DROUGHT IN THE WEST

This is the end of innocence. ~ Don Henley  

Once again, California and the western US is suffering from a significant water drought. Water, a precious finite resource that sustains our lives, is a common resource needed by every living organism. Even though we 39.6 million residents innocently do not want to admit it, periodic droughts have been an all too regular feature of our environmental landscape for centuries.

Over the last twenty years, three out of four years in California and the American West have been drought years. It’s hardly surprising, given that we live in a semi-arid region. The US Drought Monitor shows that over 90% of California currently is suffering from “extreme” or “exceptional” water drought conditions. The on-going drought has contributed to 11 major fires and 7,738 incidents in the state according to Cal Fire this season.

A drought emergency was declared in May by the California Water Resources Control Board (Board). For the first time ever the US Dept. of Interior declared on Aug. 16 a water shortage on the Colorado River basin that provides much water to seven western states, including southern California. Last year, California received an out-sized 62% of the Colorado River Lower Basin’s water allocation. Starting in Jan. 2022, farmers, ranchers, and irrigation districts will be forced to use less water.

The Board has already reduced the amount of water CA farmers can draw from rivers and streams. These reductions are unusual because in well-endowed water politics, water power usually runs uphill to Sacramento. Although bountiful, the state’s agricultural output accounts for only 0.8% of the state’s GDP, but more than 80% of its potable water usage. Such water-intensity illustrates that no one can grow almonds, artichokes, grapes or lettuce without “liquid gold.”

If California wants to reduce its water consumption, agriculture is where decreases need to start first and foremost. The price of farmers’ irrigation water has been deeply subsidized by state and federal agencies forever. With its slight cost, California ag irrigators, as well as other users have had no economic incentive to conserve or efficiently use water.

We desperately need a completely-justified increase in water pricing. Who knows, perhaps this drought might entice water policy-makers to properly raise water’s price so the reduced volumes of H2O available for agricultural irrigators would be used far more effectively. Non-ag, residential customers would be incented to use Xeriscaping methods and otherwise conserve. Lawns would become an endangered “species.”

Surface irrigation systems – also called flood irrigation where water is pumped onto an entire farm section – is highly water-wasteful. Unsurprisingly, surface systems are the most commonly used ag water irrigation system, principally because of its very low initial capital cost. California almond growers, who use about 14% of California’s prime, irrigated their cropland, overwhelmingly use surface irrigation. Drip irrigation systems are far more water-efficient, providing water only to the individual plant’s root systems. Much of California’s wine-grape industry, which uses about 7% of the state’s prime, irrigated cropland, employs drip systems.

So far, Governor Newsom has imposed no water-reduction mandates for non-agriculture water usage that we citizens consume. It’s probably only a matter of time, now that the recall election is history.

Unlike the last drought that ended in 2016, the federal government swiftly has reduced water allocations by 75% in the Central Valley Project (CVP) to farmers and cities. The CVP provides about 20% of the state’s potable water through its huge system of reservoirs and canals. Reservoirs, like Shasta Lake shown below, are now less than 25% of capacity, and continue to drop rapidly every day.

 

Shasta Lake/reservoir, July 2021.

Before the winter rains hopefully begin in a month or so, it is vital that federal and state water policies throughout the western US are changed. Like others before it, this devastating drought’s impacts are caused in no small part by misguided policies in the water market.

It’s an unfortunately fine example of a liquid tragedy of the commons. This tragedy can be mitigated by increasing everyone’s water price to properly reflect its true, essential value. In addition, water districts can incentivize conservation by providing bill credits and rebates to customers who have reduced their usage by some minimal percentage – say 20% – via conservation or installation of water-saving methods that will decrease future usage. Such incentives have produced impressive reductions in electricity usage, but all too many water utilities and districts seem inured to their value. This hesitancy needs to end.

 

A DAMMED WATER CONSERVATION POLICY

Water is the driving force of all nature. ~ Leonardo da Vinci

Californians hopefully now know Governor Jerry Brown mandated on April Fool's day that the state's urban water users reduce their water consumption by 25%. His mandate has produced a fair amount of media attention, which is a good thing, since most of us are blithely unaware of how much freshwater we actually use or why we should care, especially the multitudes of customers whose usage isn't metered at all.

