- That's a lot of money for 14,000 af of water rights. At a 5 percent discount rate, that works out to $275/af. (According to my sources, that water has an annual delivery fee -- for infrastructure debts, etc. -- of about $100/af.)
- The water is going from an ag seller in "parched" Kings County to an urban buyer in fast-growing San Bernadino County.
- Both the buyer and seller are contractors to the State Water Project, which means there are few -- if any -- regulatory barriers to completing the sale.
- It's clear that money talks as far as water is concerned. Although farmers are complaining of a "dust bowl" (and the media is STILL eating up Westlands agit/prop), what they are really complaining about is an increase in the cost of doing business. I guess that Westlands (et al.!) would rather lobby Feinstein and Vilsack than pay money for more water.*
- I wonder about the details of the contract. Does the price change if less than 14,000 af/year are available? Seth -- the reporter on the original story -- says that the seller received an average of 50 percent of its contracted deliveries/rights in the past.
- Other, smaller trades are also occurring: South San Joaquin Irrigation District leased 30,000 af for $6.8 million. Curiously, they sold 25,000 af of "emergency" water to the San Luis-Delta Mendota Water Agency for $250/af, but that same water only sold for $150/af to the City of Stockton and $20/af to the East Stockton Water District. Seems like these deals reflected a compromise between politics and market efficiency.
- Here's a link to water trades that require SWRCB approval.
hattips to PB, ED, CM and DW
*Westlands is a CVP contractor, but CVP-SWP trades are now very easy.