22 Jul 2009

The Department of Messing Up Farming

The Pacific Institute has released an updated version of their report on agricultural water conservation.

My response to their report from last year ("farmers are not dumb") was based on their notion that farmers need only install high-tech irrigation technology (e.g., drip) to save water. I pointed out that farmers are not going to do that unless it's profitable. Peter Gleick and I had an argument about that opinion; see comments in the original post, this and this.

Right. So that's some background. What about this year's version?

Here are my initial impressions:

First, the PI authors claim that California farmers can use efficient irrigation technologies to save about 5.5 maf of water in an average year. That's about 14 percent of the State's water or about 17 percent of what farmers use now.

Second, they make extensive reference to the cost of installing this technology (good!). Unfortunately, those costs are BIG: Efficient irrigation technology will cost $4.2 billion (or more) and "save" about 1.1 maf in an average year.* That's about $3,800/af conserved. Assuming a ten-year payback, that's $380/af, which is pretty damned expensive when farmers pay about $10-30/af now...

Third, they mention the need for water pricing and markets to create incentives to conserve water. Good!

Fourth, they call for extensive monitoring and reporting on water use. While I support that idea for ground water, I do NOT support it for overall water use. Why? It doesn't matter how much water is being used when its owner is making the decision. Ground water is different because it's often shared by many.

Fifth -- and this is my biggest point -- they propose that the cost of conservation be paid by a combination of tax breaks, government grants and other subsidies.** In other words, they propose to save pennies by spending dollars. This idea is totally backwards, unwieldy and probably doomed to failure. Why? Because subsidies rarely create the anticipated changes in behavior. You know that law? The Law of Unintended Consequences? That's where the title of this post comes from -- the inevitable government bureaucracy that will be interfering with farming decisions.

In conclusion, I think that this exercise in simulation should not be implemented. If it were, it would not produce the promised results.

Bottom Line: Farmers use a lot of water. If you want them to use less, give them a profitable reason, i.e., selling that water for more money, elsewhere.
* Note that "saved" water is really a reduction in applied water. Flood irrigation doesn't waste water when excess seeps into ground water; see this and this.

** They said the same thing in 2008. I said this:
Besides calling for a "realignment" of subsidies to discourage farmers from growing low-value crops -- something that makes no sense when farmers grow the most-profitable crops they can -- they think that farmers should get "tax breaks for water-saving irrigation systems." Those tax breaks would change the profitability of certain practices, which means that farmers are bound to react to them -- but at what cost? (Remember ethanol!)
Addendum: Looks like Spreck @ EDF and I agree.