On the public record

When I was just a little girl, the Archer Daniels Midland price-fixing scandal broke.  Forever after, my father and I would mutter “bunch of crooks” in  unison when we heard their ads on NPR.  Today, wonderful people at the SEC tell us that Westlands Water District lied to investors to disguise the fact that they’d rather sell bonds they can’t afford to pay back than raise their water rates.  Evidence shows that General Manager Tom Birmingham advised to his board to do some “Enron accounting” and then verified the financial lies in their Official Statement.  For this he was personally fined $50K.

My thoughts:

• The SEC holding is very clear, very clean writing.  If you can follow this blog, you can read the holding itself.  You might enjoy that as much as I did.
• Mr. Birmingham should be disbarred for perjury.
• Westlands Water District is broker than it looks from the outside.  Without “Enron accounting”, they can barely afford their debt service.  I have occasionally wondered how they could afford their very pricey stable of politically connected managers, plus the tens of millions they’ve shoveled into BDCP.  Apparently they can’t, not without raising their water rates.
• I wonder how the SEC found this crime and why they pursued it.  If you know, please do email me.  I would love to hear the story.

My father sent me the breaking article about the SEC fining Westlands and two of their managers.  I am sure he’d be happy to append “couple of crooks” to their name, as a cozy father-daughter activity.

MORE, 3/10:

It looks like Ms. Schifferle was the person who drew Westland’s illegal activities to the attention of the SEC.  Great tactic, great work.

Schifferle said she filed a complaint with the SEC in 2011, and last year sent the agency minutes of a 2010 Westlands finance committee meeting, obtained through the Public Records Act, that discussed the debt ratio and revenue shortfall.

“I thought it was going in the round file,” she said. “Maybe they finally took a look at it.”

This is what comes of Westland’s willingness to make enemies. Making many enemies means having a lot of people out there trying different ways to expose any wrongdoing.

CORRECTION, March 4th.  Dude.  I’ve made a fairly substantial mistake.  The statements I attributed to Mr. Levine were made by “David Festa of Mill Valley, senior vice president at Environmental Defense Fund”.  Frankly, that makes the quote more egregious.  A senior professional enviro should have a better understanding of water markets.  We know more about them than we did when Tom Graff was promoting them.

I pretty much have to leave the original; I can’t see how to correct it and still have it make sense.  But I owe an apology to Mr. Levine, and want to redirect the gentle ribbing to Mr. Festa.  That’s how I should have written it in the first place.  MY BAD.  Sorry, Assemblymember Levine.

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Friends, what I am about to write is both speculation and loshon hora; I should not.  But the conclusion is inescapable.  I strongly suspect that Marin Assemblyman Levine is out in public, talking about water markets without having read Dr. Haddad’s River of Gold.  I KNOW, RIGHT?!!  In public!  And if he hasn’t read Rivers of Gold, his new water market bill isn’t likely to create well-designed markets to achieve explicit social goals.

I am actually not too fussed about his bill.  From the description in the article (heaven forfend I should go read the actual bill), it looks to be a bulletin board to connect buyers and sellers.  I would enjoy following such a board; that information should be public.  But it doesn’t solve the problems of market thickness, transporting water, nor planning lead time.  I don’t think it would go anywhere.  So that’s harmless.

What isn’t harmless is this misunderstanding of Levine’sFesta’s, which reading page 34 of Rivers of Gold would have corrected.

Festa said greater trading would foster more trading between farmers as well as freeing up more water for the environment and urban dwellers.

“When you have more water moving around,” Festa said, “you don’t have to draw on ground pumping or taking more water out of rivers so right there you create an automatic benefit for the environment.”

No no no no no.  A market may be the cheapest way to reallocate a fixed amount of water to the uses that make the most money.  But if the amount of water isn’t fixed, a water market is an inexorable engine for drawing ever more water out of the source, whether that’s a farming community or the environment.  It requires very careful design of the market structure to prevent that.  I wish people with the power to promote water markets would talk about the specifics of that design.  Actually, I wish they showed signs of understanding that careful design is necessary.

Interesting interview with Felicia Marcus in the L. A. Times today.  I should say some things up front.  She has done an amazing job over the past two years, and it must have been completely all-absorbing.  She has the right temperament for the leadership she did.  I have wondered how she has threaded the needle between conflicting demands and the Brown administration’s focus.  I am very, very impressed with her.

