As water scarcity has intensified in many places of the Western United States, scholars and water resource managers have increasingly reconsidered the appropriateness of exempting from state permitting processes the water withdrawals from domestic wells.  Kittitas County, Washington, which initially removed the exemption on July 16, 2009, serves as a deviant case in the population of failed recent attempts to reform domestic well exemptions.

While previous studies have simulated the impact of this regulation on future development (Balleau and Silver, 2005), assessing the Rule’s effectiveness remains a subject of hypothetical debate (Titus, 2005).  This study constitutes the first ex post policy analysis of the development impacts of removing the domestic permit exemption. To date, water resource managers have addressed exempt water uses through substitute policy tools that less directly regulate groundwater extraction, such as metering provisions, well spacing requirements and reduced exemption thresholds (Bracken, 2010; 2011). Compared with these alternative policies, removal of the exemption constitutes a hard “cap” on water demand. Where previously proposed in New Mexico and Oregon, the Rule has been accompanied by heated concerns that removing the exemption will impede rural development by making it more difficult for rural properties to acquire domestic water. This article discusses how the exemption has been removed in Upper Kittitas in an attempt to assess the extent to which this is a valid concern.

To do so, I employ a negative binomial difference-in-difference model of new well counts (rural development measure) throughout Kittitas County. The model estimates the number of new wells drilled per month (counts), and includes 792 month-years from 1980 – 2013.  The model controls for drought, home prices, income, population, as well as year and quarterly fixed effects. The DID model uses the lower County as a control; the upper County as the treatment, and a “synthetic” upper County control simulated using the synthetic control method (Abadie et al, 2009).  

There were an average of 16 new wells drills per month in Kittitas County over the study period. A public records request for mitigation contracts filed with the Washington State Department of Ecology shows that since the regulation took effect, the initial cost of acquiring previously-exempt, domestic water has risen by $7,000 - $11,000 per household. I find that the regulation has had a small but significant influence on rural development by decreasing the expected number of well counts by between 0.5 – 1 well per month (p < 0.1; 90 % confidence interval). A portion of the recent impacts on rural development can be attributed to the 2007 housing crash, which predated the Groundwater Rule by approximately two years. 

The synthetic control method shows that recent trends in wells drilled in Kittitas County are generally in line with rural development trends in other counties in Washington State (n = 16,155 month-years). This study suggests that previous development concerns may have been overstated. The work provides modest support for more aggressive approaches to regulate exempt water withdrawals in scarce water basins.