[env-trinity] Renewal Water Delivery Contracts and Related Issues

[Byron]

Water Pacts Give State's Growers New Profit Stream

By Bettina Boxall
Times Staff Writer

February 16, 2005

The Bush administration plans this month to begin signing contracts that
will position Central Valley farmers to reap substantial profits for decades
by selling water to the state's expanding metropolitan areas.

The more than 200 contracts - governing most of the water from the massive
federal Central Valley Project - will give the valley's agribusiness
interests control over the single largest allotment of water in the state
for the next 50 years.

That will not directly affect how much urban users in places such as
Southern California pay for water. But by promising irrigation districts
more water than they may need - and at a relatively inexpensive price - the
agreements will virtually guarantee growers a dominant role in the state's
water markets.

The pacts will commit the U.S. Bureau of Reclamation to deliveries that have
harmed the environment in Northern and Central California. And they will
pledge to farmers the same amount of water that they received four decades
ago, despite projections that Central Valley agriculture will use less water
in the years to come because of more efficient irrigation and the spread of
cities into farm regions.

Environmental organizations, groups that monitor federal spending and
congressional critics contend that the Bush administration has crafted the
new contracts to benefit big farmers.

"Agriculture is important, but it's not the economic future of the state of
California," said Rep. George Miller (D-Martinez). "This isn't about
farming. It's about building an annuity for people who want to sell
government-subsidized water to Southern California or whoever needs it."

Bennett Raley, who oversaw negotiations for the new contracts as the
assistant secretary of Interior for water and science before resigning late
last year, defended the plans. The contracts were designed to "provide for
stability and functioning markets," he said, adding that they are the least
contentious, most efficient way to realign water use in the West. 

When cities go shopping for water, they will turn to sellers who can
guarantee a long-term supply, Raley said. To do that, sellers need long-term
control.

The Central Valley Project is the largest water-supply system in the
country. Reaching from the Cascades near Redding to the Tehachapis near
Bakersfield, the 450-mile-long network of dams, reservoirs and canals has
long been a polarizing symbol.

Conceived in the 1930s and built over the next several decades at a cost of
$3.2 billion to U.S. taxpayers, the project propelled the conversion of
California's dusty interior into a multibillion-dollar powerhouse of
industrial agriculture. It dried up stretches of one of the state's biggest
rivers, the San Joaquin, destroyed salmon runs and supplied Central Valley
growers with a vast quantity of cheap water. 

The valley remains the nation's biggest vegetable patch, producing $13
billion worth of crops a year.

But since the original contracts were written 40 years ago, California's
population has doubled to 36 million, its farm acreage has dropped by
roughly a quarter, and new environmental protections have set aside water
for fish and wildlife.

Critics such as Hamilton Candee, senior attorney and co- director of the
Western Water Project for the Natural Resources Defense Council, an
environmental group, say the contracts ignore those changes. "These
contracts offer this super-cheap water in quantities that go way beyond the
needs of the users," Candee said.

Irrigation districts will pay more for water under the new contracts. But it
still will be inexpensive relative to what other users pay - a projected $16
to $61 an acre-foot, compared with an average $500 an acre-foot paid by
Southern California's urban water agencies, which get their supplies
elsewhere. An acre-foot, the amount of water that would cover 1 acre to a
depth of 1 foot, is enough to supply roughly two households for a year. 

Kirk Rodgers, regional director of the reclamation bureau and the official
who will sign the contracts, said they "are in full compliance with laws and
statutes."

"We are not contracting for water where there is not a need," he said,
adding that irrigators had demonstrated they would be able to use the water
they get for agricultural purposes.

Despite those assurances, reclamation delivery records show some irrigation
districts consistently have failed to use all the water available to them. 

For instance, Reclamation District 108, one of the oldest districts in
California and the provider of water to 48,000 acres of rice and tomato
fields north of Sacramento, has in the last two decades never taken its full
allotment, according to bureau figures. All told, the district's unused
water amounts to more than 1 million acre-feet.

The Central Valley Project's biggest customer, the sprawling Westlands Water
District, also has failed several times in the last decade to take all the
water available to it.

Moreover, the district, which irrigates 570,000 acres of cotton, fruits and
vegetables on the San Joaquin Valley's west side, is shrinking
substantially. Westlands is taking 108,000 salt-laden acres out of
production with the help of a federal buyout. At times, the district has
discussed retiring an additional 100,000 acres that suffer from drainage
problems.

Westlands' new contract nonetheless will provide the same amount of water it
was promised in the past. Rodgers said that if Westlands' acreage drops
significantly, the bureau "would need to reevaluate what the needs are" but
that "it's too early" to decide now.

