Limiting pumping from the Edwards Aquifer: An economic investigation of proposals, water markets, and spring flow guarantees

The Edwards Aquifer, near San Antonio, Texas, is an important water source for both pumping and spring flow, which in turn provides water for recreation and habitat for several endangered species. A management authority is charged with aquifer management and is mandated to reduce pumping, facilitate water markets, protect agricultural rights, and protect the species habitat. This paper examines the economic dimensions of authority duties. A combined hydrologic-economic model is used in the investigation. The results indicate that proposed pumping limits are shown to have large consequences for agricultural usage and to decrease the welfare of current aquifer pumping users. However, the spring flow habitat is found to be protected, and the gains from that protection would have to exceed pumping user losses in order for the protection measures to increase regional economic welfare. Agricultural guarantees are shown to cause use value differences, indicating the opportunity for emergence of an active water market. Fixed quantity pumping limits are found to be an expensive way of insuring adequate spring flow.