Designing Equitable Groundwater Trading Under SGMA: A Madera County Simulation
Madera County agricultural growers are facing significant reductions in groundwater use
Groundwater sustainability requirements under California’s Sustainable Groundwater Management Act (SGMA) pose significant challenges for agricultural producers in Madera County, California. Growers face reduced water availability and economic uncertainty. Early in the SGMA planning process, groundwater trading emerged as one tool in the toolbox for potentially addressing this challenge; however, its design and implementation raised complex questions among stakeholders about equity, efficiency, and local feasibility.
Simulating a groundwater market to inform local decision-making
To support informed decision-making under SGMA, One Water Econ’s economists led a market simulation to evaluate how groundwater trading could function in Madera County. The team modeled water demand, crop economics, and trading behavior across two subbasins, incorporating stakeholder input, local data, and policy scenarios to assess impacts on water use, farm income, and regional outcomes.
Over ten months, growers participated in a virtual trading exercise, making monthly decisions about buying, selling, and adjusting water use and cropping in response to simulated constraints. The study found that groundwater trading can reduce economic losses and improve flexibility—especially when designed with clear rules and safeguards for equity and environmental outcomes. The simulation provides a practical foundation for agencies considering market-based groundwater management and helped growers understand how trading could mitigate the effects of reduced water availability
Note this project was led by One Water Econ team members Janet Clements and Claire Sheridan while at their previous consulting firm