Estimating non-market values of protecting groundwater in a constrained environment

Abstract

In groundwater-constrained areas, reallocating groundwater away from agriculture to achieve environmental outcomes has become a popular top-down regulatory approach. However, little attention has been paid to understanding public preferences for such policies. Using a choice experiment, we explore community preferences for different components of a groundwater allocation management program affecting agriculture in a severely water-constrained but highly groundwater-dependent environment, Western Australia. We find strong community preferences for a substantial reallocation away from agriculture, with compensation based on ecological benefits, regular monitoring through meters and a medium-level penalty for those that over-extract. The estimated non-market value to implement a groundwater management program comprising the preferred structure is up to AU$61 million per year. This result demonstrates the value of considering community preferences when designing groundwater management policies.