You are not some novice at this! I expect better from you! It is stories like yours that are perpetuating one of the contentious myths of CA water, which means that I’m going to have to hear this shit at cocktail parties with my laypeople friends. Worse, we just covered this! Last week!
The selling price in the Dudley Ridge deals — $5,200 per acre-foot for Sandridge Brothers and $5,850 per acre-foot for 3R and Jackson — is 10 times the water’s value to farmers. Farmers have little chance of competing for this allotment.
Look. If the Dudley Ridge farmers buy their water for $500/acrefoot each year, it must be worth at least that to them. Say that it is worth $510/acrefoot to them. This year it is worth $510/acrefoot to them. They’d buy it next year, and that would also be worth $509/acrefoot. It’d probably be worth a little less than $510, because it is farther out in the future, so there is more risk associated with it. This year and next year’s water has a value of $1019 to them. The future stream of water has a worth every year to them, and that adds up. That is what the Dudley Ridge farmers have sold. ALL THEIR FUTURE WATER. They sold an acre-foot of water right, and all the water that will come to that right in the future. I don’t know what that is worth. Depends on how reliable the supply is. But Tejon Ranch is willing to bet that each acre-foot of water right AND ALL THE FUTURE WATER IT CONTAINS is worth about $5K. The Dudley Ridge farmers are willing to part with a water right AND ALL THE FUTURE WATER IT CONTAINS for about $5k. If you wanted to buy one of this year’s acre-feet of water from a Dudley Ridge farmer, he would probably be willing to part with it for something reasonable, like $600.
I have zero love for Dudley Ridge, but you are libeling them when you say they’re selling their water for ten times what it is worth. Worse, you are making cocktail parties more boring for me when I have to keep explaining the difference between selling an acrefoot of water and selling an acrefoot of water right to some starry-eyed layperson. That layperson SHOULD NOT BE YOU, Mark Grossi. There are plenty of real complaints about Dudley Ridge. The way they’ve circumvented the democratic intentions of special districts. The unpriced environmental externalities of their water and drainage. The near-feudal system of poverty on the west side of the San Joaquin Valley. But there is no outrageous profit on this sale*. You should understand this if you are going to write about water. You should issue a correction.
I cannot wait to lavish praise on the first water reporter to get this right.
*The outrageous part is that the growers in Dudley Ridge have the ability to sell the right in the first place. We wanted them to have access to water to farm, and they got that. If farming is becoming more marginal, or if they cannot make a profit without a steady stream of water in the future (which they won’t be getting), they shouldn’t have to buy water from the state for $500. But then, the water should revert to the state, who should lease access to that water to the next person who wants it. The outrageous part is that huge corporations that have parted out Dudley Ridge are pocketing money for the State’s water, which they didn’t make and aren’t even conveying. The outrageous part is not that the value of all that future water is $5K, but that a rich private entity gets that money instead of the people of the State.