Deriving Value from Data, Analytics, and Paths to Markets
By Richael Young, CEO & Co-Founder Mammoth Trading
“We know more about the surface of Mars than we do about water use in our country.” Few lectures from college stand out in my memory, but I’ll never forget when my economics professor announced this startling fact. The United States of America — the epicenter of innovation and entrepreneurship and home to world leaders in science, math, and technology — does not track one of our most vital natural resources. According to the U.S. Department of Agriculture, only 25 percent of agricultural groundwater wells in California are metered. How do we know so little about a resource so critical to food security and the broader economy?
The State of California has since taken action to manage and monitor its groundwater. In 2014 the Legislature passed the Sustainable Groundwater Management Act (SGMA) aimed at curbing the damages of prolonged and extensive groundwater pumping — pumping that by many measures helped the State’s agricultural economy to weather the multi-year drought. Within the emergent regulatory context of SGMA, the collection of groundwater data is perceived by many as a threat to water security, a cut to the very lifeline that sustained agriculture when snowpack, streamflow, and water allocations were at all-time lows.
Experience worldwide has shown that good groundwater governance hinges on stakeholder acceptance and willing participation. Yet, one of the largest hurdles to SGMA’s successful implementation will be overcoming misconceptions around the collection and reporting of groundwater data.
One common misunderstanding around groundwater data collection is that its only purpose is as a regulatory control. Having spent a lot of time with agricultural producers — our country’s and State’s largest users of groundwater — I’ve come across this concern time and again. I’ve also heard uplifting — and perhaps, surprising — stories of that very data being leveraged to increase farm profitability. One producer told me that he was using 30 percent less groundwater than he thought he was; his pump had degraded significantly since it was installed. The insights into his combined energy and groundwater use led him to invest in a more efficient pump, saving him energy costs. The new pump has already paid itself off; this wouldn’t have been possible absent the collection and analysis of his pumping data. This story is not exceptional as we hear versions of it often.
The conflict between fear of data collection and actual experience gave rise to an idea: we need to paint a different narrative about groundwater data, because we are currently overlooking its value to the user. Groundwater data can be analyzed, benchmarked, tracked for performance, and valued in real time. Such insights are opportunities to invest in gainful upgrades, reduce pumping costs, and put groundwater to its best and highest use. Knowing how much we’re using is the key to understanding its value to the user and on the open market. It’s also key to how we as a State can manage it more efficiently and for the long term. Monitoring and managing groundwater are compatible with a thriving agricultural industry in California, but require stakeholder engagement and trust.
The development of groundwater analytics and markets can incentivize and reward the agricultural community to collect and profitably leverage groundwater data. We submitted this idea to Imagine H2O’s 2017 California Water Policy Challenge, hosted in partnership with the Milken Institute, and quickly discovered the concept had traction. Our company, Mammoth Trading, is partnering with private and public sector organizations, including the Environmental Defense Fund, Smart Water Metering, and the Daugherty Water for Food Global Institute at the University of Nebraska, to demonstrate the value of groundwater data to agricultural producers. Insights into groundwater use will spur technology adoption, reward good management practices, and enable more sophisticated policy solutions, such as groundwater markets and other incentive-based management, to achieve SGMA’s goals.
Agricultural producers are primary and important stewards of our land, water, and other natural resources. Let’s equip them with the tools needed for 21st-century food production and resource use so that we can promote water and food security within the State and Nation.
Mammoth Trading, with its partners, was a runner-up in the Imagine H2O 2017 California Water Policy Challenge. They are currently seeking partners to support the deployment of 100 groundwater meters across California for a two-year beta project.
Co-Founder and CEO Richael Young was a featured speaker at the 2017 Milken Institute Summit: California Leading on November 8th in Los Angeles.
Mammoth Trading develops the most advanced trading platforms for the exchange of surface water and groundwater in the world, known as ‘smart’ markets. To learn more about their efforts in California or elsewhere, visit their website at www.MammothTrading.com.