All that said, this is some bullshit false enlightenment that pretends that we can get through this drought with no losers:

“I worry about how those tensions exacerbate nonproductive rhetoric that pits urban versus agriculture, or fish versus farmers, or fish versus people. Or picking on a given crop when what we really need to be doing is embracing an all-of-the-above strategy so we can all get better together, rather than wasting time vilifying a number of very legitimate needs.”

My main objections to this approach is that it sacrifices some real leverage and it perpetuates existing inequities.

Mr. Arax describes the problem in Fairmead, California.  In Fairmead:

…the way it went dry is that one day last June, Annie Cooper was looking outside her kitchen window at another orchard of nuts going into the ground. This one was being planted right across the street. Before the trees even arrived, the big grower — no one from around here seems to know his name — turned on the pump to test his new deep well, and it was at that precise moment, Annie says, when the water in his plowed field gushed like flood time, that the Coopers’ house went dry.

The choices are that 1,450 residents of Fairmead can have no domestic water, or one big grower can have no agricultural water.  That is very powerful leverage; the unhappiness of having no water could be diminished by (1,449/1,450)%.  To do that, though, means making a judgment call about what water use is  more important, and the “all get better together” strategy refuses to do that.  Further, refusing to make a judgment call leaves existing inequities in place.  In Fairmead, poor people’s water was sucked away from them by someone with the wealth to install new orchards and dig a deeper well.  In practice, refusing to target anyone or any water use fucks the poor.  Again.

On a more diffuse level, the entire urban water conservation efforts of the state last year came out to 1.1MAF.  Nearly thirty-nine million people worked to achieve that on a near daily basis.  That is a cognitive load on all those people.  Not a huge one, but it is a small constant burden for nearly every Californian.  Urban trees took a substantial hit.  For the same 1.1MAF of relief on Californian developed water demands, we could fallow 350,000 acres of land, or 4% of the 9 million irrigated acres in California (in addition to the 7ish% of land that was fallowed).  Selectively fallowing land on the west side of the San Joaquin Valley would minimize owners and farm workers hurt by that policy.  If we wanted, because they have feelings too,  we could compensate them with fat stacks of cash.  “Nonproductive rhetoric” about who is intensely using water is only nonproductive because the Brown administration didn’t choose to look for leverage to minimize misery during the drought.

Continue reading →

DroughtMath is doing fantastic work analyzing LADWP’s Urban Water Management Plan.  The slides are great.  I love this sort of analysis, and read every post.  This isn’t my bailiwick, but I have some vague thoughts on the management plan process.

• DWR does not “vet” UWMPs for accuracy, because that would require the sort of work that DroughtMath is doing.  To my knowledge, DWR checks the plans for completeness, not accuracy.
• NRDC’s suit is very appropriate.
• I have no reason to think LADWP’s UWMP is an outlier.  I don’t know firsthand, but suspect most UWMPs are equally aspirational.
• Lois Henry’s column a couple weeks back is a beautiful example of the difficulty of getting solid answers to questions about water availability for development.
• Somehow, cities keep not running out of water.  I don’t think that is because of the good work in their UWMPs.  I attribute that to the surprising amount of slack we’ve had to work with, but that comes from a legacy of substantial water waste.  Getting better (decoupling water use from population) is a good thing, but that starting point is nothing to be proud of.

My real objection to the Australia love-fest today is that it isn’t specific enough.  That study and the write-up are about the lessons of Australian urban drought management.   But both those discussions say nice things about ‘Australia’s drought management’, which implies both the urban and the ag side.  The implicit endorsement is a problem.  Careful readers who look deeply into the text will understand it was a study of four Australian cities.  Most other people will just think that California should do whatever Australia did, both urban and ag.

My impression from afar is that Australian agricultural drought management was pretty damn problematic.  Here are the problems I know of:

1. They spent A$1B on district modernization, mostly on remote controlled moving gates.  I’ve had strong doubts about how those gates are performing.  I still don’t know the answer to that, but apparently they are reevaluating the second phase of the project, another A$2B on district modernization.  I am a huge proponent of district modernization, but not with high-tech gates.
2. The farmers’ subjective experience of the drought seems to have sucked.  Whatever the drought measures were, they didn’t change the rhetoric about government-created drought any.  That article once again describes the process of a water district crashing as water leaves a district piecemeal; this time, sadly, after they spent a bunch of money on the canals.  Water delivery infrastructure has a density threshold that must be met. If ag land is not retired by planning at the district level, it will crash at the district level.
3. The support structures for their water markets, as described in Unbundling Water Rights, are more autocratic than anything I’ve ever seen in California.

