California's water crisis: banking on thrift!

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The farmers of California's Central Valley don't have enough water for their crops this year...... yet again.  It happens year in, year out. The Economist's report on the problem says that the almond-growers are becoming so desperate, they have begun to trim their trees so they will survive on less water.  One farmer, Dan Errotabere, has left a quarter of his land fallow this year, getting rid of lower value crops. He now sprays his almond trees with a chemical retardent and plans to use some salty, boron-tainted groundwater.  A very dangerous tactic of course.  But he is desperate.

Desert: All this land was desert until the 1930s.  Famers discovered an ancient aquifer there in the 1920s and began massive pumping, according to Mark Reisner in his book, Cadillac Desert. Then President F.D.Roosevelt came along with his Bureau of Reclamation, to fund the huge Central Valley Project - a system of canals to bring the waters from the Sierra Nevada mountains, down to the Sacramento delta and pass them through a 400 mile canal for the entire valley.

At the time, it was an engineering marvel. 

Today, any map of California will show a irrigation network across the entire state. The Valley extends for 500 miles, between Bakersfield and Redding.  It supplies water to three million acres of farmland and two million consumers.  It has been hugely successful.  Its farms supply a quarter of all America's food.  The Economist estimates that in 2006,  this output was worth $31 billion, more than any other state.  In fact, it is more than the $25 billion earnt by Hollywood. People have got used to this abundance; and very few have thought about the profilgacy of using this supply. 

Until now. 

Warnings: For the last three years, the snow levels in the mountains have been low. A poor winter for one year might be a freak.  Three years of poor winters are serious.  Things are not going to change. Something has to be done to change Central Valley. But people have been saying that for years.

We've known that American agriculture wastes fifty per cent of the water it receives. Sandra Postel's essay - Water and Agriculture - in Peter Gleick's Water in Crisis book came out in 1993.  There have been many specific studies ever since.

Cypresso wrote a report on NowPublic last week, saying that the losses for farmers were $2 billion last year and could be $3 billion this season. 

Amyjudd reported in NowPublic in February that the silicon chip industry is also suffering from the shortage.  She described the similar water crisis last year. The San Francisco Chronicle (May 2, 2008):  "The East Bay Municipal Utility District announced in April that it was considering water rationing, price increases and other measures in response to critically low reservoirs. The district, which serves 1.3 million customers in Contra Costa and Alameda counties, will vote on the measures this month" (see postscript comment)*.

This year, Governor Arnold Scharzeneggar on Febnruary 27th said: “Even with the recent rainfall, California faces its third consecutive year of drought and we must prepare for the worst - a fourth, fifth or even sixth year of drought. Last year we experienced the driest spring and summer on record and storage in the state’s reservoir system is near historic lows. This drought is having a devastating impact on our people, our communities, our economy and our environment - making today’s action absolutely necessary. This is a crisis, just as severe as an earthquake or raging wildfire, and we must treat it with the same urgency". 

Well said, Arnie. He wants a twenty per cent drop in water usage. So the farmers are now left to wrestle with these new restrictions. But will restrictions really solve anything? 

California:  the prosperous state; the land of plenty. People in California have always been in a state of denial over their use of water. I remember meeting a Californian woman in Britain in the 1980s who said she and her partner were building a home in the desert.  All mod cons.  It surprised me at the time.  But, hey:  Californians innovate.  They were always good at thinking big.  Turning on the tap to transform a semi-arid area into a food basket, with these unlimited water supplies, with no thought for the future is surely foolhardy.  And overall water consumption in California has been heavy for years.

Cheap water: They should have seen this coming. Even when the Valley Water Project was first constructed in the semi-arid plain, the plan set off fierce political battles.  Roosevelt intended it to help small family farmers, but the big boys soon muscled in.  After all it was enormously lucrative. Jimmy Carter tried to warn people.  Yet he failed to get the problem sorted.  Says Reisner, "He failed to see how water flows uphill toward power and money."

