Water marketing is the transfer or sale of water or water rights
from one user to another, typically from an agricultural to an
urban water agency, often without investing in new infrastructure
The worsening drought has canceled a large water sale to West
Side farmers by the Oakdale and South San Joaquin irrigation
districts. They announced Wednesday that their own
customers will need the water, which had been declared surplus
in early March. A revised forecast of Stanislaus River runoff
scuttled the sale, which could have brought up to $25 million
to the sellers.
Water is one of the world’s most vital resources. So is there
reason to freak out now that profit-hungry hedge funds and
other investors can trade it like a barrel of oil or shares of
Apple? That’s exactly what CME Group recently did in California
when it launched the world’s first futures market for water in
December 2020. Put simply, a futures market lets people place
bets on the future price of water.
-Written by Ellen Bruno, of University of
California, Berkeley and Heidi Schweizer, of North
Carolina State University.
Despite market unknowns created by the pandemic and lower
commodity prices, California agricultural land values remained
largely stable, an indication buyers have confidence in the
long-term land market in the state: This was a key takeaway
from a virtual business conference held by the California
Chapter of the American Society of Farm Managers and Rural
Appraisers. The conference also discussed impacts of the
Sustainable Groundwater Management Act on California land
values. Even though record supplies of the state’s
highest-value crops led to lower prices for farmers last year,
appraisers said the softer prices also helped move those
products.
A barely-noticed action early in March by the San Luis Obispo
County Board of Supervisors likely has placed greater control
of the region’s water supply in the hands of a few individuals
and private water agencies. On a split 3-2, north-south vote,
supervisors on March 3 approved an amendment to the county’s
contract with the state of California for deliveries from the
State Water Project (SWP). An approval that creates the
opportunity, some say, for a controversial practice called
“water banking.”
Rural water users are panicking over a proposal to create a
market for the sale and purchase of water rights in Nevada,
unconvinced by arguments that the concept would encourage
conservation. Lawmakers on Monday weighed whether so-called
“water banking” would be preferable to prevailing water law
doctrines that govern surface and groundwater rights disputes
in the driest state in the U.S. A legislative hearing about two
proposals to allow water rights holders to sell their
entitlements pitted state water bureaucrats against a coalition
of farmers, conservationists and rural officials.
A groundwater market, which caps total pumping within one or
more basins, allocates portions of the total to individual
users and allows users to buy and sell groundwater under the
total cap, is a promising tool for basins implementing
California’s Sustainable Groundwater Management Act
(SGMA). … [G]roundwater markets can be a useful tool for
achieving basin sustainability, but they are not a good fit for
every basin or groundwater sustainability agency (GSA). … The
Fox Canyon groundwater market benefitted from the four enabling
conditions (water scarcity, fixed allocations, agricultural
stakeholder support, and capacity and funding) described below.
California has recently established a water futures market that
has brought with it some criticism as well as confusion. As the
first of its kind in the country, it will function similarly to
futures markets for other commodities. The market will allow
water users to lock in a particular price they are willing to
pay for water. This new futures market is entirely different
from water markets that allow the purchasing of water
allocations.
In California’s Water Futures Market: Explained, Cora
Kammeyer describes how futures markets
operate generally and the particulars of California’s
version. This new water futures market has attracted
considerable attention and hyperbole. Here we explore the
potential implications of this novel financial tool
through the lens of California water supply
reliability. The water futures market opened on
December 7, 2020, intended to improve the transparency of
water trade prices and to enable participants to hedge
their financial risk.
Water access in the western United States is controlled by
property rights to use water. In most of the region’s
watersheds, all of the water supply is legally claimed or is
projected to be by 2030. In such locations, new water demands
can frequently only be met through reallocation of existing
water rights. For decades, water markets have helped the
western U.S. voluntarily adapt water rights to new demands and
changing supplies, providing water for growing cities,
freshwater ecosystems and new farms and industries. However,
many have questioned whether western U.S. water law provides
sufficient flexibility to adapt to unprecedented water demand
and a changing climate.
In times of drought, California’s Central Valley is full of
farmers hindered by the lack of water. And this region, where
the bulk of the nation’s fruits and vegetables are cultivated,
is driving up the demand for water. Although many farmers
without easy access to water often buy and pump it in from
their neighbors, droughts often fuel massive price increases.
