Thursday, July 24, 2003

Water - 3 Short Subjects

1. Pirates rule

Ninja lovers aren't the only ones who follow their high seas high jinx. At least one Singaporean businessman considers the current increase in South East Asian pirate activity a leading economic indicator. He swears where there's pirates, there's a recovering economy. It may be true. There's a lot of semiconductor production in the area and I've recently received calls from two semiconductor services companies, looking for sales help.

2. Koi need water

Before you read the 3rd subject, just so you know I'm not a total hypocrite, my new koi pond is fed by a spring on our property! You might be able to make out the inlet, in the lower right corner of the picture. The pond is filling up right now. The spring isn't a very copious source - we're a week into the fill and will need at least 10 days to top it up. We haven't land- or water- scaped yet, so it will look nicer than these pictures when it's done.

3. "It has never been true that a water right includes the right to waste water." - Assistant Interior Secretary Bennett Raley

Environmental Entrepreneurs has embarked on an initiative to bring some logic to the California water allocations situation. Most of the following information is from them. It's a good outfit to support, if you can.

Over 40 years ago, the federal government signed water contracts to supply water to agricultural groups at prices far below the costs of delivering the water. As a result, some farms continue to produce crops worth less than the water they consume. Others have become water brokers - selling their subsidized water to cities produces far more revenue than farming. These contracts are now up for renewal.

It's time to do an honest reassessment on how water is used, while at the same time giving back the salmon their rivers. Large portions of the San Joaquin river run completely dry now, due exclusively to the hydro-construction necessary to distribute these ag-allocated waters. Every significant CA river system except one (the Consumnes) is being diverted, in some measure, for ag use. The Delta wetlands, once 4 million acres, is now only 300,000 acres.Chinook salmon populations have declined 90% since 1970.

It's surprising to me, but depending on how you measure it, 80% to 94% of California water is consumed in agricultural use. I will still put the water saving brick in the toilet tank, but domestic use accounts for only 4% of the total state water usage. Even a slight 5% improvement in agribusiness water usage efficiency would be the equivalent of the state's total domestic water use.


What is a fair price to pay for water? Take a look at the following chart, comparing three agricultural water districts and three cities. The first three prices are for highly subsidized water. The last three are actual market prices. The water sold to Glenn-Colusa for $2 costs $26 to deliver.

Of course some farmers use water efficiently, producing high value crops. But others can only exist if water is free or nearly free. As an example, take alfalfa. It's a particularly low value crop to produce in the arid California climate. Yet alfalfa uses 14% of the land and 25% of the state's irrigation water, while producing only 4% of the agricultural revenue. Alfalfa is used primarily as a feed crop for cattle. That next Big Mac you eat impacts more than just an unfortunate cow.

Compare average water costs as percent of total production costs for the following California crops:

Average Water Cost as a % of Total Production Cost

 Wine Grapes5%
Sugar Beets12%

It just doesn't make sense to try to grow 'wet' crops in an arid climate.


Let's also consider the cost to build and maintain the state's water delivery system. It is dramatically subsidized by, yes, the taxpayer. As an example, in the 50 years of the Central Valley Project, only ~5% of the taxpayers' investment of $1.611 Billion has been repaid. If we could get the same deal on an average $450,000 Bay Area home, the mortgage payment would be only $75 per month.

The federal government's current water contracts waste water, damage aquatic ecosystems, deplete fish and bird populations, degrade drinking water quality, waste taxpayer money and reduce available supplies for more profitable uses of water.


The Solution

The current water contracts make no sense. All of the federal government's Central Valley Project water contracts are currently up for renewal. The federal agency in charge, the Department of the Interior, has announced its intention to renew all contracts before November 2004. Renewed water contracts should include the following reforms:

· An end to water pricing subsidies

· The establishment of realistic water quantities

· Enforced compliance with existing state and federal environmental

The purpose of the original subsidy has been met. These agricultural water users have become well established over the past 40 years and should be ready to be financially independent. In most cases, the agribusiness can afford higher price by investing in water efficiency, planting higher value crops or retiring marginal land that is not economically viable.

As always, if you're concerned, write your legislators.


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