The managers of Reclamation District 108 and other districts also said
events in coming years could increase the amount of water they use. Farmers'
planting patterns could change, requiring more water, they said; in a
particularly dry year, they may need more water.

Because of its size and the enormous amount of water it delivers - more than
enough to supply every household in California - the Central Valley Project
has long been the target of reform efforts. The most notable was the 1992
Central Valley Project Improvement Act, sponsored by Miller.

That law set aside a large portion of water from the project for
environmental uses such as maintaining wildlife refuges and keeping enough
water in rivers to protect endangered fish. It shortened the length of
irrigation contracts from 40 years to 25 years, and allowed farmers to sell
their water to urban users outside the Central Valley.

But Miller and others complain that the new contracts skirt Congress' intent
in three major areas: their duration, the amounts of water involved and the
price the irrigators will pay.

"Every judgment call is a call for the current contractors," said Edward R.
Osann, who served as the Bureau of Reclamation's director of policy and
external affairs from 1993 to 1996 and now works as a water and energy
conservation consultant for utilities and environmental groups. "If you had
an umpire that called every ball a strike, sooner or later you'd wonder."

Although the 1992 law shortened contracts to 25 years, the new pacts can be
stretched to 50 years. The administration included a clause that provides an
automatic 25-year extension as long as contractors meet certain conditions.

Miller calls those near- automatic extensions "outrageous," and predicts the
contracts will be challenged in court. "They'll be sued, and we'll start all
over again," he said.

Environmentalists also argue that the amounts of water to be delivered under
the contracts should be smaller. The new agreements should reflect the fact
that the Central Valley Project frequently can't deliver full contract
quantities south of the Sacramento-San Joaquin Delta because of
environmental restrictions, they say.

Rodgers, however, said proposed new storage and diversion projects should
make more water available. And he pointed out that the contracts contain a
clause warning irrigators that in times of shortage, they may not get all
the promised water.

Critics also question whether the price the irrigation districts will be
charged will be high enough to meet a deadline for farmers to repay the
government their $1.3-billion share of the cost of the Central Valley
Project. In 1986, Congress said farmers must pay that bill by 2030.

With project water costing as little as $2 an acre-foot under the expiring
contracts, irrigators have so far repaid just $122.6 million. Under the new
contracts, the price will be higher and adjusted each year. Reclamation
bureau officials say that will be enough to pay the debt. "We have made a
commitment to Congressman Miller," said John Davis, deputy regional director
and contract negotiator. "We know we owe $1.3 billion, and have said we will
[provide] him with yearly updates. We're not asking him to trust us." 

Water under the new contracts will still be subsidized: the price will be
less than what it costs the government to provide it. That is largely
because under century-old policies, the government has made what amounts to
a decades-long, interest-free loan to farmers. Although the farmers owe the
federal treasury a huge sum for their share of the cost of building the
water project, they are not required to pay any interest as part of their
irrigation bills. 

Farmers do have to pay interest to the government when they sell water to
urban users outside of the project, along with a surcharge of $25 an
acre-foot. 

But with urban water agencies now paying from $110 to more than $200 an
acre-foot for farm water - prices that can only go up with rising urban
demand - sellers can still look forward to hefty profits. 

California's water markets are just emerging, and many farmers remain
reluctant to sell. "There is a paranoia that exists in the community that if
we don't use the water, we'll lose it," said Van Tenney, general manager of
the Glenn-Colusa Irrigation District, which supplies water to 170,000 acres,
mostly planted in rice, in the Sacramento Valley.

But with 80% of California's water supply going to agriculture statewide,
farm-to-city sales are widely expected to become a permanent fixture in the
state. 

Glenn-Colusa just sealed a deal for a second round of water options to
Southern California's major urban wholesaler, the Metropolitan Water
District of Southern California. With the first transfer, in 2003, the
irrigation district reaped $4 million for fallowing rice fields and sending
water south.

This year, it could collect $10 million from the MWD for transferring up to
80,000 acre-feet. 

Looking at those kinds of figures, critics say the new federal water
contracts are positioning irrigation districts to make a bundle in the
coming decades. Said Aileen Roder, program director for Taxpayers for Common
Sense, a watchdog group: "We have set up a water-profiteering system here."


 

 

Byron Leydecker, 

Chair, Friends of Trinity River

Consultant, Californiua Trout, Inc.

PO Box 2327

Mill Valley, CA 94942-2327

415 383 4810 ph

415 383 9562 fx

415 519 4810 ce

bwl3 at comcast.net

bleydecker at stanfordalumni.org (secondary)

http://www.fotr.org

http://caltrout.org

 

 

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