Complying with the Arizona Groundwater Management Act: Policy implications.

Groundwater overdraft in Arizona has imposed significant costs on society and has precipitated a number of social responses. One of the most significant of these responses is Arizona's Groundwater Management Act of 1980 (GMA). The GMA established a water conservation program by restricting the uses and quantities for which water may be legally employed and by prescribing the ways in which groundwater rights may be transferred. The Arizona Department of Water Resources (DWR) is charged with implementing the GMA and achieves compliance by allocating conservation enforcement and rights retirement through time. The distributive equity characteristics of these policy tools suggest that irrigated agriculture will be most affected by DWR's efforts. This study examines the major economic issues associated with GMA compliance by focusing on the various combinations of irrigation conservation enforcement and irrigation rights retirement that achieve GMA compliance, holding the level of conservation in non-irrigation uses fixed. The general result of this study is that DWR faces an inherent conflict between its two overdraft management considerations of compliance and efficiency. That is, the required use of irrigation conservation enforcement frustrates the efficient achievement of zero overdraft. A reexamination of the GMA's provisions is indicated to resolve this inconsistency and thereby promote water resources management in Arizona. Incidental to this result, the hydrologic characteristics of the regulated aquifer and the discount rate are identified as critical determinants of an optimal overdraft reduction policy