Workshop on the Economic and Policy Implications of Water Banking

On May 21-22, 2009, the Stanford Woods Institute for the Environment sponsored a workshop in Sacramento, CA, on the economic and policy implications of water banking - a conservation strategy based on the voluntary purchase and sale of water supplies. The workshop served as a launching point for a long-term project to evaluate the costs, benefits and challenges of water banking, with a focus on California and the Kern River Fan aquifer in particular. Interest in water banking is growing, so an assessment of the replicability of the Kern Fan system is due.

Water banking is designed to make water supplies more predictable and cheaper during the dry season, and may provide substantial environmental benefits by recharging depleted aquifers. Because water banking is lightly regulated, there is potential for conflict when multiple landowners or water districts rely on an aquifer that is being used as a water bank.

Water banks have expressed interest in using new water sources, particularly treated wastewater. However, permits to do so have not been granted because of concerns over water quality and health. Banks also have expressed concern about inefficiency in regulations that require them to treat water placed in canal systems, even though that water will be treated again prior to urban use. Other interests have raised additional concerns, in particular the potential environmental impacts of increased winter water use, which may have contributed to ongoing problems in the San Francisco Bay Delta. There is also potential for failure in existing non-binding governance tools. 

Organizers: 

Frank Wolak
Holbrook Working Professor of Commodity Price Studies
Department of Economics
Stanford University  

Josh Sladek Nowlis
Graduate student, Economics and Environmental Scientist
Department of Economics
Stanford University        

Support for this workshop was provided by a Stanford Woods Institute freshwater planning grant.