As a child, I spent summers on my family's dairy in Panama. For 100 years, our family has held the dairy in trust for the next generation. We were raised with farm values: Never borrow when you owe; never mortgage the farm; and above all, always prepare for bad water years. On our farm, water is scarce. Over my lifetime, we've irrigated from ponds, from a well powered by a rickety windmill or a gas engine, and on occasion, by trucking in water. Our irrigation is expensive, but for a century we've made do through thoughtful planning.
Fast-forward to Modesto, 2012. Because of our forefathers' foresight, our once-arid valley flows with water, and we have become America's breadbasket. For a century, MID farmers have had access to high-quality affordable water, and not a single farmed acre in the Modesto Irrigation District has failed for lack of water. Because of our low water price of less than $9 an acre-foot, MID farmers continue to thrive. However, the 100-year old canal system is at risk of catastrophic failure. More than $100 million in infrastructure repairs is needed to assure that Modesto farmers continue to receive high-quality affordable water. The questions are who will pay for these infrastructure repairs, and at this watershed moment, what course should MID take to best prepare the district for the next 100 years?
As for bearing the $100 million cost of repairs, there are only four options.
Option A: For the next 10 years, the cost could be shared by agriculture and Modesto. Farmers would pay eight times their current rates, and city consumers would have to pay $2 million more a year for the repairs. Since the average MID irrigator farms less than 20 acres, I'm concerned about the survival of our agricultural community if it has to pay eight times the current price of water. As for the City's two million dollar a year share of a repair tax, I wonder how its customers could bear that burden? As a Trustee for Modesto City Schools, (Modesto's fourth-largest water user,) I wonder what our schools would have to cut to pay the fourth-largest share of a $2 million annual repair bill.
Option B: The repairs could be financed through 30-year bonds. Agriculture water rates would go up five-fold, city users would have to pay $1.3 million per year for 30 years, and Wall Street would continue to get rich off of us. This also seems a shortsighted option. As my father and grandfather taught me, you never mortgage the farm when you can pay cash on the barrel.
Option C: The agricultural community could solely bear the repair costs. MID would have to impose a tax of $200 per acre, in addition to the cost of water. The average small farm would pay at least $4000 a year in this tax-to-farm. This seems the worst option: In these bad economic times, agriculture is the one industry that thrives. A farm-only tax would be bad for everyone.
Option D: MID pursues alternative revenue streams to pay for the repairs, including San Francisco's offer to pay almost 100 times current local rates to purchase a portion of the water MID currently wastes. Due to the inefficient infrastructure, MID dumps more water under the Golden Gate Bridge than San Francisco is considering buying. One way or the other, our excess water is heading to San Francisco. Do we continue to waste the water, or do we accept San Francisco's offer to monetize our excess water to put Modesto's economy first?
Which raises the second question: What course should MID take to prepare for the next 100 years? MID has proposed a small sale of 2,200 acre feet per year to San Francisco, as well as the study of the impacts of a larger 25,000 acre-foot transfer. The smaller transfer is a literal drop in the bucket compared to Modesto's water supply, and could generate $50 million over 25 years. MID should approve this small water sale.
As for the larger transfer, MID should start the environmental review process, to see if the larger transfer would be in Modesto's interest. Before approving the larger transfer, which could generate more than half a billion dollars over 25 years, MID should assure that local water needs are met for the life of the contract. MID should also implement a citizens advisory committee to ensure that proceeds are spent transparently for the betterment of the district. This committee could also ensure that the infrastructure repairs are completed by local firms and workers, so as to benefit the local economy.
Selling water is never popular, in fact, for those of us who have grown up on farms, it goes against our grain. However, MID has a duty to do what is right for Modesto farmers and rate payers. If selling to San Francisco the water that we currently waste will pay for the next 100 years of clean affordable water for Modesto farmers, we would be fools to say no.
Villalobos is a Modesto attorney and co-chairman of the Latino Community Roundtable Water and Power Committee.