As supplies dry up, growers pass on farming and sell water

February 2008

U.S. Water News Online

FRESNO, Calif. -- In a state where water has become an increasingly scarce commodity, a growing number of farmers are betting they can make more money selling their water supplies to thirsty cities and farms to the south than by growing crops.

The shortages this season -- among the most intense of the last decade -- are already shooting water prices skyward in many areas, and Los Angeles-area cities are begging for water and coaxing farmers to let their fields go to dust.

"It just makes dollars and sense right now," said Bruce Rolen, a third-generation farmer in Northern California's lush Sacramento Valley. "There's more economic advantage to fallowing than raising a crop."

Instead of sowing seeds in April, Rolen plans to leave his rice stubble for the birds and sell his irrigation water on the open market, where it could bring up to three times the normal price.

"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, national public affairs manager for the California Farm Bureau Federation. "We're prepared to see significant fallowing in several key parts of the state."

Water from Northern California rivers irrigates most of the country's winter vegetables and keeps faucets flowing in the Los Angeles area. But it must be shipped south through a complex network of pumps, pipes and aqueducts, and that system recently developed a kink when a federal judge ordered new restrictions on pumping to save a threatened fish.

As Gov. Arnold Schwarzenegger and California legislators argue about how to solve the state's water crisis, the bottleneck has sent the demand for water soaring in cities and farming districts far to the south.

Residents of Long Beach can't run fountains, and it's now illegal for restaurants to serve customers a glass of water unless they ask for it.

Near Bakersfield, the shortages are expected to force some almond and pistachio growers to triage which of their nut trees should survive.

And cities across California are drawing down underground stashes meant to carry them through dry years just to avoid any new purchases.

The high premium for water has been especially painful for those served by Los Angeles' massive Metropolitan Water District, whose other main source of water, the Colorado River, is in its eighth year of drought. The agency recently proposed a rate hike for next year of 10 to 20 percent on the water it sells to cities.

Prices have jumped from the $50 per acre foot typical in wet years to as much as $200 per acre foot said Dean Reynolds, a scientist who oversees water transfers for the Department of Water Resources.

"We're moderately nervous," general manager Jeff Kightlinger said. "We haven't prepared ourselves should we run into really severe droughts, so we're trying to formulate that now."

Officials in the Southern California suburb of Maywood are protesting the price hikes, which they say will force them to put off fixing corroded pipes that leach manganese into the water supply. "You go to any water tap in Maywood and you open it up and it looks like iced tea," Mayor Felipe Aguirre said.

That kind of desperation is pushing up demand for water from farmers further north, especially in the green rice fields north of Sacramento and along the San Joaquin Valley's western edge. Well-supplied water agencies like Rolen's Glenn Colusa Irrigation District are looking to sell, trade or exchange their water in time for the spring planting season.

Some environmental groups say that isn't a viable long-term solution.

The problem should be fixed by retooling a decades-old formula that gives farmers a break on their contracted water, even in times of scarcity, they say.

"Essentially these farmers are getting water for a subsidized price and selling it to taxpayers at an elevated rate," said Renee Sharp, senior analyst with the Environmental Working Group, an Oakland-based nonprofit that tracks farm subsidies. "On the other hand, the more often water agencies are scrambling to buy water, the more they get interested in some creative solutions, like conservation."

So far, conservation efforts and a set of storms earlier this month have helped replenish dwindling reservoirs and stave off a need for rationing. But even Rolen, who expects to harvest a bumper crop next year after idling 100 acres of his rice fields, says selling water is only a temporary fix to the problem.

"The state is growing almost exponentially and we have never totally satisfied agricultural water needs in the San Joaquin Valley and the southern part of the state," he said. "I hate to say it, but the supplies that we have now are just tapped out on a good year."

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