And this often makes water so cost-prohibitive that it can
discourage farmers from even planting crops. This predicament
led a firm to recently list water as the newest commodity on
the Chicago Mercantile Exchange. Now, water futures are traded
daily. This helps farmers lock in a price for water, so they
have a cushion if a drought threatens their crop revenues.
California water has joined gold, energy and bitcoin as a
commodity whose future value can be traded on a financial
exchange and the first market trades on water futures took
place three months ago. The market, based on values determined
by NASDAQ’s Veles Water Market Index, was hailed by some as a
useful tool so California farmers can reduce the risk of
drought-driven escalation in water costs. It was sharply
criticized by others, from a United Nations representative to
racial justice groups as potentially limiting access to
something essential to life.
It’s not long ago that Lake Cachuma, the main water source on
the South Coast, was in danger of going dry in a seven-year
drought. Water agencies from Carpinteria to Goleta spent
millions of dollars scrambling to buy surplus state aqueduct
water from around the state to avert a local shortage. They did
so not only because their groundwater levels were plunging and
Cachuma was failing, but because their yearly allocations from
the aqueduct had dropped to zero. Yet on Tuesday, the water
managers serving Santa Maria, Buellton, Guadalupe, Santa
Barbara, Goleta, Montecito and the Santa Ynez and Carpinteria
valleys will ask the County Board of Supervisors to grant them
the right to sell their state water allocations outside the
county — not permanently, but potentially for years at a
stretch.
This month, the comment period for a potentially landmark piece
of legislation ended. Since California v. Arizona in 2000, the
Colorado River Indian Tribes have the sole rights to more than
600,000 acres-feet of water from the Colorado River, but they
are barred from selling or leasing any of this water to outside
communities. The proposed federal legislation, led by
the tribes themselves, would allow them to lease some of this
water as long as they reduce their own water consumption by an
equivalent amount.
-Written by Isaac Humrich, a senior at Sunnyslope High
School in Phoenix and a member of American Conservation
Coalition.
On December 7, 2020, financial futures based on California
water prices began trading. This post is a short introduction
to these water futures. First, what’s a future? A future is a
type of contract. It obligates the seller, who receives money,
to provide some good at some future date, to the buyer, who
pays money now to lock in the right to buy that good at that
price. Humans have been using futures for thousands of years,
primarily for agricultural products. But in recent years the
futures markets have been expanding.
A recently launched water futures market in California
drew global attention, from Wall Street to
the United Nations. While news of the market has
brought both skepticism and speculation, much
of the coverage has failed to address
some fundamental questions: what actually is a water
futures market? How does it work, and who are the
players? And most importantly, what are
the potential benefits and risks? In this short
piece, we explain the California water futures market in simple
terms. We will explore its potential
implications in a second blog soon.
Climate change and extreme weather events are forecast to
further reduce water supplies in the American Southwest, and a
new futures market could allow water users to recoup losses if
the price of water spikes. The futures market is the first of
its kind, allowing investors and farmers alike to bet on how
much water in California will cost on a future date. Water
users buy the futures contract to avoid risk and hedge against
rising water prices affected by things such as droughts.
A recent webinar on trading of guaranteed future water prices
on the stock market showed the potential to drive up the price
tag of water for public agencies. During a Feb. 2 California
Department of Food and Agriculture (CDFA) virtual meeting,
water stock market advocates were clear that prices would rise.
However, they stated that it would be a good thing, because
water has been undervalued and therefore wasted. Their approach
would encourage more efficient use of water, they told the CDFA
board.
There has been recent commentary and discussion around a
commodity futures market for water in California. In the
Sacramento Valley, we are not involved in this process; nor are
we participating in these contracts. Although we are not
entirely clear on this market or what is being traded, it is
clear that this new market does not involve real/wet
water–which is our focus in the Sacramento Valley. We will
continue to focus on serving water for cities and rural
communities, farms, fish, birds, other wildlife and recreation.
