Opinions Page Editor

Mike Dunbar: Profiting on water is wrong when it belongs to all of us

mdunbar@modbee.comMarch 8, 2014 

Farmers like to talk about their water. But in reality, all the water in California is our water. Every citizen owns it, just like we own the parks and the roads. It’s a shared resource; a common good. So when someone tries to profit unduly off water, well, that’s just wrong.

But apparently not according to the Modesto Irrigation District or even the state itself.

In facing a historic drought, the MID board of directors – with three new members – decided to apply economic theory to allocating water. It voted last week to allow any farmer who doesn’t need his or her water – either because they’ve got pumps and can replace it with groundwater or because they’ve decided not to plant crops this year – to “transfer” that unused water to another farmer in the district.

It will be up to those two farmers to work out the details, like how much the farmer who gets the water will pay for the “transfer.” If more than one farmer wants the water, then a bidding war could ensue. And the farmer with the water could reap quite a windfall. Farmers who get outbid could face substantial losses.

It’s a plan that would make Alan Greenspan or Milton Friedman or Ayn Rand proud. They were all proponents of free markets and survival of the financially fittest.

They were also wrong when it comes to water.

“You can’t have a free-market approach to something that doesn’t belong to you,” said MID Director Jake Wenger. That sums it up perfectly.

Farmers are fairly conservative, independent to a fault. But for more than a century they have pooled their resources, so to speak, and shared water through irrigation districts. And nowhere in America is there a greater history of this sharing than in Stanislaus County – which established the first two irrigation districts in the early 1880s. Those forward-thinking pioneers also pledged enormous portions of their personal fortunes to build the dams that stored the water for later use.

But since that time, California’s water law has become complicated and even contradictory. And maybe people have become more greedy.

Andy Sawyer, the State Water Resources Control Board’s assistant chief counsel, has no problem seeing water transferred to the highest bidders. “If we’re going to get through this drought,” said Sawyer, “we’re going to see some transfers. ... I don’t know about these particular transfers, but the State Water Board supports (transfers) in general – as long as you follow the rules.”

But which rules? Section 102 of the water code spells out public ownership and prohibits personal profits. But Section 109 encourages transfers, and that’s the section the state is focused on.

A few weeks ago, the Buena Vista Water Storage District decided to auction off 14,000 acre-feet of water from fallowed fields. The district paid a flat fee to the farmers, then kept several million dollars of profits from the auction. All of those profits will be put into district improvement projects. No similar plan was considered by the MID.

MID board member John Mensinger points out that the MID actually set up two programs. The transfers and one that allows growers to return their allocation for $267 per acre-foot. That water then will be pooled and redistributed. If there’s not enough to go around, a lottery will pick the lucky farmers who will get the water at the district’s cost. But what happens if it starts raining hard, and there’s no demand? Then the district will lose whatever it has paid to those farmers for the water.

“This is all uncharted territory,” said Mensinger, who is trying to do the right thing and is concerned that rate payers aren’t left holding a soggy bag.

Wenger feels the MID became desperate too soon. With some careful planning and pumping, he believes the district can weather this drought season without destroying anyone’s livelihood.

“It’s early yet,” he said, noting the district’s initial allocation of 18 inches (usually it’s 36) could go up with even a little more rainfall. “The rain that’s already fallen could pop us up to 20 (inches). By the time we get into May ... we could see that base allotment come up to maybe even 24 inches.” That, he said, would save most everyone’s trees and vines. “We’re in a crisis, but we’re not in desperation.”

The board has already chosen its plan and it might work. Regardless, the next time this comes up they must remember – the water belongs to all of us.

Dunbar is The Bee’s Opinions Page Editor; contact him at (209) 578-2325.

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