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An Economic Review of Inefficiency in Utah Groundwater Law: Cache County Emphasis

January 2008

Citation: ELR 10021

Author: Kevin L. Brady

Editors' Summary: The demand for groundwater is projected to grow over the next 20 years, resulting in increasing requests for groundwater extraction permits. However, current groundwater allocation laws in some states are economically inferior for a number of reasons; therefore, these states may have difficulty meeting the growing demand for groundwater. In this Article, Kevin L. Brady reveals the reasons for inefficiency in groundwater allocation and management in Utah. He identifies beneficial use rankings, high transaction costs, permit transfer difficulties, and forfeiture clauses as some of the main causes of inefficiency. He argues that Utah should adopt better groundwater allocation laws in order to prepare for future stresses. He advocates the disbandment of beneficial use hierarchies, increased freedom in permit trading, and the elimination of deed expiration periods to improve Utah's groundwater law efficiency.

Kevin L. Brady is a graduate student at Utah State University, Department of Economics. He would like to thank Prof. John Keith for providing insightful comments on an earlier draft.

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