Posted on 01/26/2008 10:53:22 AM PST by LibWhacker
By GARANCE BURKE, Associated Press Writer Fri Jan 25, 4:15 PM ET
FRESNO, Calif. - With water becoming increasingly precious in California, a rising number of farmers figure they can make more money by selling their water than by actually growing something.
Because farmers get their water at subsidized rates, some of them see financial opportunity this year in selling their allotments to Los Angeles and other desperately thirsty cities across Southern California, as well as to other farms.
"It just makes dollars and sense right now," said Bruce Rolen, a third-generation farmer who grows rice, wheat and other crops in Northern California's lush Sacramento Valley.
Instead of sowing in April, Rolen plans to let 100 of his 250 acres of white rice lie fallow and sell his irrigation water on the open market, where it could fetch up to three times the normal price.
What effect these deals will have on produce prices remains to be seen, because the negotiations are still going on and it is not yet clear how many acres will be taken out of production. But California grows most of the nation's winter vegetables and about 80 percent of the world's almonds, and is the No. 2 rice state, behind Arkansas.
Environmental restrictions, booming demand for water, and persistent drought along the Colorado River have combined to create one of the worst water shortages in California in the past decade, and prices are shooting up in response.
The would-be water sellers include farmers who grow rice, cantaloupes and tomatoes around Sacramento and the San Joaquin Valley. Rice, in particular, requires a lot of water; the fields have to be flooded.
The farmers looking to buy water are generally farther south in the San Joaquin Valley and the Los Angeles area and grow such crops as pistachios, almonds and grapes. Because of the heavy capital investment they made in their trees and vines, these farmers cannot afford to stop irrigating their crops and let them die. In contrast, rice, melons and tomatoes are planted anew each year.
Individual farmers don't actually sell their water themselves. Instead, their local water districts represent them in negotiations with other water agencies.
"It's been a good decade since there's been this much interest in buying and selling water on the open market," said Jack King of the California Farm Bureau Federation. "We're prepared to see significant fallowing in several key parts of the state."
As for what this will mean for the cost of food at the supermarket, "it's still too premature to say where prices will settle, but I can say that virtually every agricultural district in the Sacramento Valley is thinking about selling their water this year," said Laura King Moon, assistant general manager of the State Water Contractors Association, which represents 29 water agencies.
Water from Northern California rivers irrigates central California's farm fields and keeps faucets flowing in the Los Angeles area. But it must be shipped south through a network of pumps, pipes and aqueducts, and that system recently developed a kink when a federal judge ordered new restrictions on pumping to save threatened fish.
At the same time, Southern California's other main source of water, the Colorado River, is in its eighth year of drought.
Because of the resulting shortages, Long Beach cannot run fountains, and restaurants there are not allowed to serve customers a glass of water unless they ask for it. Near Bakersfield, in central California, almond and pistachio growers will have to perform triage of sorts and decide which of their nut trees can be saved. And cities across California are drawing down underground supplies of water rather than buying it.
Water on California's open market typically sells for $50 per acre-foot in wet years. But now it is expected to go for as much as $200. Farmers, however, pay $30 to $60, rates that are set under state and federal policy. (An acre-foot is enough water to cover an acre to a depth of one foot.)
Because of rising costs, the huge water agency for the Los Angeles metropolitan recently proposed a rate increase for next year of 10 to 20 percent on the water it sells to cities.
Some environmentalists are troubled by farmers' efforts to sell their water, and warn that such deals don't begin to address the long-term problem.
"Essentially these farmers are getting water for a subsidized price and selling it to taxpayers at an elevated rate," said Renee Sharp of the Environmental Working Group.
Everyone thought Wally boy was completly off his rocker; kinda funny when you think about it now.
Save the environment now, return the Los Angeles area back to it's original native environment. Too many people with their swimming pools in a desert area, sucking the life out of California. Then northern water can stay in the north, and there wouldn't be shortages from the Colorado River. L.A. is the long-term problem.
No it isn't. The farmers are buying water at a cheap, subsidised price. They want to resell it at market rates. Let the farmers pay the full price and we'll talk.
Precisely. Rice is a crop best suited to very humid climates. There's no shortage of wate in California, just a shortage of water markets caused by idiotic federal and state politicians and bureaucrats.
This is the sort of free-market dogma espoused by people who haven’t actually studied the effects of diverting water to “the highest bidder.”
Here in Nevada, the Southern Nevada Water Authority is seeking to dry up entire valleys, one after another, running up the east side of the state. They’ve filed on all unappropriated groundwater, they’re buying up ranches and farms, etc.
The net:net effect is that economic development in these rural counties is halted forever. Their school systems will never have the growth in tax based from economic growth necessary to fund the school budgets. As a result, the school systems become wards of the state government. The taxpayers end up paying to transport the water, then pay for the effects of transporting the water.
Water should stay where it is. The Owens Valley is a prime example of what happens when cities “buy” water “for the highest and best use.” The taxpayers have been paying and paying and paying for that fiasco, and they’re going to keep on paying.
