Ellen Bruno

Ellen Bruno did not set out to study water. Growing up, her mother managed a water utility, so the world of pipes and rates was always there in the background, but the spark came in college, in a single class on the economics of ocean resources. What grabbed her was the idea of the tragedy of the commons, the way a shared resource like a fishery gets overused because no one individual pays the full cost, and the more hopeful flip side of it: that you can sometimes re-design the incentives so that market forces start working in favour of the environment instead of against it. She has been chasing that idea in water ever since.

Ellen Bruno is what universities call an economist in Cooperative Extension, which is a job with two halves. One half is original research, and the other half is outreach, taking what the research finds and translating it into something a farmer, an irrigation district, or a state policymaker can actually use. That second half matters here, because her whole subject is a policy problem with real money on it. In 2014 California passed the Sustainable Groundwater Management Act, usually shortened to SGMA, which for the first time told groundwater basins across the state that they have to stop draining their aquifers and reach balance. That sounds reasonable until you are the farmer being told to pump less, and the question Bruno works on is the uncomfortable one underneath it: when you have to cut water use, how do you do it in the least painful way possible?

Ellen Bruno's answer, and the reason she came on the show, is water trading. The logic is the kind economists love and everyone else finds slightly suspicious, so it is worth walking through. If the state simply orders everyone to cut by the same amount, it hits the grower of low-value forage and the grower of high-value almonds equally hard, even though the almond grower would happily pay far more to keep that water. A market fixes the mismatch: the grower who values the water least sells his allocation to the grower who values it most, money changes hands, and both of them come out ahead of where the flat cut left them. As she puts it, no one trades unless it is in their own interest, so all a market does is let those beneficial swaps happen. The gain from all those voluntary trades, added up across a basin, is what makes trading cheaper for everyone than a blunt across-the-board mandate.

Ellen Bruno backed that argument with one of the harder numbers in the field. To design any of this, a regulator first needs to know how sensitive farmers are to the price of water, what economists call the price elasticity of demand, and in California almost nobody had measured it, because groundwater is rarely metered and even more rarely priced. Bruno found a workaround in the Coachella Valley, one of the few basins that both meters its wells and charges a flat fee of about $64 per acre-foot, and with seventeen years of that data she and her co-author estimated the elasticity at roughly -0.2. In plain terms, push the price up by 10 percent and pumping falls by only about 2 percent, because water is a required input and you cannot simply decide not to irrigate a crop you have already planted. That inelasticity is exactly why a flat price or a flat cut is so costly, and why being able to reallocate water through trade is worth so much.

Ellen Bruno is careful not to oversell any of it, which is part of why she is worth listening to. She is the first to say that trading is one instrument, not a cure, that it will not fit every basin, and that her own estimates rest on simplifying assumptions, as all such research does. Her larger frame is that water scarcity is increasingly a climate problem, made more variable and less predictable than the models we inherited, and that the economists' job is to give the people writing the rules the clearest possible picture of what each choice will actually cost. You can hear the full conversation, including how a groundwater market would work in practice, in her episode on California's $580-million question.

“When we think about water trading, it's to sort of make that transition to a restricted environment easier. So we have to cut back, and how can we do that in the least painful way possible? And that's by taking this scarce resource and using it in the most efficient way amongst those who are using it.”

Ellen Bruno is, in the end, the economist who puts a price tag on water-policy choices before anyone has to live with them, which in a state learning to share a shrinking aquifer is a quietly indispensable thing to be.