Imposing hefty taxes on speculative water sales, requiring that
water rights purchased by investors be held for several years
before they can be resold, and requiring special state approval
of such sales are three ideas that might help Colorado protect
its water resources from speculators. The ideas were discussed
Wednesday at a meeting of a special work group looking at
whether Colorado needs to strengthen laws preventing Wall
Street investment firms and others from selling water for
profit in ways that don’t benefit the state’s farms, cities and
streams.
Investors, farmers, and Reddit users can now all hedge bets on
the price of water in California thanks to the launch of the
first water futures market in the country late last year. It
represents a new financial outlook on water in California — one
driven by the market. Since its launch Dec. 7, the futures the
market has seen 180 trades — equivalent to over 550 million
gallons of actual water. But the water futures market has
nothing to do with the movement of real water: it’s just about
money.
Water futures and groundwater trading was the central focus of
the most recent meeting of the California State Board of Food
and Agriculture. Several panelists and speakers weighed in on
how a water trade system like that would impact farmers and
ranchers.
A major water banking proposal northwest of Bakersfield that
won coveted Proposition 1 funding in 2018, was hit by two
lawsuits earlier this month, one claiming it is nothing more
than a wolf in sheep’s clothing intent on selling Kern River
water to southern California. The City of Bakersfield and
the Kern County Water Agency filed separate complaints Feb. 2
against the Kern Fan Groundwater Storage Project seeking to
have the project’s recently approved environmental impact
report deemed inadequate. …
Coastal cities and farming regions can maximize supplies by
teaming up. And it could help with critical infrastructure
funding and upgrading water trading policies.
[T]he president of New York-based hedge fund Water Asset
Management … has called water in the United States “a
trillion-dollar market opportunity.” The hedge fund invested
$300 million in farmland in Colorado, California, Arizona and
Nevada as of 2020, including $16.6 million on 2,220 acres of
farmland with senior water rights in Colorado’s Grand Valley
just upstream from where the Colorado River crosses into Utah.
The volatility of stock market trading has made global
headlines over the past couple of weeks thanks to the frenzy
surrounding a US video games retailer. It’s a dizzying yarn of
Reddit vigilantes taking coordinated action to bankrupt hedge
funds that were short selling GameStop stocks, resulting in
rollercoaster share prices, trading restrictions and US
congressional hearings. It provides a stark illustration of the
absurdity of the stock market, and yet, late last year, the US
state of California decided to allow water to become a tradable
commodity.
Mayors and county supervisors in towns along the Colorado River
were already upset five months ago when the state water
agency endorsed an investment company’s plan to take water
from farmland near the river and sell it to a growing Phoenix
suburb. Now, they’re incensed that the agency, which initially
suggested holding back a large portion of the
water, changed its stance and will let the company
sell most of the water to the town of Queen Creek. Elected
leaders in communities along the river say they intend to
continue trying to stop the proposed deal, which would need to
be approved by the federal Bureau of Reclamation.
California’s increasingly volatile warming climate is making
droughts more intense, and complicating water management. A
just-launched commodity futures market for the state’s water
provides a new tool for farmers, municipalities and other
interested parties to ensure against water price shocks arising
from drought-fueled shortages. Taking a Wall Street approach to
an essential natural resource has prompted both fear and hype.
Will California experience a new Gold Rush in water? Will
speculation boost the cost of water? Perhaps both the fear and
the hype are unwarranted. -Written by Ellen Hanak, economist and director of the
Public Policy Institute of California’s Water Policy
Center.
The calls came in shortly after the story in The New York Times
announced Wall Street was on the prowl for “billions in the
Colorado’s water.” … The national story raised hackles
across Colorado. It defined agriculture as a “wrong” use of
Colorado River water and detailed a growing swarm of investors
eager to inject Wall Street’s strategies into the West’s
century-old water laws. The idea of private investment in
public water has galvanized the state’s factious water
guardians.
Former U.S. Rep. Sam Farr is calling for the Marina Coast Water
District to be investigated for fiscal mismanagement and merge
with the Monterey Peninsula Water Management District, even as
the district is involved in a lawsuit that has successfully
challenged its water rates and could have implications for the
entire Ord Community.
For almost 230 years, agricultural commodities have been bought
and sold in New York’s finance district. Now the NASDAQ stock
exchange – which celebrates 50 years of activity next month -
has put a price on our most vital substance: water contracts
for five water districts in drought-prone California are being
bought and sold.