In the end, people have to learn that there are limits to urban growth. Water is the limiting factor. There comes a point where no more people will be able to move into an area and that’s that.
California created its own problem by refusing to allow desalinization plants to be built.
Ironically, if they still are desperate enough, there are better technologies being developed for desalinization now, that would permit it to be done using much less energy.
I remember that they were weeping and gnashing their teeth that desalinization would change the salinity of ocean water and confuse the wales and other sea creatures that use it to navigate.
The new technologies could probably be adapted so that once the salts were removed from the ocean water, they could be returned to the sea near where they were taken. But they would probably get terribly upset about that as well.
I suppose it’s not our fault if they just don’t grasp the whole “technology can make your life better” thing. But if they want to wear wooden shoes and eat lawn clippings, no skin off my nose.
Take away the sibsidies, that was my immediate thought too.
The solution to the problem is simple; stop the subsidies and let everyone pay market price.
Your general point is valid, but the reality is that residential water use is actually quite low compared to agricultural use. California’s biggest water problem is its farms, not its cities.
There has been major flooding in CA for the past 10 days, with even heavier rain and snow to hit tomorrow. This was posted in November. A lot has changed since then. Those farmers better start planting as soon as the soil dries out, because the water scare might be over for a while.
It is one of the few and necessary functions of government that it enforce property rights, and assist in codifying rational property rights when people come into conflict over what was the “commons”.
The West always had more conflicts over water, and developed an ad hoc property system that needs to be rationalized and fixed. It currently allocates more water than is available in low years and encourages wastage of water otherwise. We know a lot more about market systems now, and moving away from the semi-property right, semi-property of the commons system that we now have, to a full property right, market system is where we need to go to best allocate the use of the water.
So, food, shelter, and health care are all necessities. They should all be provided by the government? It has been tried many places, and it just doesn’t work.
If you are saying that the government should ensure that their is some kind of safety net... That is a whole ‘nother issue. But we are not talking about people going thirsty. With your example of Bill gates vs his neighbor, the current system is more like Bill cannot buy enough water for his pool, because all his neighbors have wasted so much subsidised water that rationing has been announced, and of course, pools are not on the “approved” list.
Do they have eminent domain? Are they forcing people to sell with a gun to their head? Could anyone else have filed on the “unappropriated groundwater”?
Give de man a ceegar!
It did go to the highest and best use: The Brits, having gave up their treasury and blood to liberate Europe, were entitled to a little untaxed Frenchie vin de ordinaire.
Why are we growing rice in the desert?
They’re powerful enough (thanks to Sen. Harry Reid’s son being on their board) that they can warp the law to their ends.
When they needed more money, they created an act that allowed the BLM to sell off public lands to developers and then divert 50% of the proceeds to an account to buy “sensitive lands” (which are always private lands with water they want - species or habitat considerations never enter into it). They just jack up the price as high as they need to buy out the pivotal ranch or farm in the area.
Unappropriated groundwater: Yes and no. Private users could have filed on it, but the politicians and environmentalists have blocked the Desert Land Entry conversion of public lands to private lands to make beneficial use of the water - so private use of the water is restricted. So the water remains unappropriated until the SNWA comes along.
But then the SNWA, being very politically powerful, has changed the state law to allow them to file on unappropriated water, then not use it (which would be required of anyone else filing on the water). The SNWA then simply pays a fee and updates their filing - for years and years (in some cases, nearly two decades), even if they don’t develop the water rights. Anyone else has five years to use it or lose it.
Long story short: Harry Reid (and his clan), coupled with California land developers who have moved into Nevada, have used the power of the federal government to take water from entire counties.
If you’ve ever farmed or ranched (and it is abundantly clear you never have), you’d also know that municipal water use gets a use preference over ag water use, which circumvents the “first in use, first in right” law of water. So the cities can buy up a junior water right, convert it to municipal use, and force other water rights holders to sell because when the cities over-appropriate the water in a basin/river/etc. They have a “more important use” and deep pockets to allow them to force forfeiture on more senior water rights holders.
Suffice to say, the free market bromides of “let the highest bidder win” are long-term economic disasters for both the private sector who has existing property rights and the taxpayers who have to clean up the mess decades after the fact. The “let the highest bidder win” is nothing but simplistic shorthand for “let the taxpayers of tomorrow put money in the pockets of real estate developers today.”
The Colorado River Compact suffers from the allocations being based upon high precip years.
Water rights are not “semi property right” - they’re full property rights. That is true of water rights going back to before the southwest was part of the US. There are water rights on ranches in Nevada that exist prior to 1848 and are recognized in treaty.
If they were full property rights, you wouldn’t have to ask special permission and get laws changed in order to sell your water to someone who wanted to buy it.
If you can do that, well, then more power to you. I was under the understanding that the water rights depended on the owner using the amount allocated to him, or the rest was forfeit to other users downstream.
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