California's groundwater overdraft: An environmental Ponzi scheme?

Groundwater levels have been decreasing in most agricultural areas, motivating research to find optimal solutions to balance socio-economical and environmental demands. Traditionally, groundwater optimization aims at long-term profit maximization, while accounting for the extraction costs. Following this approach, we find exploitation protocols characterized by pumping rates that slowly decrease in time toward a long-term sustainable value. However, the comparison of the model prediction with water extraction data for the period 1985–2021 from Kern County in California points out the inconsistencies between real management and long-term optimal behavior. Rather, the observed trajectory resembles those obtained by finite-time optimization horizons, which provide short-term high profits by over-drafting, while leading to long-term dilapidation of the capital and the exhaustion of the aquifer. Such myopic planning results in a Ponzi scheme for groundwater extraction. Like the infamous fraudulent scheme, ‘more-than-optimal’ profits are achievable by excessive short-term consumption by the early investors (the past and current aquifer exploiters), leaving the later comers (the future generations) with an impossible cost to sustain. Including the environmental costs of aquifer over-exploitation, the myopic nature of human planning can be corrected and reconciled with a more sustainable use of groundwater.