As COVID started to spread, farmers and large cities in
Southern California were hit with another blindside last March.
Fires, drought, and the planting season drove up the price of
California’s water market, over 220 percent in just three
months. Crops failed and pastures were lost. In September, CME
Group Inc vowed to create a new market to help with the
risk of these price swings. Last month, the first contract
connected to the future price of California’s $1.1 billion
water market was inked. -Written by Will Rinehart, a senior research fellow at the
Center for Growth and Opportunity at Utah State
University.
The old axiom goes, “Whiskey’s for drinkin’ and water’s for
fightin’” — it reflects the never-ending horse-trading that
involves distribution of water in the arid Southwest and the
tug of war between the region’s agricultural communities and
the ever-growing urban centers, including Las Vegas, Phoenix
and areas of Southern California. Traditionally, water rights
have been brokered by state and local governments, as well as
regional water districts. This is changing, though, as private
equity firms have been purchasing water rights in localities
along the Colorado River, from the Western Rockies through the
valleys of Southern California.
There is a myth about water in the Western United States, which
is that there is not enough of it. But those who deal closely
with water will tell you this is false. There is plenty. It is
just in the wrong places…Transferring water from agricultural
communities to cities, though often contentious, is not a new
practice. Much of the West, including Los Angeles and Las
Vegas, was made by moving water. What is new is for private
investors — in this case an investment fund in Phoenix, with
owners on the East Coast — to exert that power.
The San Joaquin Valley, which can be regarded along with arid
urban Southern California, as the table on which this game is
to be played, has always rested on two absolute poles: every
inch of farmland is for sale; and water runs uphill to money.
This derivative market, far from “rationalizing” water
distribution in the state, is going to disturb the magnetic
field that is the Prime Mover and Original Cause of all
economic activity in our region. -Written by Bill Hatch, who lives in California’s Central
Valley and is a member of the Revolutionary Poets Brigade of
San Francisco.
It’s not just Californians paying attention to the state’s
water supply anymore. It’s Wall Street. In a sign of the
growing value of water in a warming world, investors began
trading futures of the coveted commodity, tied to California
water prices, for the first time last week. The novel
marketplace allows speculators to make money betting on future
prices of California water while allowing farmers, businesses
and municipal suppliers to hedge against price swings and
stabilize their costs.
The United Nations said Wall Street’s new water futures risk an
essential public good being treated like gold and oil, leaving
the market vulnerable to a speculative bubble.
For the last 100 years, water in the American west has rarely
been priced on the open market. Water rights were bought and
sold through private contracts and government deeds, and public
agencies doled out most of the coveted commodity. On Dec. 7,
trading began in the first futures market for water. Farmers,
businesses, and investors can now pay to lock in the future
price of water in California.
Farmers, hedge funds and municipalities alike will be able to
hedge against — or bet on — potential water scarcity starting
this week, when CME Group Inc. launches contracts linked to the
$1.1 billion California spot water market. The contracts, a
first of their kind in the U.S., were announced in September as
heat and wildfires ravaged the U.S. West Coast. They are meant
to serve both as a hedge for California’s biggest water
consumers against skyrocketing prices and a scarcity gauge for
investors worldwide.
Join us as we guide you on a virtual journey through California’s Central Valley, known as the nation’s breadbasket thanks to an imported supply of surface water and local groundwater. Covering about 20,000 square miles through the heart of the state, the valley provides 25 percent of the nation’s food, including 40 percent of all fruits, nuts and vegetables consumed throughout the country.
This virtual experience focuses on the San Joaquin Valley, the southern part of the vast region, which is facing challenges after years of drought, dwindling water supplies, decreasing water quality and farmland conversion for urban growth. The tour gives participants an understanding of the region’s water use and issues as well as the agricultural practices, including new technologies and water-saving measures.
Getting water through a tunnel under the Sacramento-San Joaquin
Delta would be pricey. So pricey, some Kern County water
districts were looking for an “off-ramp” by potentially selling
their main state water supply out of the county. The request
was shot down on Nov. 6 by the Kern County Water Agency, which
holds the contract for state water on behalf of 13 area water
districts.
