Groundwater Recharge Trading for California's Groundwater Sustainability

The Freshwater Trust, an Imagine H2O Water Policy Challenge Finalist, aims to improve coordination between groundwater and flood control agencies through a novel recharge crediting framework.

The shortage of surface water for farmers in California—over 60% below pre-drought levels—has sparked an unprecedented increase in groundwater withdrawals. As a result of the shortages, millions of acres of farmland remain fallow. Estimates suggest that water scarcity cost the state’s agricultural sector $1.8 billion in 2015. The increased reliance on groundwater has degraded aquifer storage capacity and accelerated land subsidence across the state. While El Niño has offered some reprieve, the state’s long-term water supply faces considerable stress. The one silver lining from the drought is the rise in political will to address the looming water crisis.

Passed in 2014 in response to prolonged drought conditions, California’s Sustainable Groundwater Management Act (SGMA), just one of the recent pieces of drought legislation, provides a framework for the sustainable management of groundwater supplies. Local authorities have until 2017 to organize themselves into Groundwater Sustainability Agencies (GSA). By 2040, the most critical basins must achieve groundwater sustainability. While SGMA is an important step forward, it does not mandate agencies to consider flood management, a crucial resource for farmers to boost groundwater recharge and mitigate aquifer overdraft.

Recognized as a Finalist in Imagine H2O’s inaugural California Water Policy Challenge, The Freshwater Trust proposed an innovative groundwater recharge crediting system that would foster improved coordination and collaboration among groundwater, flood control, and irrigation agencies by aligning water management incentives.

“As a pioneer in the field of quantified conservation, we felt that we could offer a new perspective to the groundwater quantity discussion,” said Chris Thomas, staff attorney with The Freshwater Trust. “We saw an opportunity to increase collaboration under SGMA by incentivizing groundwater supply augmentation.”

The proposal uses the potential groundwater pumping limits and fees under SGMA to drive a trading program similar to other market-based environmental trading systems. “Addressing groundwater shortages is of utmost importance to ensure the continued vitality of California farming, and increasing supply is one of the most promising and politically feasible solutions,” said former California Secretary of Agriculture AG Kawamura who served on Imagine H2O’s judging panel. “The Freshwater Trust’s proposal is the kind of innovative solution that Californians need now.”

Under the envisioned approach, local water agencies and landowners cooperate to divert winter river flows and apply it to farm fields. This allows the water to percolate into the soil, recharging the groundwater. The GSA would quantify the recharge and reward participating landowners and agencies with ‘recharge credits.’ These credits would count against groundwater pumping fees or limits and could be sold to other water users or banked for future use. Agencies could then use the proceeds from the credit sales to defray the cost of complying with SGMA and modernize their water infrastructure. Thus, landowners and agencies all receive a direct benefit for participating and the groundwater supply increases.

The Freshwater Trust's recharge crediting framework

The Freshwater Trust's recharge crediting framework

Mike Jolliffe, applied research scientist at The Freshwater Trust, laid out the proposal’s main objectives: “This proposal reinforces the importance of working farms and floodplains in California’s future. It incentivizes integrated management of water resources while promoting the use of both natural processes and low-cost infrastructure that is flexible, low-impact and long-lived.”

To further this approach, The Freshwater Trust proposed supporting existing legislation that would make groundwater recharge a beneficial use. The Trust also proposed the adoption of SGMA regulations that would encourage agencies to include in their sustainability plans an assessment of opportunities for voluntary recharge crediting programs that address groundwater and flooding.

“Adoption of the proposal would create the impetus to upgrade water infrastructure, much of which has not seen meaningful improvements for decades,” said Kate Anderson at The Freshwater Trust’s office in Sacramento. “We have already had interest from stakeholders who see the potential for a crediting system to help defray improvement costs and spur technological innovation.”

In the end, a recharge crediting framework would simultaneously improve the existing groundwater conditions and modernize the water infrastructure. While just one of many tools to address the ongoing drought, groundwater recharge has the potential to greatly increase the available water supply. Moreover, quantifying the recharge benefits would facilitate more effective water management and more efficient water usage to the benefit of all Californians.

To learn more about the project contact Chris Thomas ( or visit