Monthly Archives: December 2015

I find it dismayingly easy to write critiques of people that I substantially agree with, but have some minor point of disagreement.  Often that’s easier than taking on a fundamentally different viewpoint.  But I’m finding even less to say when I don’t even have a minor point of disagreement.

The UCD/PPIC group made fantastic recommendations to the State Board on Measuring and Reporting Water Diversions.  We would be substantially better off if those were thoroughly implemented.  Too often recently, the state agencies have been pleading for money to support the gauging stations they already have.  Some of those gauges have been providing decades of data; I have heard that after funding cuts, some personnel have continued checking gauges on their own time, so there aren’t holes in the record.  More instruments, more telemetry would be a very welcome change.

I also liked and agreed with the proposals in PPIC’s recent Allocating California’s Water: Directions for Reform.  I especially liked setting instream flows as the most senior water diverters, if we are going to keep our incredibly stupid and unjust seniority-based system.   I didn’t think Allocating California’s Water went far enough, but the things they propose don’t foreclose any future options either and they tidy up some problems nicely.  So I am in favor!

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I thought the language in this EDF op-ed was interesting.  He discusses removing barriers to “water sharing”, of which a market might be one example.  I’d be pleased if we moved away from the inevitable “water market” or “water transfers” (which are also purchases) as the only means of moving water to different users.  Maybe this marks a change in environmentalist support for water markets as the win-win, nobody-hates-you-for-saying-it proposal.

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Hope you are having a good winter.  I probably won’t write much until 2016.  Happy New Year!

As groundwater sustainability agencies have to bring irrigated acreage in line with the sustainable yield of the groundwater basin, they will be retiring irrigated lands (Dr. Burt: 1-1.5 million acres; Dr. Lund: up to 2 million acres). I say 3 million acres, because so far everything we’ve predicted for climate change has been an underestimate.)

I have two top priorities for the Central Valley’s farmland.

• Preserving about 5 million acres of the best ag land for growing food for humans, mostly Californians.  I don’t worry too much about this goal, because we have about 9 million acres of ag land now, so we could lose quite a bit before I get concerned.
• Minimizing the human misery from the transitions brought by climate change.  Assuming that retiring farmland sucks for the farmers whose land is retired, and sucks for their communities as people leave farms, that means choosing to retire lands that support the fewest people and communities.  It turns out there are entire water districts where not one single person lives.  Not one person would lose their way of life if these districts closed.

Berenda Mesa Water District:

27,000 irrigated acres, approx. 80,000AF/year

Boundary map here.  Centered satellite map here. (Click to expand and verify.  Not one house, no towns.)

Lost Hills Water District:

32,000 irrigated acres, approx. 90,000AF/year

Boundary map here.  Centered satellite map here (no houses, no towns).

Dudley Ridge Water District (no website):

17,000 irrigated acres, approx. 34,000AF/year

Boundary map here, page 50. Centered satellite map here.

What is that green, up in the corner?  I think it is Westlake Farms. Sixty-thousand acres, give or take, depending on whether their neighbors have been paying attention.  That means about 180,000 AF/y.

The owners of Westlake Farms do live on the farm, so if that acreage were retired, they would feel misery and so might their 11-50 employees.   But that’s still not a whole lot of people.

There is a lot of acreage like this.  Compared to the southwest corner of the valley, even the notorious Westlands Water District is relatively populated.  For contrast, look to the east in the Friant.  Those are towns and many, many farms.  Were those acres retired, many people would feel miserable.  My second criteria for retiring ag lands (minimize human misery) leads to preferentially retiring lands in the western valley.  Responsive local groundwater sustainability agencies should think carefully about their criteria for land retirement.  Geology and hydrology are only two factors.  The way their constituents want to live going into the next few decades should matter far more.

Continue reading →

I need strong convincing before I support water markets, but it strikes me that internal cap-and-trade systems might work well for the new Groundwater Sustainability Agencies.  The State should develop a manual or guidebook for creating a cap-and-trade system for GSAs that must allocate newly limited annual groundwater withdrawals.  It should make that guidebook publically available for free.

