May 8, 2013

While surface water trading has occurred regularly throughout the western United States and the rest of the world for decades,  groundwater trading has been limited. However, groundwater is increasingly under stress from overuse and many areas are starting to regulate its use.

Unlike many other groundwater-dependent areas across the nation, the Upper Republican Natural Resource District (URNRD) has had metering and use restrictions in place for over 30 years. The URNRD has also developed some mechanisms to help producers use water most efficiently under allocation restrictions. Two of the tools available include creating pools and formally trading water.

Formal water trading occurs when the irrigation rights are permanently transferred from one field to another field. The other option, when multiple fields are combined to create a pool, a producer can temporarily move a water allocation from one field to another field in the same pool. Within-pool transfers are conducted when fields under the same owner aggregate their total allocations into a pool, as approved by the URNRD board, and then redistribute the water to each field at the owner’s discretion. 

A study by two researchers in the UNL Department of Agricultural Economics examines formal trading and within pool transfers using 30 years of water use and field level characteristics provided by the URNRD.

Read more about what they found in this recent issue of Cornhusker Economics.