Terry L. Anderson is executive director of PERC and a professor of economics at Montana State University. Pamela S. Snyder is a research associate at PERC.