Water for Food

Paid to pump: Policy brief analyzes potential impacts of tax policy on groundwater conservation

December 6, 2017

Photo of Corn

An important goal of the Daugherty Water for Food Global Institute is to improve groundwater management for agricultural production. One challenge when working with groundwater is that it’s literally underground! As a result, it’s often hard to understand and picture what’s happening in an aquifer in terms of the physical flow of water. But it’s equally hard to understand how local, regional, and national policies can affect groundwater use, whether in data-poor areas such as Sub-Saharan Africa or in well-studied areas such as the High Plains Aquifer. We are pleased to share our first policy brief, which examines a little-known federal tax credit for aquifer depletion, which may discourage High Plains Aquifer conservation.

It began with a phone call. In the summer of 2016, ProPublica reporter Abrahm Lustgarten contacted Director of Policy Nick Brozović to discuss an obscure tax deduction that might provide incentives for increased depletion of the High Plains Aquifer. Nick was unaware of the tax credit, but started asking around. It turned out that one of our Faculty Fellows, Dave Aiken, had written about the deduction more than a decade ago.

High Plains Aquifer

High Plains Aquifer

The Water for Food team decided to keep digging.

We sought to understand how important the deduction actually is and how this varies across the High Plains Aquifer (it seems as though we need to remind people regularly that there is a lot of variation across the aquifer and that it’s not one giant bathtub). Our student interns undertook detailed research, talked with people across the region and developed a design template to present their results in a visually appealing way. Program Associate Morgan Spiehs unearthed a key, forgotten lawsuit. Program Coordinator Kate Gibson analyzed data from the U.S. Department of Agriculture to estimate how much the deduction might be worth.

The result is our first policy brief — a four-page summary of the tax credit, its implications and some suggestions on alternate deductions that might reward long-term water conservation efforts.

The team enjoyed working on the brief, and we hope you find it informative — and if you have any ideas for other issues you’d like us to explore, please let us know!

Read the full policy brief.

The ProPublica article on the deduction is also available.

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