PUB00020

• Year: 2000
• Title: Layperson's Guide to Water Marketing
• CWCB Section: Interstate & Federal
• Author: California Water Education Foundation
• Description: Layperson's Guide to Water Marketing
• Publications - Doc Type: Other

get a toothold in California's water market by
purchasing water and water rights and then selling
them to willing buyers in order to turn a profit (see
page 13).

Transferring water, in particular from farms to cities,
is an emotionally charged issue because whoever
controls a region's water also controls its destiny.
Those opposed to major ag.to.urban water trans-
fers frequently refer to the Owens Valley as a source
of their fears. The first and most-legendary, large-
scale transfer in the West occurred in this eastern
Sierra Nevada valley where, in the early 1900s, the
city of Los Angeles purchased thousands of acres
of land solely for the purpose of exporting the water.
In that example. however, the water rights were
permanently transferred. Modern, long-term water
transfers commonly involve leases for a term of
years.

An advantage of water marketing is that it allows a
shih in water supplies without building costly new
dams and reservoirs and, in the process, can
increase the seller's financial return. Transferring
water from farms to cities is justified by some
because the value of water used for urban needs is
generally much higher than the dollar value of
irrigation water. But water marketing also can hold
value for farmers.

By reducing water use via transfers, farmers can, in
some settings, transition their water use to less water
intensive crops. There are some limitations to this
prospect including the potential for decreased worth
of crops because ot market saturation, and
requirements for farmers to have the appropriate land
type, location, support facilities (such as farm supply
and processing needs) and equipment for growing
the crop.

Conceivably, farmers could increase their revenue
from water transfers by reinvesting profits from water
sales in irrigation and water conservation technol-
ogy (such as canal lining), thus creating a long.term
supply of water for sale. Examples of long-ferm,
ag-to-urban water transfer agreements via conser.
vation include the 1988 agreement befween Imperial
Irrigation District (110) and Metropolitan Water District
of Southern California (MWD) and more recently.
the 1999 agreement between liD and SDCWA
(see page 18).

Because of the unique nature of water, the interde-
pendence of many users, and the traditional use of
the resource, there is disagreement over what the
proper mechanism to facilitate transfers should be,

what parameters are necessary, and how large a
role transfers should play. Should interstate water
marketing be allowed? Should water be treated as a
commodity and sold in a "free market" to the highest
bidder? Or should it be treated as a natural resource
and sold and transferred in a
regulated market to protect in-
terests not directly connected
to the transaction - so-called
third-party impacts?

Third-party impacts may ex.
tend to a variety of facets
within the water community.
Local agricultural communi-
ties can suffer from a loss of
income to local businesses
and unemployment for farm
workers when farmers sell
their water and do not plant
their fields. Growers who sell
surface water and as a result
draw upon groundwater may increase pumping costs
for other groundwater users or aggravate overdraft
problems in a groundwater basin. The environment
can suffer from transfers because of a reduction of
water needed for instream flows or altered timing of
the flows - important components of restoring
California endangered fish populations. Water
quality also can be impaired without the usual
runoff available to dilute salts and other constituents
in the water.

Another crucial issue that must be resolved involves
the Sacramento-San Joaquin Delta where water
quality and environmental problems are complex.
With much of the transferable water supply located
north of the Della and demand for this supply south
of Ihe Delta, it Is generally agreed that improving
the Delta delivery system is necessary to facilitate
transfers through the area and protect the ecosys-
tem. There remains, however, lack of total consen.
sus over the means of upgrading the distribution
network. CALFED, the joint federal/state coalition of
agencies and stakeholders, is working to develop a
solution for the ailing Bay-Delta and has identified
water transfers as one of several components
essential to improving the water-related problems
associated with the region.

This Layperson's Guide, part of a continuing series
published by the Water Education Foundation, is in.
tended to give the reader basic information on water
marketing and transfers in California. More in depth
information on many topics addressed in this guide
can be found in other Layperson's Guides.

To supply rapidly growing
urban areas in California
wirh wale1; some drh's are
tuming ro ag-TO-llr!Ja1/
lI'arer tran.\fers.

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