My final concern is more of a question.  Do these endorsements mean that Australia’s policies, including their ag policies, are OK?  Are we following in their footsteps?  Because the effect of their policies (and the part that effectively absorbed the lack of water) is that they fallowed half their irrigated land.  They retired 15% of their ag land.  From Australia’s Series 4618.0:

Instead of the 600,000 or so acres of land that was fallowed in 2015 in California, an Australian level of agricultural drought response would have been fallowing about 4.5 million acres.  (Which would decrease human water use by ~13.5MAF.)  Do endorsements of Australia’s techniques include that?  If so, I am all in.  I would love to talk about a zoning approach for ag land that designates whether irrigated acreage gets water in wet, normal and dry years.  If it doesn’t mean that, I wish the Australia advocates would be a little more specific about which lessons we should bring back home.

A couple great posts over at ValleyEcon today.

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High Country News, always wonderful, reports on southern San Joaquin Valley farmers’ fears of going out of business from a dry future.  The tagline to the article asks: Something’s got to give in Central Valley farming. The only question is what.  Dude.  We know “what”.  California will lose 1-3 million acres of irrigated land.  The interesting question is how.

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Mr. Fitchette writes a post urging agriculture to speak with a united voice.  This paragraph caught my eye:

As I understand it, the roots of California’s water woes tap into the federal Endangered Species Act and the Central Valley Project Improvement Act, which set in motion later court challenges and decisions from the bench that did not support production agriculture.

As I understand it, the roots of California’s water woes come from historic assumptions that the supply of water for human use could be expanded infinitely, our realization that the total quantity is fixed, and that further withdrawals will cause environmental damage that we don’t like.

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Mr. Cannella’s confusion about the way state regulators operate would go away if he understood that state regulators do not hold the amount of irrigated lands constant.

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There has to be a better way forward on water conservation than encoding #droughtshaming (& naming, with addresses). https://t.co/PtOr0f0SGK

— Faith Kearns (@frkearns) February 22, 2016

During the last drought, I attended workshops in which one of the State’s water use efficiency experts told water districts  to rank their water users from lowest to highest, privately contact the top ten water users and work directly with them to lower their water use.  (Then do that a few more times until the chunk of disproportionate water users at the top is gone.) My recollection is that water districts said they didn’t have the data, didn’t care to mine it like that, and weren’t in the business of approaching their customers that way.  But yes, collecting and using their data and directly contacting big water users could have saved quite a bit of water and bad publicity.

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I diverge from the UC Davis group’s drought analysis here:

Global food markets have fundamentally changed the nature of drought for humans. Throughout history, disruptions of regional food production due to drought would lead to famine and pestilence. This is no longer the case for California and other globally-connected economies, where food is readily available at more stable global prices. California continued to export high-valued fruits and nuts, even as corn and wheat production decreased, with almost no effects on local or global prices. Food insecurity due to drought is largely eliminated in globalized economies (poverty is another matter). Subsistence agriculture remains more vulnerable from drought.

I do not trust global food markets.  We may have the wealth to participate in them as winners (which hurts the global poor).  But I would rather use that wealth to support a healthy farming community in our own state as insurance against unpredicted extreme climate change effects.

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None of what I just commented on was nearly as interesting as this look at a macadamia farm in Hawaii.  Trees planted straight into the rock!

I don’t see the new emphasis on stormwater as a changing paradigm.  I see it as a society that has become poorer looking to the next-lowest-entropy source of water.  This is the behavior of people who have lost wealth (high elevation snowpack) and on top of that, have to spend wealth to make the new higher-entropy source act like the old low-entropy source (by gathering and cleaning distributed dirtied water).  Climate change will cost and cost and cost.

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You know, if the AroundDeltaWaterGo doesn’t end up happening, the State Water Contractors will have ended up transferring a few hundred million dollars to slightly lefty urban environmental consultants for no tangible benefit.  They will have underwritten some environmental research in the Delta in the process.  Thank you, Westlands!