Tuesday, July 29, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

In dry California, water fetching record prices

California Drought Water Auctions

FILE - In this May 1, 2014 photo, irrigation water runs along a dried-up ditch between rice farms in Richvale, Calif. In dry California, water is fetching record high prices. As drought has deepened in the last few months, a handful of special districts in the state's agricultural heartland have made millions through auctions of their private, underground caches that go to the highest bidders. With the unregulated, erratic water market heating up in anticipation of the hot summer months, the price is only going up. In the last five years alone, it has grown tenfold, shooting to as much as $2,200 an acre foot. (AP Photo/Jae C. Hong, FILE)

By
From page A12 | July 02, 2014 |

SAN FRANCISCO — Throughout California’s desperately dry Central Valley, those with water to spare are cashing in.

As a third parched summer forces farmers to fallow fields and lay off workers, two water districts and a pair of landowners in the heart of the state’s farmland are making millions of dollars by auctioning off their private caches.

Nearly 40 others also are seeking to sell their surplus water this year, according to state and federal records.

Economists say it’s been decades since the water market has been this hot. In the last five years alone, the price has grown tenfold to as much as $2,200 an acre-foot — enough to cover a football field with a foot of water.

Unlike the previous drought in 2009, the state has been hands-off, letting the market set the price even though severe shortages prompted a statewide drought emergency declaration this year.

The price spike comes after repeated calls from scientists that global warming will worsen droughts and increase the cost of maintaining California’s strained water supply systems.

Some water economists have called for more regulations to keep aquifers from being depleted and ensure the market is not subject to manipulation such as that seen in the energy crisis of summer 2001, when the state was besieged by rolling blackouts.

“If you have a really scarce natural resource that the state’s economy depends on, it would be nice to have it run efficiently and transparently,” said Richard Howitt, professor emeritus at the University of California, Davis.

Private water sales are becoming more common in states that have been hit by drought, including Texas and Colorado.

In California, the sellers include those who hold claims on water that date back a century, private firms who are extracting groundwater and landowners who stored water when it was plentiful in underground caverns known as water banks.

“This year the market is unbelievable,” said Thomas Grecie, the general manager of the Madera Irrigation District, which recently made nearly $7 million from selling about 3,200 acre-feet. “And this is a way to pay our bills.”

All of the district’s water went to farms; the city of Santa Barbara, which has its own water shortages, was outbid.

The prices are so high in some rural pockets that water auctions have become a spectacle.

One agricultural water district amid the almond orchards and derrick fields northwest of Bakersfield recently announced it would sell off extra water it acquired through a more than century-old right to use flows from the Kern River.

Local TV crews and journalists flocked to the district’s office in February to watch as manager Maurice Etchechury unveiled bids enclosed in about 50 sealed envelopes before the cameras.

“Now everyone’s mad at me saying I increased the price of water. I didn’t do it, the weather did it,” said Etchechury, who manages the Buena Vista Water Storage District, which netted about $13.5 million from the auction of 12,000 acre-feet of water.

Competition for water in California is heightened by the state’s geography: The north has the water resources but the biggest water consumers are to the south, including most of the country’s produce crops.

The amount shipped south through a network of pumps, pipes and aqueducts is limited by the drought and legal restrictions on pumping to save a threatened fish.

During the last drought, the state Department of Water Resources ran a drought water bank, which helped broker deals between those who were short of water and those who had plenty. But several environmental groups sued, alleging the state failed to comply with the California Environmental Quality Act in approving the sales, and won.

This year, the state is standing aside, saying buyers and sellers have not asked for the state’s help. “We think that buyers and sellers can negotiate their own deals better than the state,” said Nancy Quan, a supervising engineer with the department.

Quan’s department, the U.S. Bureau of Reclamation and the State Water Resources Control Board have tracked at least 38 separate sales this year, but the agencies are not aware of all sales, nor do they keep track of the price of water sold, officials said.

The maximum volume that could change hands through the 38 transactions is 730,323 acre-feet, which is about 25 percent of what the State Water Project has delivered to farms and cities in an average year in the last decade.

That figure still doesn’t include the many private water sales that do not require any use of government-run pipes or canals, including the three chronicled by the AP. It’s not clear however how much of this water will be sold via auctions.

Some of those in the best position to sell water this year have been able to store their excess supplies in underground banks, a tool widely embraced in the West for making water supplies reliable and marketable. The area surrounding Bakersfield is home to some of the country’s largest water banks.

