The Economics of Groundwater Governance Institutions Across the Globe

This article provides an economic framework for understanding the emergence and purpose of groundwater governance across the globe. Efforts to reduce common pool losses in the world’s aquifers are driven by water scarcity, with problematic water table drawdown occurring in areas with low water supply or high demand. Drawdown creates local externality problems that can be addressed through a variety of management approaches that vary in the level of control over the resource and costs of implementation. We examine 10 basins located on six continents which vary in terms of intensity and type of water demand, hydrogeological properties, climate, and social and institutional traditions via an integrated assessment along three dimensions: characteristics of the groundwater resource; externalities present; and governance institutions. Groundwater governance is shown to address local externalities to balance the benefits of reducing common pool losses with the costs of doing so. In many basins facing drawdown, the high cost of coordinating largescale governance institutions has resulted in a de facto state of open access resource use. However, the spatially local nature of externality problems allows for effective local management actions in some cases.