Impacts of Policy Design and Risk Management on Groundwater Conservation Program Effectiveness

Abstract

Irrigated agriculture has led to aquifer depletion in many places, necessitating effective groundwater conservation policies to slow unsustainable water use. However, the success of conservation policies is contingent on complex interactions between agronomic production, aquifer response, and risk management tools, such as crop insurance, all of which shape a farmer’s groundwater pumping. This study uses an agent-based model to evaluate how uniform pumping restrictions and crop insurance, a popular risk management tool, jointly influence farmer decisions in the Sheridan-6 Local Enhanced Management Area (SD-6 LEMA) self-regulated region of western Kansas. Calibrated against observed data under widespread crop insurance coverage and LEMA regulation, the model captures farmers’ adaptive decision-making shaped by prior-year satisfaction. Scenario-based analysis reveals that pumping restrictions reduce groundwater withdrawals by up to 19.9% during drought years and modestly promote crop diversification, while crop insurance helps stabilize farmer income without substantially undermining conservation outcomes. These findings highlight that combining well-designed pumping limits with crop insurance can balance short-term agricultural risk management with long-term aquifer sustainability, offering transferable insights for groundwater governance in irrigation-dependent regions.