10 Sep 2014

It's my well and I can pump if I want to?

In my Reddit AMA, hobbers wrote:
So I was imagining how you would price water when someone has their own well. Sure, it's the same aquifer or whatever. But people will still moan and complain - "it's my land, I can do whatever I want, what gives the government the right, etc". All of which still makes sense, except for the common resource problem. But couldn't you influence their behavior by offering a water market? In a similar way to solar? People can pipe water back into the system at market prices. That sets a cost for them watering their lawn, while not forcing the government to inspect their well or otherwise. When water is abundant, market prices are low, people can water whatever they want. When water is scarce, market prices are high, and people have incentive to not water their lawn, instead piping the water back into the system where use can be prioritized.
I responded with:
I agree with these general outlines. The key for the well example is the degree of "shared" in the aquifer. Assuming it's worth the metering cost, it would be pretty easy to charge a "public goods extraction fee" based on extraction volumes and wellhead depth in a region (averaged over a year). Above average extractors would pay if the level dropped, since they are depleting the common pool resource. "Unconnected" people could do what they way (pay or not) with "their" water, which they have the ability and incentive to protect. (Aquifer science is VERY complex in the field.)