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<br />I <br />I <br />I <br />I <br />I' <br />I <br />a <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />receive 2,158 af (again 14.38% of the total) and sole-source sprinkler water users receive <br />4,158 af(27.72 % of the total). All user groups face a demand shortfall in a 2nd dry year <br />of38.61 %. <br /> <br />The water-allocation factors differ in a normal year. Note from Table I that, in a normal <br />year, the supplemental user's replacement demand is 49.96% of the total (9,019/18,049). <br />Sole-source flood user's replacement demand is 16.99% of the total (3,068/18,049) and <br />sole-source sprinkler user's replacement demand is 32.75% of the total (5,912/18,049). <br />Table 4 shows that in a normal year the total available net supply of replacement water <br />equals the total replacement demand (18,049 af.). Therefore, each user group is allocated <br />their percent of this total (e.g., supplemental users get 49.96% of the total or 9,019). As a <br />result, in a normal year all replacement demand is met and all groups face a demand <br />shortfall of 0% (demand shortfall is equalized). <br /> <br />Summary of Current Organization Allocation Methods <br /> <br />As compared to the relative normal-year supply method where each user's water- <br />allocation factor is fIxed for all years, under the relative demand method a user's water- <br />allocation factor varies from a normal year to a dry year. Under the relative demand <br />method, demand shortfall is equalized across all groups while curtailment (due to the <br />additional water allocated to supplemental users) is unequal across groups. The reverse is <br />true under the relative supply method. Under both allocation methods LA WMA <br />revenues are variable. <br /> <br />Moreover, under both Cl and C2 - because individual members do not actually own the <br />rights to replacement water - they must, in a particular year, "use or lose" the water <br />allocated to them. Of course, however, they only pay for what they use. Under the <br />current organization allocation methods, therefore, special attention must be made to both <br />the method of allocating water in dry years (i.e., quantity rationing) as well as the manner <br />in which the water is priced. In theory, with a well thought-out pricing scheme (and with <br />perfect information) could both generate a stable revenue source for LA WMA and, <br />through price-induced rationing -- alter demand (on a year-to-year basis) to meet <br />available supplies. In real-world practice, however, this is extremely difficult - if not <br />impossible. Consequently, under the current organization, LA WMA is left with having <br />to ration the quantity of water in dry years (through the development of water-allocation <br />factors) and to price the water it sells to its members. The choice of which allocation <br />method to use (choice of water-allocation factors) will trade ofT equalization of <br />curtailment against equalization of demand shortfall. Moreover, the choice of which <br />pricing scheme to use will trade off revenue stability (high fIxed charges/low per unit <br />water rates) against efficient water use by members (high per unit water rates/low [LX <br />charges). <br /> <br />We now turn to an organizational structure that I) generates perfectly stable revenues for <br />LA WMA; 2) balances demand and supply; and 3) allows members, through secondary <br />market trading, to on a year-to-year basis efficiently adjust their portfolio of replacement <br />water assets to better suit changes in their particular fann operations. <br /> <br />EnWater Resource Consultants September 5,1997 Final Report <br /> <br />28 <br />