You guys know I’m not really going to return to that last post and write it up elegantly, right?
Honestly, the only decent use I can see for water markets is in-basin cap-and-trade systems for getting to sustainable groundwater use. The locals will put cap-and-trade in place themselves in their Groundwater Sustainability Plans, because it will feel all “free-market” manly to them and obscures the real outcomes. If it sucks after that, and growers realize that it forces the less-rich out of farming no less than power politics would have, I’ll have no sympathy, because self-inflicted. I’ve warned them as clearly as I can.
To be clear: the land retirement that is necessary to bring basins into sustainability will happen no matter what. Growers in severely overdrafted basins should be thinking about their exit terms. It may be that money from a cap-and-trade system is good enough, although these farmers didn’t think so afterward. But if there are other, non-monetary exit terms that would make the transition feel better (possibly in addition to money), a water market of any kind won’t provide those.
On the public record 
I’d like to add a couple of anecdote-based points here: The midwife of California’s water market is, of course, the State Water Resources Control Board – to get water from point A, where the attendant water right is located, to point B, the place of intended use, one must in most cases apply to the SWRBC for permission and the SWRCB has to make certain findings according to law before it can approve the transfer.
As we first entered a string of dry years between 1986 and 1992 a few water transfers were applied for but were set aside on the advice of SWRCB staff that the transfers required CEQA compliance and that insufficient time remained to complete such, i.e., within the timeframe anticipated by the transferring parties.
In the of second of those dry 1980s-90s years there were several more water transfer requests put before the SWRCB, all of which were vigorously supported by the Environmental Defense Fund and opposed by the legislatively-created California Advisory Committee on Salmon and Steelhead Trout (see http://fisheries.legislature.ca.gov/content/california-advisory-committee-salmon-and-steelhead-trout-cac). EDF’s position, as best I understood it, was that water transfers would delay the day that new reservoirs would be required. The Advisory Committee’s position was that State facilitation of water transfers should be based, among other things, on an understanding of third-party impacts, including those impacting public trust resources.
There had been some slight water transfer activity in the prior, 1977-78 drought, the third-party impacts issue had been raised then and the SWRCB and DWR (which was involved in transfers in both of these droughty periods) committed to tackling the third-party impacts matter. A committee was formed, met a few times, prepared a draft report and the matter was shelved as the rains returned.
In 1987 then-Assemblyman Costa, chair of the Assembly Water Committee, introduced legislation to exempt ‘temporary’ water transfers from CEQA. I can recall being prepared to testify against a transfer on behalf the Advisory Committee when Costa, summoned from the Capitol for the purpose, showed up long enough to confirm for the record that his bill was progressing nicely through the puzzle factory and that the transfers before the Board that day were precisely the sort that would be exempt from CEQA as soon as the Governor was able to sign it. Which took some wind out of my testimony sails ….
When I did finally deliver my opposition testimony one of the Board members looked at me kindly and said ‘these are definitely temporary transfers – permanent transfers, those for which you are concerned, would be far pricier than these’. Which is one of OTPR’s points, right? ‘Buyers want constant predictable large volumes’
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The 1986-92 drought broke and the SWRCB once more approached the water transfer third-party impact issue, this time with public meetings and some public participation (the earlier stab had been entirely in-house). And there was a report – and I have to admit I don’t know what came of it.
But I’d bet the farm that the third-party impacts associated with SWRCB-processed water transfers are left un-analyzed to this day.
Does anyone know better?
Bill Kier
Richard Howitt conducted a study of agricultural third-party impacts from the Drought Water Bank (that actually ran to 1994). Several other studies have been conducted since then, and many transfer agreements include compensation for third-party impacts.
Interbasin transfers and increased impounding of surface water still seem to be off the table. Raising Shasta and Pardee and building Sites and Medicine Flats all will reduce pressure.
The MWD paid for an extensive land fallowing experiment in wyoming in 1996 to test purchasing that state’s compact allotment (and they’ve got a budget hole, so let’s just buy it and then transfer Platte allotments over to the Green basin, increasing MWD’s draw from the Colorado, reducing SWP, increasing CVP’s draw from the delta, and there, more for Westlands. Hooray!)
And as long as you are getting furious at almonds, does it really make sense to continue to grow cabbage in Yuma? Think big picture. And howabout an itty bitty bit from the Klamath. Those trout can have sex up in BC anyway. I hear the climate’s getting better.
Friend, perhaps you are new here and maybe you aren’t familiar with the house style. It is too much to expect everyone to read all the archives. I suppose that every few years, I can bear to spell it out:
I have never, even once, pretended to care about anything outside of California. I have never read up on the projects outside the Great Valley, since I might accidently also learn about things outside of California. Since I am vastly ignorant of those projects, I will never opine on them. We are a niche blog here; a narrow and acquired taste.
Regarding CEQA, et. Al.
We have a vexatious litigant statute in this state. Use it.
Or cap and trade babies and buy credits from China.
But more seriously: we have Local Agency Forming Commissions in this state. What about Local Agency Reforming Commissions with the authority to hold shotgun weddings to East Porterville?