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Liquid Gold or Water for Pecans? Valuation of Groundwater in Regulatory Takings Law

October 2015

Citation: ELR 10932

Author: William W. Wade, Ph.D.

In 2012, the Texas Supreme Court’s decision in Edwards Aquifer Authority v. Day reversed 100 years of state water law by changing the principle that establishes groundwater ownership rights from a “rule of capture” to a rule of ownership of “groundwater in place.” Ongoing litigation in Bragg v. Edwards Aquifer Authority is the first of what could be a number of Texas cases invoking Day to claim a regulatory taking due to the Edwards Aquifer Authority’s (EAA’s) management of the Edwards Aquifer groundwater. The appellate court’s remand to the trial court for valuation of the Braggs’ damages for their taken water supply is the remaining issue in the litigation, and the subject of this Comment. The author concludes that the plaintiffs’ persistent valuation of their taken access to EAA groundwater as if it were a tradable commodity was correctly disallowed by the appellate court, but that the appellate court’s remand for valuation of the pecan orchard land with and without access to EAA water is inconsistent with standard economic practice.

William W. Wade is a water resource economist.

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