The drought is so severe that aggressive pumping of the banked supplies may cause some wells to run dry by year’s end, said Eric Averett, general manager the Rosedale Rio Bravo District, located next to several of the state’s largest underground caches.

Farther north in the long, flat Central Valley, others are drilling new wells to sell off groundwater.

A water district board in Stanislaus County approved a pilot project this month to buy up to 26,000 acre-feet of groundwater pumped over two years from 14 wells on two landowners’ parcels in neighboring Merced County.

Since the district is getting no water from the federal government this year, the extra water will let farmers keep their trees alive, said Anthea Hansen, general manager of the arid Del Puerto Water District.

Hansen estimated growers would ultimately pay $775 to $980 an acre-foot — a total of roughly $20 million to $25.5 million.

“We have to try to keep them alive,” Hansen said. “It’s too much loss in the investment and the local economy to not try.”

 

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | 5 comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • JimboJuly 01, 2014 - 4:18 pm

    In this age of water shortages isn't it time to consider desalination water plants for coastal cities?

    Reply | Report abusive comment
  • Rick WoodJuly 01, 2014 - 5:09 pm

    Not sure what you mean. There are several projects underway.

    Reply | Report abusive comment
  • Rick WoodJuly 01, 2014 - 10:41 pm

    Truly impressive figures, but keep in mind these are "spot market" prices for water for one year under extreme conditions. Still, it show's you what water is worth to someone who really needs it. I'm a bit surprised farmers are paying these prices, but I guess if you have a big investment in a permanent crop such as an orchard or vineyard, it can be worth it. These prices also show why I was surprised Vacaville sold water to Benicia earlier this year for only $200/AF. There has to be more to that story.

    Reply | Report abusive comment
  • patrickJuly 02, 2014 - 1:27 pm

    In the mid seventies local farmers paid $3.00 an acre foot for irrigation.

    Reply | Report abusive comment
  • patrickJuly 02, 2014 - 2:09 pm

    Home owners in ca have no mineral rights. Anything below your grass lawn belongs to the state. The state senate is now considering putting water meters for any property with a well.--------------NO SUPRISE.

    Reply | Report abusive comment
.

Solano News

 
Library teens plan summer reading party

By Glen Faison | From Page: A3

 
Weather for Tuesday, July 29, 2014

By Daily Republic staff | From Page:

 
Big-rig driver strikes telephone lines in Fairfield

By Ryan McCarthy | From Page: A6, 2 Comments | Gallery

 
Fairfield police log: July 27, 2014

By Glen Faison | From Page: A12

Suisun City police log: June 27, 2014

By Glen Faison | From Page: A12

 
Caltrans makes I-80 lane change

By Barry Eberling | From Page: A3, 5 Comments

 
Fairfield tries to end Cordelia Road detour

By Barry Eberling | From Page: A3, 15 Comments | Gallery

 
‘Guardians of the Galaxy’ primed for big screen

By Amy Maginnis-Honey | From Page: A7 | Gallery

.

US / World

 
Sacramento Gold Rush Days canceled due to drought

By The Associated Press | From Page:

 
Man charged in teen’s 9-month disappearance

By The Associated Press | From Page: , 1 Comment | Gallery

 
Deal to improve veterans’ health care costs $17B

By The Associated Press | From Page: , 1 Comment | Gallery

Suspect dead, 2 marshals and cop wounded in NYC

By The Associated Press | From Page: | Gallery

 
New fears about Ebola spread after plane scare

By The Associated Press | From Page: , 1 Comment

In Iraq’s Mosul, radicals unleash their vision

By The Associated Press | From Page: , 2 Comments

 
Fighting in Ukraine prompts residents to flee

By The Associated Press | From Page: | Gallery

 
Witnesses: Thunderstorm hit beach without warning

By The Associated Press | From Page: | Gallery

Suspect’s mom also charged in Long Beach burglary

By The Associated Press | From Page:

 
City: Emails show ‘cozy’ ties of PG&E, regulator

By The Associated Press | From Page: | Gallery

Pool water dumped in South Tahoe; resort fires 3

By The Associated Press | From Page:

 
Additional charge filed in California wildfire

By The Associated Press | From Page:

California governor takes dig at Texas guard plan

By The Associated Press | From Page: , 2 Comments | Gallery

 
.