But the governor's new water policy is fundamentally flawed; dammed to failure. It mandates a 25% reduction in urban water usage without requiring increases in the all too low price of water or creating incentives for water-efficiency. The governor's mandate completely sidesteps imposing any limitations for the state's biggest water users – farmers, agricultural (ag) growers and irrigators. And we are not conserving much water at all, despite the governor's recommendations and mandate. On Apr 7, state officials announced that California’s water conservation efforts slowed markedly in February, with water use declining by a miniscule 2.8%, which they correctly called "dismal."

I urge the governor to immediately amend his Apr 1 mandate so it's more comprehensive and far more effective. He can do this by adding 4 important actions:

1.       The state will create a "conservation fee" administered through water districts for all users' water consumption, including ag irrigators that will supplement the customer's local water district prices. The more water you use, the higher the fee will be. Virtually all water rates now don't change no matter how much water is consumed. The conservation fee will employ a 3-part "inverted block" structure. There will be no fee on the "baseline" amount of water consumed. This baseline amount will equal 75% of the state's average customer monthly usage in 2013. Average customer usage will be separately calculated for each group of customers (e.g., residential, commercial, ag). The second block of the fee will be charged on water used – between 75% and 135% of average monthly usage in 2013 will be charged at 140% of the baseline price. Any water usage greater than 135% of 2013 average monthly usage will be charged at 175% of the baseline price. These new water conservation fees should be put into effect by year-end.[1]

2.       The state will provide rebates of up to 30% for residential, non-residential and ag customers who purchase approved water-conservation equipment during the next 12 months, starting on Jul 1. The rebate will be reduced to 20% for purchases of such equipment that occur for 12 months, starting Jul 1, 2016. Examples would include low-water use washers, "grey water" systems and low-pressure, drip irrigation systems.

3.       The more than 250,000 California water users who are not now metered – a dispiritingly large number, reflecting those bygone days of "too cheap to meter" – will have meters installed by their water district/provider within the next 9 months and be subject to the above supplemental conservation fees.

4.       Water districts will be required to reduce water losses due to leaks by at least 50% over the next 12 months, and by 90% over the next 24 months. Customers who use wells for their water will be subject to groundwater withdrawal regulation.

The water conservation fees will incent water users to reduce their consumption. With the fees farmers will curtail growing crops like low-value, water-thirsty alfalfa and cotton. With these higher fees and incentives, ag and other customers will finally have a clear economic incentive to switch from water-inefficient irrigation techniques like flooding and high-pressure sprinklers to those that reduce water usage, like low-pressure and drip technologies.

The New York Times has provided an informative, interactive map , based on work by the Pacific Institute, that shows what the average residential customer's winter and summary use is for many water districts in the state. The map states that an average residential customer uses 57 gallons per customer per day (gpcd) in the winter and 110 gpcd in the summer at the East Bay Municipal Utility District (EBMUD) my provider and one of the largest non-agricultural water distributors in the state. EBMUD's residential customers reduced their water consumption between 2014 and 2015 by only 3%. Clearly, even in the SF Bay Area – one of California's more "water aware" areas – there's a lot more water conservation that is both possible and needed.

The 4 above-mentioned actions are needed because even if ALL residential, commercial and industrial water consumers drop their usage by the mandated 25% (as the governor stated), how much water will be "saved" in California? Very little, at most only 6%. Because Gov. Brown's conservation mandate says absolutely nothing about agricultural irrigators, who consume 75% to 80% of the state's freshwater. Ag users are the giant, water-leaden elephant in the room of California water users that the governor somehow didn't mention in last week's announcement.

Should we be surprised at this egregious omission? No. Ag water users – which include virtually every farmer and grower in the state – have always exercised disproportionate power in California, including when Gov. Brown's father, Pat Brown, was governor. The first Gov. Brown approved the construction of the State Water Project (SWP) in 1960, a massive series of dams, aqueducts and power plants that principally move water from Northern California to farmers and to people in parched Southern California. The SWP's construction cost over $2.2 billion in the 1960s and early 1970s.

