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Aaron McGarvey

Portfolio and Case Studies

Case Study - Developing a cap-and-trade system for groundwater in California

USE CASE: Groundwater, Water Quantity, Climate Change & Sustainability


In 2014, the state of California passed the Sustainable Groundwater Management Act (SGMA). The first legislation of its kind, the law required the formation of "groundwater sustainability agencies (GSAs)" to develop and implement "groundwater sustainability plans (GSAs)" designed "to avoid undesirable results and mitigate overdraft within 20 years." For the first time, groundwater pumping rights in California were no longer solely defined by propery ownership. The law recognized the importance of water management at a local level, and allowed local agencies to determine how best to allocate pumping rights within their basins.

OUTCOME: A trust-less exchange for farmers to transfer their water rights.

As part of an NSF funded program at the University of Pennsylvania's Penn Center for Innovation, Aaron conducted a feasability study alongside a team of hydrogeologists and environmental scientists to determine the attitudes of local water managers towards the idea of water markets as a solution to SGMA. The team interviewed over 20 different water agency managers in state, local, and tribal governments across the western United States.

The study found general support among water agency managers for the implementation of water markets, given proper metering and enforcement, and provided the basis for the creation of Basin Logix, a company implementing the use of Smart Contracts to allow farmers to trade their groundwater pumping allocations over a trust-less exchange.

The detailed results of the study are available here, and were presented at the 11th Annual Global Water Alliance conference at Villanova University in 2018.