Water Prices up?

Water shortages in California have resulted in higher prices for agricultural water: "Prices have jumped from the $50 per acre-foot typical in wet years to as much as $200 per acre-foot." [These are Northern California prices. Prices in the south are double] Some farmers are have decided to "farm water" instead of food -- it's more profitable and less uncertain.

Meanwhile, rationing plans in Southern California appear to be hitting some places harder than others:

Under the proposed formula, cities heavily dependent on MWD water and growing cities would receive preference, while cities such as Long Beach with a significant local water supply would both receive less water and pay more. Big winners in the plan would be Los Angeles and San Diego — both heavy users of MWD water. San Diego in particular has little local water available.

A letter sent Jan. 3 from the Long Beach Board of Water Commissioners to the chair of the MWD board says that the MWD would be violating its own guiding policies if it approves the new policy. The guided principle cited is to work first with agencies that have helped develop conjunctive use (shared storage) projects.

The same letter says that MWD plans to continue to provide water to agricultural users even if there is a shortage. Long Beach contends that state law requires MWD — and any other water delivery agency — to provide domestic and municipal water before offering any surplus water to agriculture.

Bottom Line: Market forces do not have a strong impact on water allocation, and unfair outcomes still result from political power. If California is going to use its water efficiently, farmers should be able to sell water and cities should be able to compete with farms to get water. No more special privileges.