There’s a concept called “demand management” in the news in
Colorado, and here’s a simple definition: Landowners get paid
to temporarily stop irrigating, and that water gets sent
downstream to hang out in Lake Powell. It’s an idea long talked
about because of increasing drought and the very real danger of
both Lake Mead and Lake Powell dropping into “dead pool” where
no hydropower can be generated.
Mexico is obligated under a 1944 treaty to deliver to the
United States a set amount of water from the Rio Grande and its
tributaries over a five-year period. … The last-minute
agreement signed Oct. 21 settles the conflict. Mexico will
transfer ownership of water stored in two border reservoirs to
the United States to make up the deficit.
The San Joaquin Valley and urban Southern California are worlds
apart in many ways. Yet each face growing water challenges and
a shared interest in ensuring reliable, affordable water
supplies to safeguard their people and economies. Both regions’
water futures could be more secure if they take advantage of
shared water infrastructure to jointly develop and manage some
water supplies.
Water itself isn’t just an economic policy issue and risk
arising from population growth and climate change. Julie Moret,
our global Head of ESG, outlines how water is impacting the
day-to-day operations of investee companies and how they are
thinking through their own business models and business risk.
Protecting the health of California’s rivers, estuaries, and
wetlands has been the grandest—and perhaps thorniest—of the
many challenges facing the state’s water managers. The San
Joaquin River watershed, the state’s third largest and an
important water source for irrigating farmland in the San
Joaquin Valley, epitomizes this challenge. Yet California is
making progress here, bringing a glimmer of hope.
The supply and demand of California water are geographically
and seasonally disconnected, a trend that could be exacerbated
by climate change. Agriculture, urban and environmental use
compete for limited supply in the state’s $1.1 billion water
market.
At the Western Groundwater Congress hosted online by the
Groundwater Resources Association, Audrey Arnao, an associate
with WestWater Research, gave the following presentation on
California’s surface water market, covering prices and trading
activity in recent years and providing a forecast of spot
market transfer prices in 2021.
To inform landowners about their water budgets, Rosedale-Rio
Bravo Water Storage District in Kern County partnered with EDF,
Sitka Technology Group, WestWater Research and local landowners
to co-develop a new online, open-source water accounting and
trading platform. We asked general manager Eric Averett to
answer a few questions about how the platform…
The Georgetown Divide Public Utility District reported Sept. 23
that its release of 2,000 acre-feet of water from Stumpy
Meadows Reservoir to be transferred to the Westlands Water
District has been successfully completed.
Climate change is affecting natural resources in California,
with water being one of the most important in the state. Water
source is critical for municipalities, agriculture, industry,
and habitat/environmental purposes. Will future supply meet
future demand? How will the economic value of water change over
this century?
Investors will be able to make wagers on the price of water
later this year with the launch of futures contracts, which are
expected to better balance supply and demand for the commodity
and hedge price risks. … The index, itself, sets a weekly
spot rate price of water rights in California, the majority of
which are owned and managed by water districts that deliver
water to individual farms…
By 2030 we will be water positive, meaning we will replenish
more water than we use. We’ll do this by putting back more
water in stressed basins than our global water consumption
across all basins. … We will focus our replenishment efforts
on roughly 40 highly stressed basins where we have
operations….Our new Silicon Valley campus, opening later this
year in California, features an on-site rainwater collection
system and waste treatment plant to ensure 100% of the site’s
non-potable water comes from onsite recycled sources.
There is a new product allowing businesses in California —
mostly farms and other agricultural businesses that rely on
water — to lock in prices for water. But there are plenty of
questions as to how this will actually work. To state the
obvious, it’s just not that easy to transact in water. It’s not
a block of gold, or even a barrel of oil.
If the record heat and wildfires ravaging California weren’t a
clear enough sign that the climate is changing, then consider
this: Wall Street is about to start trading futures contracts
on the state’s water supply. … They are intended to both
allow California’s big water consumers—like almond farms and
municipalities—to hedge against surging prices and can act as a
benchmark that signals how acute water scarcity is becoming in
the state and, more broadly, across the globe.
Dr. Ellen Bruno is a Cooperative Extension Specialist in the
Department of Ag and Resource Economics at UC Berkeley. At a
recent Silver Solutions webinar, she shared some of the
preliminary results on a paper she is working on… The study
considers the impacts of agricultural water pricing and the
effect on water use and land use change.
