This story in the AgAlert helps illustrate why individual farmers acting in a water market cannot make the decisions that climate change will require. The article mentions four growers:
Stuller is down to 80 acres of citrus, 1 of 4 wells gives water.
Everett, Terra Bella ID, irrigating 15 acres of 75. Maintaining his valuable lemons and bees.
Unnamed friend of Everett, not farming entire 160 acres.
Unnamed ranch, removing a block (160 acres?) Valencias, which is a real shame ’cause I love Valencias.
It sounds like these guys are making good economic decisions; they are accurately assessing when they can’t afford to farm and keeping the high value crops.
“We can’t justify the cost of the water needed to grow this crop because of the value, so we need to take that expensive ($2,000 an acre-foot) water and grow more valuable crops such as mandarins,” Stuller said. “Growers are taking the citrus that only produces $100 a bin and pushing it out or letting it dry up, to move water to farm mandarins that produce $400 a bin.”
So why not let them work out their future in a water market?
Here are my usual reasons that we are all bored with:
1. The drought we are in now likely represents the coming climate. These guys have no water to sell if they want to do any farming at all. If they do sell, what are they then? Re-entry into farming is difficult. They become notational farmers who have other careers but get a small side income from the little water they sell every year?
2. I want them to farm because I like the small farms on the east side of the Valley. So maybe I am happy because they could buy water in a market. First, from whom? Second, I would rather they just get water for the cost of conveyance because I want them to have secure resilient farms. Third, I don’t want them to have high water costs that force them to grow only high value lemons. I want them to grow a variety of citrus, including Valencias and navels.
The new reason farmers shouldn’t make individual decisions about buying and selling water is that individual farms are on the wrong scale for cheaply moving water:
3. We can’t get a good sense of the proportions in the article. But let’s look at the farm that they gave the numbers for. Everett has kept 20% of in acreage in service. Those 15 acres must now support 75 acres worth of operations and maintenance costs for the infrastructure that delivers water to his farm; district O&M costs on each acre just became four times as expensive. On every farm, the acreage left in production will have to pay for all the costs of farmgate delivery.
For the sake of this argument, let’s say that this drought portends the coming climate and that irrigated acreage will decrease 25%.
Imagine the poor district general manager looking at his district map, with dry quarter-sections on every separate parcel. (Grant that good rational farmers have all made smart decisions at the farm level.) The district manager wishes that he too could make the rational decision. If he’s going to lose a quarter of farmed district acreage, why couldn’t it be the south-east lateral? That thing is due for a new pump, always did cost more than the gravity fed ones, the radical environmentalists are talking about a kit fox sighting out that way, and the retiring ditchtender was the only one who could nurse it through a storm anyway.
At the district level, laterals are not all the same. They cost different amounts to maintain and operate. Abandoning the low value ones first is the best way to keep a district solvent. Keeping the entire infrastructure to service much less irrigated acreage will make O&M that much more expensive per acre. Optimizing that is a decision that (smart, rational) individual farmers cannot make, because it involves more than the property they control.
The same concept scales up. If a great deal of acreage is going to go out of production (as I predict) the decisions about what to consolidate, what infrastructure has the most value, what acreage could serve other purposes like power generation or re-naturalization, should be made at the project level. Even in a market, even with perfect information, even with economically rational decision-making, individual farmers responding on their own farms are at the wrong scale to make those decisions. Lots of tiny, scattered, widely distributed retired acreage will become a burden.