In 2013, California's ag sector produced $46.4 billion in sales, which although larger than any other state's ag output represents only 2.3% of this state's GDP. Think about this; 80% of our water usage accounts for just 2.3% of economic output. A sterling example of how water power has flowed uphill from the Central Valley to the state capitol in Sacramento.

It's true, a number of ag users have recently been cut off from state and federal water allocations, but as these cuts have occurred, growers have deeply expanded the overdrawing-depletion of the state's groundwater aquifers, at a rate far greater than they have for decades. This switch to groundwater has allowed farmers to idle only 5% of irrigated ag land because of the drought. At this point, well water heights in the southern San Joaquin Valley have dropped more than 100ft, mainly due to huge withdrawals for irrigation. The governor's plan for regulating and limiting groundwater usage so it's "sustainable" won't be finalized until the 2040s. Come on!

The only real solution to our latest (but not likely to be last) drought is to align water's cost with its true value, for all users, including farmers and growers, as I've mentioned above. Stop providing huge subsidies to ag irrigators that allow them to grow and export low-value "surplus crops" like alfalfa to Chinese feedlots. Holy cow!

For more than half a century, through intense ag sector lobbying and significant government subsidies, federal and state water policy has been established in California to keep irrigators' water prices very, very low. As Marc Reisner states in Cadillac Desert, his classic book about water policies in the mostly arid West, ''What federal water development has amounted to, in the end, is a uniquely productive, creative vandalism." This vandalism references the large difference between what irrigators and other large-scale water users have paid for using water (the private, regulated price) compared to its social value (which, as a common resource, is much higher).

Here's a prime example of preposterously low ag water prices, taken from Reisner's book. Through the 1980s the Westlands Water District, one of the largest in California and therefore in the US^[2], charged its ag customers between $7.50 and $11.80 per acre-foot of water. Economists estimated the actual cost of delivering this water at the time was $97 per acre-foot. Thus, these customers were paying only 8% to 12% of the cost of providing this resource. This degree of public financial support is at the very deep end of the subsidy pool. Who paid (and continues to pay) the remaining 90% of the cost? Us taxpayers. Adding more water to this vandalism conflagration caused by super-low prices, the dominant planted crop at the time in Westlands was cotton – a very water-thirsty, "surplus crop" whose price is itself heavily subsidized by the federal government. Talk about going from worse to terrible.

With its all too slight cost, California ag irrigators (and virtually every other water user) have had no economic incentive to conserve or efficiently use water. They have continued to greedily guzzle as the rivers, reservoirs and wells are drying up during this latest drought. Unsurprisingly, this unsustainable water gluttony itself has also created significant environmental damage in the Central Valley.

California's appropriate use of our water supply requires that all 38.8 million Californians face water costs that actually reflect its true value. These conservation fees, together with incentives to induce customers to install more water-efficient techniques and repair water pipe leaks, will reduce wasteful usage and hopefully allow us to live sustainably with our available and limited water supply.

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[1] These conservation fees are necessary to comply with Calif. Prop 218, which states that water districts cannot charge prices that cross-subsidize water customers' prices. Some readers will recognize the first 2 actions as consistent with how California electric utilities – under considerable pressure from the CPUC and other parties – changed their electricity rates to encourage customers to use less kWh and install more energy-efficient appliances and equipment. These price changes and rebate programs have been very successful in promoting energy efficiency. The same will happen for water users with my recommendations.

[2] Reisner states that in the 1980s, just 1/4^th of Westlands Water District's annual available water would completely accommodate New York City's total annual water needs.

IS IT DRY ENOUGH TO RAISE THE PRICE OF WATER? Apparently Not.

Years of drought and famine come and years of flood and famine come, and the climate is not changed with dance, libation or prayer. ~John Wesley Powell


Let's consider water, perhaps the most precious resource that sustains our lives, next to oxygen in the atmosphere. Fresh water is a finite resource needed by every living organism on a daily basis. Despite occasional droughts, we have taken its availability for granted for a long, long time. Our assumption that water will be accessible for everyone's unlimited uses at near benthic prices needs refreshing.