Roughly a thousand acre-feet of water won’t make or break the
Colorado River. But for many who live in counties that border
the river, even losing a few drops of water to central Arizona
poses a major threat to their way of life.
Irvine Ranch Water District and Rosedale-Rio Bravo Water
Storage District had just begun environmental review for their
joint banking project this past April when TCP reared its head.
… TCP (trichloropropane) is a carcinogenic leftover from a
nematode pesticide made by Shell Oil and Dow Chemical that was
liberally applied to Central Valley farmland from the 1950s
through the 1980s.
Indian Wells Valley Groundwater Authority voted 4-1 to pass the
replenishment fee despite significant public opposition. …
Although residential users will see an estimated $24 per month
increase, Searles Valley Minerals will see a 7,000-percent
increase in water costs.
With all permits in place, on Aug. 20 the Georgetown Divide
Public Utility District announced the State Water Resources
Control Board Division of Water Rights approved the temporary
transfer of up to 2,000 acre-feet of GDPUD’s water to the
Westlands Water District. The transfer of the water began Aug.
19 and is expected to continue until Sept. 23.
Crops require water to grow. By importing water-intensive
crops, countries essentially bring in a natural resource in the
form of virtual water. Agricultural virtual water is the amount
of water needed to grow a particular crop in a given region.
Now research led by scientists at PNNL has projected that the
volume of virtual water traded globally could triple by the end
of the century.
Central Arizona has been booming – more people, more houses,
more need for water. There’s also a long-term drought and less
water to buy from the Central Arizona Project canal system.
It’s leading Phoenix exurbs to cast about, looking for new
buckets. Other regions of the state are saying: Don’t come
here.
The company’s long-term goal is still to complete a project to
allow the transfer of up to 1.6 billion gallons of water a year
from an aquifer under its land to six Southern California water
agencies. But for the short-term, Cadiz is looking toward
agricultural development on its 45,000 acres of land about 30
miles northeast of Joshua Tree National Park.
As California navigates a critically dry water year, many
business-as-usual elements are getting a second look. One such
transaction is a proposed water sale by the Merced Irrigation
District. The district … filed an application with the State
Water Resources Control Board in March to transfer as much as
45,000 acre-feet of water to a bevy of water districts across
the state.
Taking the opportunity to bring in some extra revenue, the
Georgetown Divide Public Utility District Board of Directors
approved the sale of up to 2,000 acre-feet of water to
Westlands Water District at a price of $350 an acre-foot.
South Feather Water & Power Agency proposes to transfer the
water from July through November 2020 to participating agencies
of the State Water Contractors and the Central Valley Project
(CVP). The transfer would involve up to 5,000 AF of water
previously stored in Little Grass Valley Reservoir under Permit
1267, and up to 5,001 AF of water previously stored in Sly
Creek Reservoir under Permit 2492.
The water transfers could occur on an annual basis sending
water from willing sellers north of the Sacramento-San Joaquin
Delta to water users south of the Delta and in the San
Francisco Bay Area. Based on annual approvals, the transfers
could occur through 2024. In addition, the transfers could
occur by various methods, including groundwater substitution,
cropland idling, reservoir releases and conservation.
This report, “Scaling Corporate Water Stewardship to Address
Water Challenges in the Colorado River Basin,” examines a set
of key corporate water stewardship actions and activities, with
associated drivers and barriers, to identify how the private
sector could help tackle Colorado River water challenges.
Central Valley farmers may soon have another crop to sell along
with almonds, tomatoes and peppers — the groundwater beneath
their land. Proposed groundwater markets have popped up in just
about every groundwater sustainability plan filed with the
state Jan. 31.
Another block of water has been offered for sale in Kern County
at $950 per acre foot. With a dry January and extremely dry
February, California’s water outlook has worsened. And that has
bumped the price of water for those who have it to sell.
The Chino City Council on Tuesday night approved selling
3,500-acre-feet of surplus groundwater to the Fontana Water
Company for more than $2 million. … As of June 2019, the city
of Chino’s stored groundwater reserves totaled approximately
120,000-acre-feet, which is equivalent to 31.1 billion gallons
of water.
