Groundwater as a Commodity in Texas

Hydrogeology, Geology, & Environmental Issues

Date posted: 01/05/16

Dr. Rima Petrossian, Vice President for Western Texas of the AIPG Texas Section, reports that water, as it moves from the surface through the soil to an aquifer, takes on a differing economic value depending upon its location, abundance, and purpose. Location includes variables such as political boundaries, depth in the geologic strata, continent, latitude and longitude, and type of landform. Groundwater values, as interpreted through an economic lens, are based on supply and demand. Production and transportation and/or infrastructure factor into the cost of developing water. Part of the economic value is sustainability over a long period of time: possibly as short as two or three years for oil and gas drilling, as long as 20 to 30 years for municipalities, agriculture or industry, or even 50 to 100 years for planning purposes. Another economic aspect is the cost; different but related to the value. Pricing, related to the value and the cost, may not be available to most landowners. Many groundwater transactions purchasing water are hidden from the market, as are much of the private investments in groundwater, at least in Texas. This discussion addresses groundwater value, cost, and pricing generally in Texas.