I believe that California's current drought is caused in large part by market failure in the water market. This failure is a fine example of a liquid "Tragedy of the Commons" in the making, coupled with misguided government policies. These policies have allowed the price of water to be too low for way too long. Simply put, the price of water that's charged to users everywhere – including you and me– usually does not cover the private or social-environmental costs of providing it. For example, analysts have estimated that over the years farmers have paid just 15% of the capital costs of the federal system that delivers much of their irrigation water.

At such prices the quantity demanded exceeds the available supply, primarily in (but not limited to) recurring drought conditions. Federal government subsidies for agricultural water use in the US – which accounts for over 75% of all freshwater use in California – reach a staggering $4.2 billion to landowners since 1997.

The market for freshwater in California and elsewhere is highly regulated by public agencies. But the regulated price of water has never reflected the actual private cost of using it. Public regulation and sizeable subsidies have kept water prices very low, so there has long been over-consumption and inefficient usage. Generations of residential and non-residential water users have benefited from these continuing subsidies, which we are barely aware of. That is, until they disappear.

The Irish are rebelling at having to actually pay for the water they use for the first time. A growing number of Irish citizens have assembled in large protests against their government's plan to begin charging many of them a flat $285/year fee for their water consumption. That works out to less than $24/month. In the face of stiff and vocal resistance, the government rapidly abandoned their initial plan to install water meters to determine how much to charge each customer. The flat-rate $285/year price was recently sweetened when the Irish government provided households with a €100 (~$109) payment as an inducement for households to register for the water fee. Despite the offer, few households have registered.

Meanwhile back in parched California where our now 4-year old drought continues, the idea of a residential customer paying a mere $24 a month for whatever amount of water you use seems downright cheap, especially for folks whose water use is actually metered. Over 250,000 water users in California do not even have meters to determine their actual water usage. These unmetered customers are charged a flat fee, sometimes as low as $20/month. Cities and areas where unmetered water usage is significant include South Lake Tahoe (62% unmetered), Merced (52%) and Sacramento (47%).

Today (Apr 1st) marks the end of the "water-year" in terms of measuring seasonal rain and snowfall in California. This past year has been as dry as previous years in our continuing drought. How bad is our current drought? California has 12 major reservoirs from which water is distributed to all users. These reservoirs are no more than 45% filled; versus an average of 65% over the pre-drought past. As of yesterday, the California snowfall is an all-time low of 6% of normal. Last month the California's State Water Resources Control Board (SWRCB) renewed its restrictions on water use because of the continuing drought. Residents of California have had to restrict their water usage as a way to conserve the limited amount of water available. People have been advised to reduce watering plants, grass and washing cars, and be mindful of water usage in daily tasks (brushing teeth, taking showers, and doing laundry). In the face of the severe drought, these restrictions are so feeble that Felicia Marcus, chairwoman of the SWRCB stated, "We are not seeing the level of stepping up and ringing the alarm bells that the [drought] situation warrants." Few if any residential, commercial or industrial consumers are now paying more for their water.

Thus, it's no surprise that we haven't reduced our water consumption much, in spite of Gov. Jerry Brown's declaration to cut water use by 20%. Last summer, statewide water usage was cut 7.5%, compared to a year ago. Southern California consumers reduced their usage a trifling 1.7%. Is it time also to raise non-irrigator water prices as well as that of irrigators? Yes, but it's also time to further incentivize water conservation by giving bill credits to customers who have reduced their usage more than 15% to 20% and/or installed water-saving methods that will reduce future usage. Surprisingly, very few local water districts that set local prices have created such conservation credit or rebate programs.^[1]  Are they waiting for the major reservoirs to be completely bone dry before initiating such programs? Seems so.

Water policy economists are not at all popular when they support such needed price increases. Every water user is completely comfortable with their long-time, subsidized, all too miniscule water prices. But water pricing policy must change from a subsidy-based system for 2 reasons: (1) if we are to avoid a true liquid Tragedy of the Commons; and (2) if existing water resources can ever sustainably accommodate both the arid West's significant population growth and increasing agriculture needs. Appropriately set market-based, subsidy-free prices can make every user recognize that water is indeed a precious, common and limited resource that must always be used wisely.

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[1] Only 21 water districts or water utilities were listed – out of the 600 operating in California – as having a water conservation rebate program for their customers.