This paper examines how institutional structure shapes groundwater market participation using the evidence from the Oxnard Basin in Ventura County, California, where the first groundwater market under California’s SGMA was implemented. Using a farm-year panel of well-level extraction records linked to crop and land-use data, I show that agricultural production units have become increasingly concentrated. The internal reallocation of groundwater within the production units absorbs some marginal gains from formal market participation. The findings suggest that limited groundwater market trading may reflect institutional substitution rather than market failure, with implications for the design and evaluation of environmental markets.