California is by far the United States’ most populous state, as
well as its largest agricultural producer. Increasingly, it is
also one of the country’s most parched places. But Edgar Terry,
a fourth-generation farmer in Ventura County, just outside Los
Angeles, thinks he has a key to reversing worsening water
stress: establishing tradeable rights to shares of
fast-depleting groundwater aquifers.
Aside from advanced economies and Mediterranean climates that
sustain long growing seasons, California, Spain and Australia
share an intermittent feature that reshapes their overburdened
water systems every time it rears its ugly head: drought.
Sarah Heard is Director of Conservation Economics & Finance
with the California chapter of The Nature Conservancy… At the
Groundwater Resources Association’s Western Groundwater
Congress, Ms. Heard gave this presentation on the Fox Canyon
Groundwater Market in Ventura County, the first groundwater
market since the passage of the Sustainable Groundwater
Management Act.
The successes and failures of Australia’s recent reform of the
Murray-Darling Basin hold valuable lessons for policy makers in
California and elsewhere who are likely to grapple with the
environmental repercussions of extreme drought in the future.
The newly formed water market would create a place where
farmers in the Rosedale district can buy and sell water based
on their needs. So if one farmer has too much for his crops in
a certain year, he’d be able to sell it on the market to
another who might not have enough.
This event guided attendees on a virtual journey through California’s Central Valley, known as the nation’s breadbasket thanks to an imported supply of surface water and local groundwater. Covering about 20,000 square miles through the heart of the state, the valley provides 25 percent of the nation’s food, including 40 percent of all fruits, nuts and vegetables consumed throughout the country.
This virtual experience focused on the San Joaquin Valley, the southern part of the vast region, which is facing challenges after years of drought, dwindling water supplies, decreasing water quality and farmland conversion for urban growth. The tour gave participants an understanding of the region’s water use and issues as well as the agricultural practices, including new technologies and water-saving measures.
South Coast agencies purchased more than 27,000 acre-feet of
supplemental water during four drought years to make up for
lowered allocations from Lake Cachuma and the State Water
Project, and for most of those deals, payback includes water in
addition to money. Agencies’ so-called “water debt” means that
when the city of Santa Barbara purchased from the Mojave Water
Agency last year, for example, it was committing to paying back
1 acre-foot of water for every 4 acre-feet it purchased.
Last month, the Environmental Protection Agency published a
memo encouraging states, tribes, and local governments to look
to markets for help in solving stream quality issues. … Water
quality trading can lower costs and, thereby, unleash new
opportunities to improve water quality.
Cove, which is launching later this month, is packaged in a
bottle made from a biopolymer called PHA. If the bottle
ends up in a compost bin or landfill–or even the ocean–it will
fully biodegrade. … The company, which is a public
benefit corporation, has guidelines that say it won’t source
from areas that are currently in a drought.
Agricultural and environmental leaders spoke at the Water
Market Exchange Symposium in the Satellite Student Union on
Jan. 24 to share their perspectives on a water market exchange
program. The symposium featured speakers from water agencies,
environmental interests, disadvantaged community interests and
water market administrators.
Congressmen John Garamendi and Doug LaMalfa have reintroduced
legislation to provide farmers access to discounted rates under
the National Flood Insurance Program. The
bipartisan Flood Insurance for Farmers Act of
2019 (H.R.830) would also lift the de
facto federal prohibition on construction and repair of
agricultural structures in high flood-risk areas designated by
the Federal Emergency Management Agency.
In the universe of California water, Tim Quinn is a professor emeritus. Quinn has seen — and been a key player in — a lot of major California water issues since he began his water career 40 years ago as a young economist with the Rand Corporation, then later as deputy general manager with the Metropolitan Water District of Southern California, and finally as executive director of the Association of California Water Agencies. In December, the 66-year-old will retire from ACWA.
This tour ventured through California’s Central
Valley, known as the nation’s breadbasket thanks to an
imported supply of surface water and local groundwater. Covering
about 20,000 square miles through the heart of the state,
the valley provides 25 percent of the nation’s food, including 40
percent of all fruits, nuts and vegetables consumed throughout
the country.
