The Sustainable Groundwater Management Act (SGMA) is a landmark legislation in California, enacted in 2014 to ensure the sustainable management of groundwater resources. The primary goals of SGMA are to prevent overdraft, bring groundwater basins into balanced levels of pumping and recharge, and provide a framework for local Groundwater Sustainability Agencies (GSAs) to develop and implement Groundwater Sustainability Plans (GSPs). These plans aim to manage groundwater in a way that can be maintained during periods of drought and for future generations, preventing negative impacts such as land subsidence, reduced water quality, and decreased groundwater storage.

Unfortunately, as the saying goes, “Whiskey is for drinking, and water is for fighting.” When these local agencies develop GSPs, they are almost destined to be litigated which results in a Prisoner’s Dilemma for all parties involved. The Prisoner’s Dilemma is a game theory scenario featuring two rational individuals who face a choice: either collaborate for shared benefit or betray one another to achieve personal advantage. The dilemma highlights that although mutual cooperation leads to the best collective outcome, each prisoner has a strong incentive to defect. As a result, both prisoners often end up defecting, leading to a worse outcome for both than if they had cooperated.

Sadly, because of the high economic stakes, I’ve seen bitter legal battles between neighbors and friends as they try to eke out the largest groundwater allocation possible. Fundamentally, the problem is that it is a zero-sum game where one party’s allocation increase results in another party’s decrease.

One of the most basic questions in developing an allocation scheme is, “What is a base period that accurately represents historic and current usage?” Should it be 10 years or 20 years? should it range from 2005-2018 or 2002-2011? As the users start running their numbers, they begin vying for a base period that maximizes their usage resulting in a higher pro-rata share of the allocation. This is just one of many issues that can lead to litigation.

While there are certainly some benefits of a comprehensive adjudication, I would postulate the outcome is generally a net negative for most users and has a disproportionate impact on small farmers and disadvantaged communities. The irony for the parties that decide to take action against the GSA is that they end up paying their own legal fees, as well as the water purveyor’s and GSA’s legal fees via rate increases. They are in the untenable position of financially supporting both their own and their opponent’s legal argument. It would seem the law firms are the only real winners.

I speak from experience as I just went through a comprehensive adjudication in Ventura County. I speculate that the five years of mediation and litigation has cost the users in the basin somewhere between $30 million-$40 million. I can’t help but sigh as I see the same firms and characters moving on to the next basin to capitalize on the opportunity.

Had we been able to cooperate with each other, those funds could have been used to make significant strides towards solving the groundwater problem. Instead, the inevitable forces of self-interest lead to worse economic and environmental outcomes for all parties.

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