Unbundling Water Rights listed a simple groundwater basin conversion to a market system as its first example.  I am sure the State has other expertise from its carbon trading system.  This would be real concrete assistance to locals and could be done by the time they finish getting their governance set up in a couple years.

I have distilled my three top questions for new or additional water markets in California.  I would oppose any proposition for new market activity until I had answers I liked to these three questions.

1. What social goal is the water market trying to achieve?  That goal cannot be “have a real good market”.  Water markets are tools, among other tools like regulation or planning, that can be used to achieve something.  What is that thing for this specific proposed market?
2. What is the built-in mechanism that ensures that the market is redistributing a fixed amount of water with economic efficiency, rather than efficiently drawing an open-ended amount of water out of the environment, the ground, and rural communities?
3. What is the built-in mechanism for the Kaldor-Hicks compensation?  The Kaldor-Hicks criteria says (roughly) that the water reallocation would create so much more value that the winners could compensate the losers (beyond or outside the sale itself).  But that never actually happens, so I would want to see a mechanism for that built right into the market.

As an example, I will apply these three questions to a couple different potential water markets.

Example 1: A newly formed Groundwater Sustainability Agency has determined the sustainable yield for the year and wants to allocate that yield among the users in the area the GSA covers.  It proposes to do so by water market.  I have three questions for them!

Q1.  What social goal is the proposed water market trying to achieve?

A1.  Our goal is to allocate this year’s sustainable groundwater yield amongst the users in our boundaries.  We want to do this the way that gets the most economic value out of that water.

Q2.  What are the mechanisms that ensure that the market is only allocating a fixed amount of water?

A2.  We used geology and hydrology to tell us how much water could be withdrawn from the groundwater basin this year.   After the market allocates that amount of water, we will check well meters, pump electricity bills, and patrol irrigated lands to ensure that only that amount of water is used and there is no additional theft of groundwater.

Q3.  What is the mechanism for the Kaldor-Hicks compensation?

A3.  All water sales will include fees for paying back the state for repairs of infrastructure damaged by subsidence, for compensating the people who were not able to buy water this year, and for helping injured third parties.

Those are great answers.  I am not opposed to this water market, although I would like to see if other tools could generate greater benefits for the state.  Now let’s try another example.

Example 2:  People really think that California should have a more faster better water market because water markets would fix everything.

Q1.  What social goal is this water market trying to achieve?

A1.  I suspect it is a combination of getting additional water for urban use and new urban development, prying water lose from senior rights holders without challenging the water rights system, and retiring some ag land because we “shouldn’t” be growing field crops.  But no one says those things.  I don’t know what the goal is, because the goals people list are usually vague-ass bullshit about sending price signals or improving efficiency.  Or hell, being cool, like Australia.

Q2. What are the mechanisms that ensure that the market is only allocating a fixed amount of water?

A2.  Right now, proposals for a statewide market are usually paired with calls for “better data” on realtime use.  But that measuring and monitoring barely exists now, not even for direct use, much less water sales.  It takes a long time to verify that sellers are only selling water they’d have consumed, that they aren’t just backfilling the sale with groundwater or riparian water.  There is no effective statewide mechanism for this.

Q3.  What is the mechanism for the Kaldor-Hicks compensation?

A3.  HAHAHAHHHHAHAHHAAHAhahahahaHAHAhah ha hah ha hah ha.  *Sigh*  You’re killing me.  Rural communities try to get at this by passing Area of Origin laws saying water can’t be sold away, and we try to ensure that third parties aren’t hurt before permitting the sale.  But those are the types of things that market advocates want to “streamline” away.

These answers do not give me confidence, so I am opposed to setting loose (more of) an unguided water market in California.

If you are in the path of a proposed water market, you should ask those three questions until you get answers you like in small words.  The answers aren’t economic concepts, they are social concepts, so you should understand every inch of the answers.  Oppose using market mechanisms until you are satisfied on these points.