“A groundwater market, which caps total pumping within one or more basins, allocates portions of the total to individual users and allows users to buy and sell groundwater under the total cap, is a promising tool for basins implementing California’s Sustainable Groundwater Management Act (SGMA).
While the benefits of a cap-and-trade system for both groundwater users and regulators are potentially very large, so too are the risks.
An electronic bulletin board that introduces buyers and sellers, like craigslist.org , is not a market. Nor is a sophisticated financial application that matches participants and executes financial transactions. A water market is a complex interaction of individuals and institutions — the product of a large number of people, structures, operational mechanisms and rules. Without careful design, a water market can do harm.. ... ”
Read more from California Agriculture here: The first SGMA groundwater market is trading: The importance of good design and the risks of getting it wrong