For this reason (power), water for farming in California has always been cheap;  ridiculously cheap. In 2002, the water subsidy cost the state $ 416 million. According to the Environmental Working Group, this is what the 6,800 farmers in the valley received that year. That works out to an average of more than $ 7,000 for each farmer.

Indeed, Wolf Enterprises (Huron, Fresno County) received aq subsidy worth $ 4.2 million. The average price that farmers paid for the water that year was less than two per cent what the residents of Los Angeles paid for their domestic water. That amounts to one-tenth the cost of replacement water supplies, and about one-eighth what the public pays to buy its own water back to restore the San Francisco Bay and Delta.

Wasting it: Subsidised water causes huge problems.  Ones that farmers have no incentive to fix:  in the Valley, inefficient water use, severe pollution, as well as the destruction of wild life habitats.  Indeed, this year, state judges in California have cut pumping in order to protect delta smelt, an endangered fish.  And some of the canals in the valley are either closed or dry, including the canal that waters Dan Errotabere's land. The prospects in the Valley for its future farm production could be catastrophic. Farmers taking land out of production, at a time of recession, a loss of farm jobs and rising food prices. No wonder farmers in the area are desperate. The Economist describes how 'crowds of young Hispanic men loiter on street corners in the middle of the day'. This is serious stuff.  It needs radical solutions.

Serious thrift: It requires a change of California's mind-set.  There has to be some consensus that farmers in California need to make urgent changes. Some farmers have indeed thought more about drip feeding their crops.  Some are introducing these perforated hose pipesm laid on the ground and adjusted so the water trickles on each plant. Yes, this is a necessary adjustment.  But it depends on individual farmers taking action. 

So far, there is little incentive apart from self preservation. The state has just begun to ponder the finances. There is a growing market in water trades between farmers.  California state has now set up its first water bank for farmers north of the Sacramento delta.  They can choose to keep some of their land fallow and sell their water rights to other farmers further south.  The price to farmers in the Westlands Water District, says The  Economist, is likely to be about $500 per acre foot (the amount of water it takes to flood an acre of land one foot).  This is more than three times the price farmers paid last year.  It is a step in the right direction. At that price (set by the state) demand for water rights greatly exceeds the supply. It doesn't take an economist to figure out that the price is too low! 

Until it is raised to a level where demand and supply are equal, farmers will continue to misuse this valuable resource. It should only be used for high value crops. Rice and alfalfa can be grown elsewhere in area of water abundance. 

OK; it's the beginning of a system of rational allocations.  And it needs to be extended across the water region. Already, the world is developing exprtise in trading carbon credits rationally. A trade in water credits has been a long time coming. Hopefully, as farmers begin to pay a realistic price for what they use, they will start to decide their cropping in accord with these water costs, compared with what they can get for the produce. Water bank trading could be extended elsewhere in the US.  The Colorado Basin is an obvious region. The allocation of water between Mexico and the US over water from the Rio Grande is another. At least, things are going in the right direction.  At last.  

Post script (8th March)*:   

I included this quote from the East Bay District just to indicate how old hat is this kind of  thinking! Little wonder they've made so little progress!

David Molden, in Water for Food; Water for Life (2007, Earthscan & IWMI) probably gives the best vision yet for looking forward in tackling water scarcities. His first policy action (out of eight) is:  Change the way we think about water. We don't blueprints, he says, we need institutions that can recognise and tackle the conflicts over water and think 'outside the box' (not his words!).  After writing this piece, I looked around at stuff on water credi and water rights trading.  Australia has pioneered this for some time (1983?) yet the writers of the quote from the Valley Project authority seem to know nothing about these developments. In 1983 Australia considered the potential that could be derived by separating water access entitlement from land title, and trading the water rights between users. That is lateral thinking and will eventually be seen as a radical step in the right direction!

Nothing new in this:  bureaucrats are often caught up in their narrow politics!  When I joined a local authority housing department in London I was appalled by the ignorance of any progressive thinking outside local authorities!

As David Molden says:  Change the way we think about water and agriculture.