How transaction costs price out small deals that could lead to big wins for agriculture

Spoiler alert: It’s not the price of water that’s costing growers large gains from water trading; it’s the transaction costs associated with it. Meeting high technical and legal standards often exceeds the price of water itself, pricing out smaller deals that, in aggregate, could substantially improve agriculture’s resilience to water-related production risk.

Photo by Bence Balla-Schottner on Unsplash

Water transfers are powerful tools. They allow for the transfer of some or all of a water right between users, which typically changes the place where that water is used (e.g. downstream in a watershed) or what it’s used for (e.g. from wheat to grapes, rice to municipal…


As more agencies develop groundwater allocations, it’s important to understand how allocation design affects economic and environmental outcomes.

You’ve heard by now that our groundwater resources are disappearing. We’ve pumped so much, so fast, for so long. Decades later, we’re witnessing the effects of drawing from this invisible resource. In Kansas, wells are pumping air. In Texas, streams are drying up. In California, the ground is sinking.

It’s the consequence of us, collectively as consumers, consuming more than is replenished each year. We’ve been poor stewards of our natural wealth. Our debts have added up.

The good news is that we’re waking up to this reality. Several western states have adopted comprehensive groundwater management reform. …

Richael Young

Economist, engineer, and entrepreneur. On a mission to align agricultural profitability with water stewardship. Let’s talk: richael@mammothwater.com

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