Opinion

Editorial cartoons for July 29, 2014

By Daily Republic Syndicated Content | From Page:

 
 
.

Living

Horoscopes for July 29, 2014

By Holiday Mathis | From Page: B5

 
Today in History for July 29, 2014

By The Associated Press | From Page:

I don’t want to have intimate contact since learning I had a STD

By Kathy Mitchell and Marcy Sugar | From Page:

 
Community Calendar: July 29, 2014

By Susan Hiland | From Page:

.

Entertainment

Kevin Bacon brings his ‘Six Degrees’ to Comic-Con

By The Associated Press | From Page:

 
Sarah Palin launches online subscription channel

By The Associated Press | From Page: A7, 1 Comment | Gallery

‘Sharknado’ sequel has bite and lots of laughs

By Frazier Moore | From Page: A7 | Gallery

 
TVGrid July 29

By Daily Republic Syndicated Content | From Page: B6

.

Sports

Giants lose 5th straight, 5-0 to Pirates

By The Associated Press | From Page:

 
 
Lakers finally confirm Byron Scott is new coach

By The Associated Press | From Page:

Raiders relying on healthy Watson to solidify line

By The Associated Press | From Page:

 
This date in sports history for Tuesday, July 29, 2014

By The Associated Press | From Page:

Quarterback Johnny Manziel’s day at Browns camp

By The Associated Press | From Page: | Gallery

 
Judge OKs record-setting $2B sale of Clippers

By The Associated Press | From Page: | Gallery

Humphrey to savor Hall of Fame day with ‘wingman’

By The Associated Press | From Page:

 
Rays’ Archer: ‘Never saw Hank Aaron flip his bat’

By The Associated Press | From Page:

 
Reed HOF induction gives Bills cause to celebrate

By The Associated Press | From Page: | Gallery

In the Pits: Gordon eyeing 5th title after big Brickyard win

By Jenna Fryer | From Page: | Gallery

 
Marketing agreement an obstacle in US bid for 2024

By The Associated Press | From Page:

Sailors to navigate dirty water in 1st Rio test

By The Associated Press | From Page:

 
Manningham back with Giants, with no guarantees

By The Associated Press | From Page:

.

Business

Contracts to buy US homes slip in June

By The Associated Press | From Page: | Gallery

 
FAA proposes to fine Southwest Airlines $12M

By The Associated Press | From Page: | Gallery

Stocks pause as traders await key economic news

By The Associated Press | From Page:

 
Zillow buying Trulia to build real estate titan

By The Associated Press | From Page: | Gallery

Dollar Tree steps up fight, buys Family Dollar

By The Associated Press | From Page: | Gallery

 
.

Obituaries

.

Comics

B.C. July 29

By Daily Republic Syndicated Content | From Page: B4

 
Get Fuzzy July 29

By Daily Republic Syndicated Content | From Page: B4

Baldo July 29

By Daily Republic Syndicated Content | From Page: B4

 
Baby Blues July 29

By Daily Republic Syndicated Content | From Page: B4

Rose is Rose July 29

By Daily Republic Syndicated Content | From Page: B4

 
Zits July 29

By Daily Republic Syndicated Content | From Page: B4

Crossword July 29

By Daily Republic Syndicated Content | From Page: B5

 
Garfield July 29

By Daily Republic Syndicated Content | From Page: B4

Pickles July 29

By Daily Republic Syndicated Content | From Page: B4

 
Frank and Ernest July 29

By Daily Republic Syndicated Content | From Page: B4

Beetle Bailey July 29

By Daily Republic Syndicated Content | From Page: B4

 
Peanuts July 29

By Daily Republic Syndicated Content | From Page: B4

Word Sleuth July 29

By Daily Republic Syndicated Content | From Page: B5

 
Cryptoquote July 29

By Daily Republic Syndicated Content | From Page: B5

For Better or Worse July 29

By Daily Republic Syndicated Content | From Page: B4

 
Bridge July 29

By Daily Republic Syndicated Content | From Page: B5

Wizard of Id July 29

By Daily Republic Syndicated Content | From Page: B4

 
Dilbert July 29

By Daily Republic Syndicated Content | From Page: B4

Sally Forth July 29

By Daily Republic Syndicated Content | From Page: B4

 
Blondie July 29

By Daily Republic Syndicated Content | From Page: B4

Sudoku July 29

By Daily Republic Syndicated Content | From Page: B5