Institutions and Incentives to Protect Water-Dependent Amenities

Groundwater pumping affects riparian habitat when it causes the water table to drop beyond the reach of riparian plants. Riparian habitat provides services that are not directly traded in markets, as is the case with many environmental amenities. There is no direct market where one may buy or sell the mix of services provided by a riparian corridor. The objective of this article is to review groundwater management mechanisms and assess their strengths and weaknesses for preserving the ecological integrity of riparian areas threatened by groundwater pumping. Policy instruments available to those concerned with the effects of groundwater pumping on riparian areas fall into three broad categories: (1) command and control (CAC), (2) incentive-based economic instruments, and (3) cooperative/suasive strategies. The case of the San Pedro River illustrates multiple and overlapping strategies applied in an ongoing attempt to reverse accumulating damage to a riparian ecosystem. Policy makers in the United States can choose among a broad menu of policy options to protect riparian habitat from groundwater pumping. They can capitalize on the clarity of command-and-control strategies, the flexibility and less obtrusive nature of incentive-based economic strategies, and the benefits that collaborative efforts can bring in the form of mutual consideration. While collaborative problem solving and market-based instruments are important policy tools, experience indicates that a well-formulated regulatory structure to limit regional groundwater pumping is an essential component of an effective riparian protection strategy.