Executive Summary

In proposing the Water Legacy Act, Gov. Jennifer Granholm is attempting to increase state regulation of groundwater use through a costly and intrusive permit regime. If enacted, this drastic change would upend longstanding water rights and further weaken Michigan’s economy.

According to the governor, Michigan currently lags other Great Lakes states in controlling groundwater withdrawals, as well as in preventing diversions of surface water and groundwater outside the basin. The Water Legacy Act, now pending in the Legislature, supposedly would fulfill the state’s obligations to preserve and protect a threatened natural resource and bring Michigan into partial compliance with the so-called Annex 2001, a voluntary regulatory code under consideration by the eight states and two Canadian provinces that cooperatively exercise jurisdiction over the Great Lakes.

"We are the only state that hasn’t lived up to its end of the bargain," the governor stated in unveiling her proposal to the Legislature. "If we do not take action to regulate withdrawals of water from the Great Lakes Basin, those who are already eyeing our treasured lakes as the solution to their water shortages will begin arriving with their pumps and hoses to take their bounty home."[1]

The importance of water supplies to Michigan and its neighbors demands caution in its regulation. The lives of thousands of property owners, and the livelihoods of millions more, would be jeopardized by ill-conceived government actions. The Mackinac Center for Public Policy thus examined Gov. Granholm’s arguments for so radical a change in water law, as well as the likely consequences of the proposed regulatory crackdown. Our findings on these matters argue against enactment of the Water Legacy Act.

Michigan is not a regulatory backwater, as the governor contends. Legal mechanisms already exist to protect groundwater supplies and limit large-scale diversions from the Great Lakes. Our review of statutes throughout the region found only a single instance of a regulatory scheme as stringent as that proposed by the Granholm administration. Moreover, the governor’s proposals to restrict water diversions far exceed the draft rules of Annex 2001.

Also inaccurate is the governor’s characterization of the Great Lakes as "more threatened today than perhaps they have ever been."[2] The truth is, more water is diverted into the Great Lakes than is siphoned out,[3] and groundwater supplies are regularly replenished and remain abundant. The Michigan Department of Environmental Quality recently characterized the water quality of Lakes Superior, Michigan, Huron and Erie as "good to excellent."[4]

Notably lacking from the governor’s plan are the scientific underpinnings so necessary for sound policy. Yet in a matter of months, a statewide mapping of groundwater supplies and an evaluation of existing government controls are slated for completion by the Groundwater Conservation Advisory Council, which was established by the Michigan Legislature in 2003. At the very least, lawmakers should delay consideration of the governor’s proposal until the council reports its findings.

It is also premature for the governor to attempt to codify elements of the draft Annex 2001. As Dave Naftzger, executive director of the Council of Great Lakes Governors, recently said, the provisions of the draft annex "remain a work in progress and are continuing to evolve. Changes are being considered to reflect the numerous public comments we received. … [A]lmost all of the key issues of the draft agreements are being carefully reexamined."[5]

The proposed regulatory scheme also wholly ignores market-based incentives, such as tradable water rights, as a stewardship method. But incentive programs have proven far more effective than a flood of government dictates in conserving and protecting natural resources. According to water researchers Clay J. Landry and Laurel E. Phoenix, "[T]here is a broad recognition and understanding among researchers and policy makers that well defined property rights to resources such as water are fundamental to giving people the proper incentives for sustainable management."[6] In fact, to the extent water shortages loom or exist, government mismanagement is largely to blame.[7]

Stewardship of our waters can and should be improved, of course. The proliferation of non-native species throughout the Great Lakes ecosystem presents difficult challenges. Also, the United States and Canada have identified 14 areas within Michigan’s jurisdiction in which water quality does not support a full range of uses.

The Granholm administration and the Michigan Legislature would do well to focus attention on real environmental problems and resist the impulse to indulge in ill-conceived regulation that would do more harm than good to Michigan and the remarkable Great Lakes.