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<br />"Water Exchanges Help state Through Dry Years" <br /> <br />(Source: Nancy Vogel. <br /> <br />Los Angeles Times. <br /> <br />Seen as viewed. <br /> <br />April 4, 2002.) <br /> <br />Spectacular and expensive as it was, the collapse of the state's electricity <br />market hasn't hindered the buying and selling of an even more crucial commodity <br />in California: water. <br /> <br />Last year, enough water to supply more than 3 million people for a year changed <br />hands in deals cut outside the usual operations of California's major water <br />projects. <br /> <br />The sales amount to a near record, and even more water will be bought and sold <br />in coming years as the state struggles to accommodate its vital agriculture <br />industry and its growing population. Even so, experts say, the water transfers <br />in no way resemble the electricity market that soared and crashed last year at <br />a cost of tens of billions of dollars. On the contrary, many believe that a <br />quietly maturing water exchange makes for a more drought-resistant California, <br />where naturally erratic supplies get smoothed with minimal cost and harm. <br /> <br />Some examples: Rice-growing farm districts in the Sacramento Valley are selling <br />water to their cotton-growing brethren in the San Joaquin Valley. Southern <br />California cities have teamed up with farm districts near Bakersfield to <br />capture winter flood flows, percolate the water underground, then split the <br />supply when dry years come. Some irrigation districts are selling water <br />directly to the state to help endangered fish. <br /> <br />Not every deal is free of controversy. Some in Northern California--where much <br />of the water is sold--have fears of "colonization" by the southern part of the <br />state. But several of the more than 2,000 water districts in California are <br />getting more skilled at shifting water, for profit or policy, without <br />triggering an outcry. <br /> <br />The Oroville-Wyandotte Irrigation District in the Sierra foothills of Butte <br />County, for example, earned $750,000 selling water last year from ditches that <br />date to the Gold Rush. <br /> <br />Without that money, the district--provider of water to rural residents and <br />gentlemen-farmers--would have had to significantly raise rates to pay for the <br />consultants and attorneys it must hire to win federal re-licensing of four <br />hydroelectric power plants. <br /> <br />"Fifteen years ago, water did not have a value other than for consumptive <br />purposes," said district General Manager Mike Glaze. "And now it is a <br />marketable resource." <br /> <br />Therein lies a tale of two responses to the 1990s rage for deregulation. <br /> <br />Economists then argued that a free market--a forum in which buyers and sellers <br />could find one another and settle on prices--would relieve the chronic <br />California headaches of high electricity rates and erratic water supplies. <br /> <br />The state's electricity industry and policymakers eventually embraced the idea. <br />With Sacramento's blessing, the industry cast off 80 years of government <br />control and flung open the door to private entrepreneurs. <br /> <br />The staid water industry, ever aware that California's Constitution treats <br />water as a public resource, instead gave an entrepreneurial twist to government <br />control. Warily, public agencies began trying to arrange water sales. <br /> <br />58 <br />