I looked it up because I thought there was no way that it could be true, you must've missed some important detail. But no, the article says exactly what you said it does.
What a perfect example of the intersection of the free market and the tragedy of the commons.
It's a tragedy of the commons until you charge market prices for water.
Privatization, regulation, collectivization, adaptive fees / "market pricing" - these are solutions proposed to situations which resemble the tragedy of the commons, in order that we can avoid the worst case scenario associated with continued individually-incentivized over-exploitation.
The term refers to situations where these incentives operating on a common good line up in a way which is potentially self-destructive to the system - not strictly to situations where they've already destroyed the system.
It's a tragedy of the commons because groundwater is legally a common resource that anyone can exploit as they see fit. You can't charge market prices for it without changing that picture and declaring that someone else (eg the state) has a property interest in the groundwater, at which point it's no longer in the commons.
Yes, if you start charging for the 'common', then you can avoid the tragedy of the common. They would first have to outlaw pumping your own water in order to start charging market price for it.
I looked it up because I thought there was no way that it could be true, you must've missed some important detail. But no, the article says exactly what you said it does.
What a perfect example of the intersection of the free market and the tragedy of the commons.