Editor’s note: David Zetland, a water
economist at the University of California, Berkeley offers an insider’s perspective into water politics and economics. We will be
cross-posting occasional posts and content from his blog, Aguanomics, here
on the Range.
I’ve been participating in an email discussion about Westland’s plan
to sell 50-100,000 acre feet of water to Metropolitan Water District (Spreck
broke the news; this
article gives more background).
This ag-to-urban, central-to-southern California sale upsets enviros.
Why?
- Westlands Water District has been making A HUGE FUSS
about how it needs MORE water. How is it possible now that they can be
selling water? (Short answer is that WWD has to sell it, to avoid losing
it from storage; the long answer is that WWD will eventually sell ALL
of its water to SoCal urban buyers. No, it’s NOT about the workers, food
or community. It’s about MONEY.) - MWD’s water has driven
SoCal sprawl, and more water means more lawns at MWD and more
sprawl into new housing developments. - Some enviros just dislike WWD (and other irrigators using imported
surface water); they want it shut down and its water left in the
environment/Delta.
I am not upset about these “business facts” (or even anti-ag
emotions), especially when water is going from willing sellers to
willing buyers, for beneficial use.
OTOH, I am not happy about this (prospective) sale:
- WWD water is subsidized.That
means that price may be too low and profits come out of our pockets. - A backroom sale does not allow others to bid. That’s not good from a
social perspective. - Feinstein and other politicians are writing
special rules, changing the definition of water rights to make them
worth more cash — and more water — when we have already overallocated
our water supplies. These special interest giveaways merely rob The
Public a second time.
My suggestion? WWD auction its “surplus” water to the highest
bidder and use the revenue to repay the money it spent to acquire it.*
The remaining money should stay at WWD, as a reward for its special
relationship with DiFi and others. (I don’t like those special
interest/lobbying rents, but I don’t think they should be taken away. We
need politicians who are brave enough to change the policies that
produce these rents. Anyone?)
Bottom Line: Water trading is good, as long as the good for sale
is clearly owned and the price reflects its real cost.
* It’s
interesting that they are talking about a water swap — 3 af today for 2
af in the future — instead of a cash sale. The swap makes sense for
three reasons: (1) They do not want to haggle over price (except that
“net af” of water), (2) they do not want the public to know how valuable
the water is if it WAS priced, and (3) they do not want to worry about
cash flows. OTOH, the swap creates a long term relationship (good!), but
also creates uncertainty. Will MWD be able to return the water in the
future? What if it’s dry for 5 years and MWD needs the water for
toilets, showers and lawns?
Addendum:
Tom Birmingham wrote me
an email on this post, and I am waiting for him to let me post it as a
comment. Until then, the gist of his comment is that this is a swap, not
a sale, and that MWD has the storage space to let it happen. I replied
that this swap seems a poor substitute for a market (in which WWD and
MWD would be able to buy and sell when and if they wanted), but a
necessary substitute given the current distribution of water rights — a
distribution that favors WWD and MWD over other water users.
Originally posted
at Aguanomics.
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