Agricultural Economics Department


Date of this Version



Cornhusker Economics (May 2012)


Published by University of Nebraska–Lincoln Extension, Institute of Agriculture & Natural Resources, Department of Agricultural Economics. Copyright © [2012] Board of Regents, University of Nebraska.


The goals of a recently funded project to measure the potential benefits of developing a groundwater trading market in Nebraska is discussed in this Cornhusker Economics article. Groundwater is a major component of agricultural water use. In extensive regions of the Western United States, rural agricultural economies rely entirely on groundwater. At the same time as providing water for human needs, groundwater is also an input to streams, wetlands and riparian areas that provide important ecosystem services. Ongoing groundwater pumping will deplete flows in adjacent streams, leading to potential conflict between human and environmental uses of water. In the last decades, many conflicts over transboundary allocations of water, endangered species and instream and riparian habitat have been driven by surface water-groundwater interaction. for example, claims have been filed with the United States Supreme Court over mpacts of groundeater use on flows of transboundary rivers for the Pecos River (Texas vs. New Mexico), the Arkansas River (Kansas vs. Colorado), and the Republican River (Kansas vs. Nebraska and Colorado). Groundwater has typically been viewed as private property, and its use in agriculture is generally neither regulated nor quantified precisely. However, there is growing interest in moving to systems that regulate groundwater use. The ability to trade groundwater allocations is often a part of such conversations.