03 September 2010

Californians need to see the real water problems

A guest post from David Schurr:

Many Californians believe there is a water shortage, actually there is a water management shortage fueled by economics.* Studies conclude that water exports are the major stressor to the Delta Ecosystem, which is the most productive estuary on the west coast. Essentially water exports have exceeded what the Delta ecosystem can handle. The result is an interruption in the food chain beginning with losses in zooplankton populations that sent fish populations crashing.

Even though The State Water Board declares that 75% of the state’s water is needed to protect the environment, the Department of Water Resources (DWR) has allowed water contractors to deliver more water. This year environmental protections were overturned by Federal Court Judges to help farmers. Districts that received their water too late in the season simply used the surplus water to flush toxic salt and selenium from their fields, (no kidding) selenium that eventually ends up back in the Delta.

One user pays more while conserving and another user makes a profit. Through conservation and local water recycling programs; the Metropolitan Water District of Southern California is using about the same amount of water as it used fifteen years ago despite an almost 30% growth in its population.

The truth is that the majority of the state’s water is going to agriculture while urban users are repeatedly asked to conserve and conserve again. An average family uses 2 acre feet per year and is charged $250 while Central Valley farmers pay $55.00 per acre foot. Some districts pay only the pumping cost which is even less. Where is the equity?

Statewide agriculture exceeds $36.2 billion and exports account for $10.3 billion. For example, almond production has doubled in this decade sending bulk prices crashing. Today California is the world leader in almond production of which 80% accounts for exports. In fact 50% of the top seven farm products in California are exported to China, Asia, Canada and Europe.

Agriculture has its own public awareness programs such as; “The Central Valley a new dust bowl" or "The Latino farm worker's coalition" blaming fish for lost jobs. In their arrogance, agriculture giants like Paramount Farms and Pom Wonderful sell us slogans like, water for food but actually, water for profit is more like it. Farmers think they have us over a barrel. And about the drought: DWR and even NOAA claim that California has suffered from three years of drought but the DWR’s own figures point out that we never had precipitation below 62% and that was in 2006, in other years precipitation was normal. In 2009 it was 109%.

Now, the stalled $11 billion bond which included water transfers that would have further privatized publicly held trust were being sold as protecting the water supply and rebuilding infrastructure. This is simply another example of agriculture asking California to develop more water.

Serious problems began in 1995 when The Water Resources Agency privatized the Kern Water bank under the Monterey plus Amendments. The State essentially handed over one million acre feet of water to private investors. The Kern water bank is now owned by Westlands water district which is comprised largely of corporate farms. These corporate farms were essentially junior water rights holders. Historically Westlands received surplus water and grew annual crops. With this new water deal Westlands now has the capacity to grow vineyards and fruit trees on an estimated 200,000 acres.

What has the Governor has done about the problem? During his tenure as Governor, Arnold Schwarzenegger has put industry executives in charge of California’s environment. Such appointments include: Randy Foirini the head of the Turlock irrigation district - now on the Delta Stewardship Council, responsible for restoring the Delta. Lester Snow head of the Natural Resources agency was the former director of the failed Bay-Delta Conservation Process. Cathy Reheis-Boyd, the controversial director of the Western States Petroleum Assn. now heads up the Marine Life Protection council. Another MPLA appointment is William Anderson, the largest owner of waterfront marinas in California. Although some of these appointments are being overturned, Schwarzenegger’s legacy of failing to protect the environment will endure for decades.

Today commercial fishing boats are gone from coastal harbors; six native species of fish are listed as endangered; four salmon species are threatened. Fishing related revenue losses equal $2 billion and fishing license sales are off by one million which is another $36 million in lost revenue to the state.

The solution is simple: if the State would charge more for water, much of which is subsidized, supply and demand would dictate usage, simply price is the incentive to reduce consumption. The state would earn revenue while slowing agricultural growth and urban development. Balanced water usage would restore threatened fisheries while agricultural commodities increase. Commercial fisheries would recover consecutively.

* DZ: Although I agree that shortages are manmade, I disagree that the problems described here are "caused" by economics. They result from political decisions that have economic impacts. But keep reading...

3 comments:

  1. 1) it is meaningless to compare the price of city water, which is filtered, treated, and instantly available 24/7 to agricultural water.
    2) State water project water is already very expensive for agricultural users. If the state had the authority to change their delivery contracts, and raise prices further, it would probably reduce agricultural consumption for those users. Then the other users, like MWD, would see rates increase a lot, since they would have to make up the fixed costs now defrayed by the much larger volume of water delivered to agricultural users. In any event, the whole yield of the SWP is a pretty small amount of water, so whatever they might do is only important to their contractors. Markets work, and all users should put their cards on the table, in an auction based system.
    3) I get the impression the writer feels there is something bad about water being used for exported crops. Gosh, I don't suppose that all those urban users have jobs that depend on exports, do you?
    4) your water use figure for urban consumers ignores the inconvenient truth that they all eat, every day. Some, heck,even all, of that food could come from elsewhere. How would that be better?

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  2. Will have to agree with Dr. Zetland. Your article is great. However you are describing a political condition/argument not an economic condition/argument.

    Maybe this will help.

    In the book Applied Economics, Thomas Sowell describes first stage economic consequences and how they fit political science in what Sowell describes as “political time horizons“. Sowell makes an excellent point that the first stage economic consequences fit the short term fix needed by the politician which is re-election.

    What you are describing is a collection of first stage economic consequences driven by political decisions based on political time horizons. The collection of this first stage economic thinking, the collection of which are based on politics, is cascading into yet another set of unintended economic consequences that are politically driven and is what you are describing.

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  3. Some good points. And the best way to allocate a resource by price is to privatize it; which should be done with water.

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