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Open AccessArticle

Long-Term Storage Credits: Analyzing Market-Based Transactions to Achieve Arizona Water Policy Objectives

1
Department of Environmental Science, College of Agriculture and Life Science, The University of Arizona, Tucson, AZ 85721, USA
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Department of Environmental Science and Water Resources Research Center, College of Agriculture and Life Science, The University of Arizona, Tucson, AZ 85721, USA
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Water Resources Research Center, College of Agriculture and Life Science, The University of Arizona, Tucson, AZ 85721, USA
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Author to whom correspondence should be addressed.
Water 2020, 12(2), 568; https://doi.org/10.3390/w12020568
Received: 31 December 2019 / Revised: 10 February 2020 / Accepted: 11 February 2020 / Published: 19 February 2020
(This article belongs to the Section Water Resources Management and Governance)
The state of Arizona has created a unique water management tool in response to water scarcity and population growth. In 1994, Arizona’s state legislature authorized the creation of long-term storage credits (LTSCs) through aquifer recharge with Colorado River water or effluent. LTSCs represent a quantity of water the owner is entitled to recover and use once the water has remained underground for a full calendar year. Owners may also sell their LTSCs to others by a simple credit account transfer. LTSCs have emerged as a tool for water users to achieve compliance with groundwater regulations in the most populated areas of the state, such as the cities of Phoenix and Tucson. Using data collected and maintained by the state’s water resources regulator, this study examines sales of LTSCs to reveal patterns of market-based transactions. Analysis of 23 years of public records shows several trends: (1) LTSC transactions have been increasing since 2003; (2) municipal water providers and investment firms have been active participants in LTSC transactions; (3) the greatest transaction volumes involve governmental entities established by state law with groundwater recharge and replenishment obligations. This analysis reveals how LTSCs have contributed to achieving water policy goals in Central Arizona and suggests how the LTSC system can be used to improve water use efficiency through voluntary redistribution in other water scarce regions. View Full-Text
Keywords: market-based transactions; long-term storage credits; water policy; water management; Arizona; recharge market-based transactions; long-term storage credits; water policy; water management; Arizona; recharge
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Bernat, R.F.A.; Megdal, S.B.; Eden, S. Long-Term Storage Credits: Analyzing Market-Based Transactions to Achieve Arizona Water Policy Objectives. Water 2020, 12, 568.

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