We ventured through California’s Central Valley, known as
the nation’s breadbasket thanks to an imported supply of surface
water and local groundwater. Covering about 20,000 square
miles through the heart of the state, the valley provides 25
percent of the nation’s food, including 40 percent of all fruits,
nuts and vegetables consumed throughout the country.
We ventured through California’s Central Valley, known as
the nation’s breadbasket thanks to an imported supply of surface
water and local groundwater. Covering about 20,000 square
miles through the heart of the state, the valley provides 25
percent of the nation’s food, including 40 percent of all fruits,
nuts and vegetables consumed throughout the country.
Groundwater overdraft in the San Joaquin Valley – producer of
half the state’s agricultural output – has averaged roughly 1.8
million acre-feet annually since the mid-1980s. Even before the
start of the most recent drought in 2011, a few San Joaquin
farmers recognized the dire need for sustainable water
management and started individually pioneering a groundwater
recharge practice that has since gained
statewide traction.
On the edge of the Mojave Desert, beneath 1,800 acres of
scrubland and tumbleweeds, California’s giant public pension
fund is trying to make a killing in the water business.
As storms hit California and the Sierra Nevada snowpack keeps
building after years of punishing drought, water managers on
the San Joaquin Valley floor are replenishing groundwater
supplies while the getting is good.
San Joaquin County water commissioners took the first formal
step Wednesday toward approving an innovative experiment to
store water below ground and share a portion of it with Bay
Area residents.
It’s too late for the current drought, but an ambitious water
bank project in the southern San Joaquin Valley would give
farmers a supplemental supply in future dry spells.
The Oakdale Irrigation District expects to reap $13.75 million
selling Stanislaus River water to buyers from the Fresno area
and on the Valley’s drought-scarred West Side, according to a
sales agreement unanimously approved Tuesday by the OID
board.
[Disque] Deane [Jr.] is not a rancher or a farmer; he’s a
hedge-fund manager who had flown in from New York City the
previous night. And as he appraised the property, he was less
interested in its crop or cattle potential than in a different
source of wealth: the water running through its streams and
coursing beneath its surface.
The Bureau of Reclamation has released for public review an
Environmental Assessment on a proposal to place temporary pumps
along a joint-use portion of the California Aqueduct. The pumps
would reverse flow so the Santa Clara Valley Water District can
recover previously banked Central Valley Project water. …
Normal operations of the Santa Clara Valley Water District’s
previously approved banking and exchange program is not
possible due to severe drought conditions.
Drought is rampant these days in many parts of
the American West, so consider this a pretty sweet gift:
You’ve just been given the rights to some water. … Your
job is to turn around and use that resource in the most
valuable way possible.
This printed issue of Western Water looks at California
groundwater and whether its sustainability can be assured by
local, regional and state management. For more background
information on groundwater please refer to the Foundation’s
Layperson’s Guide to Groundwater.
Although some water districts have coordinated use of surface
water and groundwater for years ,conjunctive use has become the
catchphrase when it comes to developing additional water supply
for the 21st century. This article focuses on conjunctive use. It
includes background information explaining how conjunctive use
works, discusses the potential storage capacity, provides an
overview of the hurdles that must be overcome to develop a
successful project, and profiles several projects.
The 20-page Layperson’s Guide to Water Marketing provides
background information on water rights, types of transfers and
critical policy issues surrounding this topic. First published in
1996, the 2005 version offers expanded information on
groundwater banking and conjunctive use, Colorado River
transfers and the role of private companies in California’s
developing water market.
Order in bulk (25 or more copies of the same guide) for a reduced
fee. Contact the Foundation, 916-444-6240, for details.
The 28-page Layperson’s Guide to
Water Rights Law, recognized as the most thorough explanation of
California water rights law available to non-lawyers, traces the
authority for water flowing in a stream or reservoir, from a
faucet or into an irrigation ditch through the complex web of
California water rights.
Water marketing is the transfer or sale of water or water rights
from one user to another, typically from an agricultural to an
urban water agency, often without investing in new infrastructure
Most exchanges involve a transfer of the resource itself, not a
transfer of the right to use the water.
Reallocating the available water on a supply-and-demand basis is
viewed by proponents as the best financial, political and
environmental means of accommodating an increase in population.
