The essential but often misunderstood role of economics in groundwater sustainability research

To promote better groundwater policymaking, hydrologists and economists need to work together. The importance of hydrology is self-evident, but we posit that questions about the causes of and potential solutions for groundwater problems, and pathways to better policymaking, are fundamentally economics questions in that they rely on understanding people’s preferences, incentives, and responses to laws and other institutions that guide people’s actions. Not surprisingly then, most hydrologic research questions implicitly arise in response to economic demands and constraints. Hydrology and economics both rely on positive science involving theory, empirical methods, calibration, and validation. Indeed, their models can be linked to characterize and understand their interdependent dynamics. While other natural and social sciences also have important roles to play, this paper focuses primarily on how economics connects (ground)water to policymaking. Economics is a broad discipline with a primary role in understanding how people live in a landscape. Analogous to hydrology’s primary role in describing how water flows, recedes, seeps, evaporates, or recharges aquifers, economics describes people’s endeavors including their use of water, land, and other resources to produce, consume, trade, invest, conserve, and degrade the systems where they live. Policymaking is normative: it involves value judgments when assessing tradeoffs, setting priorities, or choosing among policy options. Economics is unique among disciplines in that it also comprises ‘normative analysis’ frameworks for measuring people’s values as a guide toward satisfying those preferences to the greatest extent possible (e.g. using benefit-cost analysis). But when natural science research is conducted without recognizing the economic considerations relevant to policymakers and managers, it may overlook critical ways that human system structures, dynamics, and people’s values inform the most promising ways to turn science into policy. By collaborating with economists, interdisciplinary research can bring natural sciences together with positive and normative economics to promote better groundwater policy.