04 September 2014

Time for a new boat

OM writes from California:
Have you thought or written about public purchase of water flows needed for the environment? We have a new water bond that includes a lot of funds for this sort of thing. It strikes me that it fits with the model of internalizing profits/externalizing costs. If there is not enough water in the river, that is because water users are not complying with permit term, flow requirements or other obligations. So why should the public pick up the cost of buying that water back? Does purchasing water needed for the environment with public funds tend to unjustly enrich those with unclean hands? Would resources be better spent on enforcement?
Here are my thoughts:

First, I would not pay to retire rights that were over-allocated, as the "right to use" (usufruct right) is not the same as the "right of ownership" in California.* I'd revoke overallocations by administrative fiat, as those allocations can not -- and will not -- be used.

Second, I'd redefine remaining allocations to exclude baseline environmental water flows. The Australians have done this in the Murray Darling Basin. The opposition to cut-outs will increase as their share of total flows rises, so it's probably best to set them lower and get them in place.

Third, I'd allow existing rights to be rented on an annual basis among all water rights holders as well as new users (environmental organizations, cities, etc.), to improve efficiency without destroying the value -- or definition -- of rights.

Fourth (rather first), I'd be sure that all water uses -- from rivers, groundwater, irrigation canals, etc. -- were tracked and perhaps regulated. California has weak or non-existant controls or reporting of uses from groundwater, riparian diversions, and pre-1914 rights. These holes will destroy nearly any system that does not close them.**

Bottom Line: California's water system is so broken that it needs to be radically reformed. This transition will upset a lot of entitled people, but some of them don't deserve what they never should have gotten.

* California Constitution, Article 10, Section 2:
It is hereby declared that because of the conditions prevailing in this State the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such waters is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare.
Many current water users will claim that their use (e.g., almond irrigation) is "reasonable" and I'm inclined to agree, but that use must be "in the interest of the people and for the public welfare," which may exclude, e.g., irrigation of almonds for export. Put differently, the government has allowed uses and can disallow them -- as it did, very famously, in the case of Mono Lake.

** After I wrote this, California's Legislature passed a law requiring local groundwater districts to have "management plans" in place by 2020 (failure means the State will impose its own plan). This action, welcome as it is, does not seem to specify a target or penalty for failing to meet a target, i.e., it doesn't promise an improvement in groundwater conditions... assuming there's any groundwater left after another five years of unregulated pumping.


  1. Great question and interesting reply. I think this is one of the biggest and most important questions in western water policy. How do we undo a century or more of legal precedent? Rivers were overallocated a century ago. People's values and attitudes have changed, but the law is (necessarily) conservative, and water policy has lagged behind societies views.

    David, is there anywhere in the US that has just cancelled existing rights by fiat? That would be considered a massive "taking" and trigger an avalanche of lawsuits. How would you decide whose rights get cancelled? I'm surprised you would trust this to bureacrats or a "water czar!"

    The Australians did set a cap on extractions in the basin, and they did establish instream flow requirements.

    BUT, the government actually did "buy back" water from users to put it back in the river. This was a big part of the $10 billion water reform plan the government announced in 2007. As part of it, they committed $3 billion to buy back water from irrigators in the Murray-Darling Basin. They created the "Commonwealth Environmental Water Holder" to purchase and retire existing water rights (or entitlements as they call them down under). Purchases made through the Commonwealth Environmental Water Holder are dedicated to instream flow, or to refill lakes and wetlands. Last I read, they had not yet reached their target, but were well on their way. Possible this has changed since the current administration seems very anti-environment.

    Here's some good reading on the topic. First a breezy blog post, then a longer more scholarly work.

    Postel, S., 2010. "Australia Takes a Bold Step To Shape its Water Future." National Geographic News. http://blogs.nationalgeographic.com/blogs/news/chiefeditor/2010/10/australia-water-allocations.html

    Connell, D., and R.Q. Grafton, eds. “The Role of the Commonwealth Environmental Water Holder.” Chapter 20 in Basin Futures: Water Reform in the Murray-Darling Basin. Canberra: The Australian National University, 2011. http://press.anu.edu.au/apps/bookworm/view/Basin+Futures+Water+reform+in+the+Murray-Darling+Basin/5971/ch20.xhtml

  2. @Matt -- great comment. I'll add that the gov't buyback was a complement to the "taking" of water via "yield allocations" as well the source of a LOT of complaining from people in the water market due to the $3 billion gorilla that distorted demand WAY beyond irrigators' ranges.

    On "taking," I'd just retire rights, from the most junior up (or back). That's what the rights system does, de facto, today when those rights are dry. I'd just make it official (and final). In the case of other rights (should eflows still be too low), I'd invoke the public trust. Property rights do not have negotiating power when it comes to public trust. If it came to condemnation (eminent domain), then there would be a case for compensation based on $ repaid to projects (e.g., CVP is only +/-20% paid) rather than "fair market value" for licenses that have never been fully paid for.

    Oh, and why would I "take" rather than follow organic political-economic development? B/c California is using so much g/w that drinking water is threatened. It's time to act, before 38 million people are REALLY thirsty.

  3. Yes, well I guess we know what to expect when you get appointed water czar. :)

    It's interesting to fantasize about some benevolent dictator being given this kind of power and putting us on a more sustainable path.

    The most junior rights are held by cities and I think the few rights that have been established for instream flow are the most junior of all.

    I haven't heard of many scholars openly discussing anything this radical... not even Marc Reisner in "Overtapped Oasis." Of course, when you explain prior appropriation to regular people, they're all, "OMG!" That was my take on how these journalists from the AP reacted when they found out how western water rights work:


  4. Yes, you're right that there may be unintended consequences in terms of who ends up with solid rights, but that does not preclude either (1) public trust reallocations due to past overallocations to ag or (2) a market (or all in auction) for reallocating water. There's a big difference between where rights ARE and where they should BE. A czar, in my mind, would not say where water should go, but how much is available and who has those use rights. Exchange of rights does not need a czar's approval, if it's among willing buyers and sellers (this is why I discuss commodity water in Part I of my book and social water in Part II)


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