Efficient Development of Surface Water Resources in Response to Regional Groundwater Pumping Reductions

Population growth and economic development are increasing water demand in many regions. In those areas where groundwater is available, the inexpensive and convenient nature of the resource can lead to pumping rates that exceed sustainable levels. As a result, the viability of many groundwater resources is being threatened by declining water levels and related problems (e.g., saltwater intrusion), events that have prompted regulatory agencies to limit or reduce withdrawals from affected formations.

Reductions in groundwater pumping will force communities to develop alternative water sources, in most cases this will involve surface water. The costs associated with building surface water treatment and conveyance infrastructure can be substantial. These investments will be a particularly burdensome for smaller communities, a disproportionate number of whom are dependent on groundwater to meet their needs. While expensive, surface water treatment is subject to significant economies of scale, giving rise to the notion that regionalized treatment facilities may lower costs. However, the advantages of a larger treatment system must be weighed against the diseconomies of scale associated with a larger distribution area.

An approach is described for developing surface water in a manner that balances these antagonistic forces, while supporting economically efficient allocation of post-reduction groundwater capacity through tradable pumping permits. While regionalized treatment has been explored within the context of wastewater, solutions were in the form of a minimum regional cost that did not consider the costs accruing to individual communities. This was logical given the levels of federal funding involved, but such approaches are less suitable when individual communities must pay their own share of development costs. A model is developed which incorporates consideration of individual community costs, and resolves the circular cost interdependencies associated with each community’s choice (i.e. as more communities join a regional surface water system, the demand for, and cost of, groundwater permits declines), until each is utilizing its least cost alternative.

The model is applied to a 15 county region of North Carolina where the state has imposed substantial groundwater pumping restrictions. The capital costs of each community acting independently to meet future water demand has been estimated at over $100 million. Consideration of collective solutions involving regionalized surface water systems and tradable groundwater pumping permits is estimated to reduce regional capital costs by over 40%. The approach described and the corresponding results should be useful to the increasing number of regions that have begun to reach the limits of sustainable groundwater use.