Drought driving up water prices

May 28, 2021
by Lois Henry
A rope swing hangs over a dry Kern River in this 2020 file photo. CREDIT: Lois Henry
Lois Henry

TRACKING WATER

The Department of Water Resources created a website to track proposed water transfers among state and federal water contractors.

It doesn’t give the details of each proposed transfer but does list the buyers and sellers and amounts of water proposed to be exchanged.

CLICK HERE to view the website.

 

Share This: 

If you were looking for some bargain priced water this year, you’re out of luck.

“We got out of the market when we started seeing prices north of $900 an acre foot,” said Jason Gianquinto, General Manager of Semitropic Water Storage District in western Kern County. “That’s just too much for us. We had some reserves and we’ll use those this year.”

Prices being discussed by sellers and buyers are all over the place from a low of $425 per acre foot all the way up to $1,000 per acre foot. But even on the low end, that’s higher than what water typically sells for through the federal and state projects, about $40 and $120 per acre foot, respectively. Those prices don’t reflect how much contractors pay for upkeep to the system and other costs, especially for state water contractors who have to pay the full cost of their contracts regardless of how much water they receive.

But state and federal contract prices are a starting point for water buyers and sellers. And it’s definitely a sellers market right now.

The Buena Vista Water Storage District, in Kern, sold 3,000 acre feet in early spring to several districts in western Kern for $1,000 an acre foot, or $3 million. It would have sold more, but with its meager Kern River supply, the district decided to back “way off” from further sales, according to General Manager Tim Ashlock.

That price is a bit more than Rosedale-Rio Bravo Water Storage District got for 5,000 acre feet it sold, also to western Kern districts, in April for $850 per acre foot, or $4.25 million. But it still made a significant profit. Rosedale-Rio Bravo had originally purchased that 5,000 acre feet on the spot market a few years ago for what was then considered a pricey $300 to $350 an acre foot, according to General Manager Dan Bartel.

In Fresno County, the Westlands Water District will be buying up to 120,000 acre feet this year, said Water Resources Manager Russ Freeman. The price to its growers will be about $1,200 per acre foot, which includes some fees Westlands charges growers for moving the water.

The district anticipates its sellers will all be north of the delta. As the buyer, Freeman said, Westlands will absorb all the “carriage losses,” or seepage and evaporation of water as it moves through the system. And it assumes all the risk in the event water can’t be moved because of ecological concerns, which has happened in previous dry years when water was held back in Shasta Lake to maintain a cool enough environment for salmon.

“There’s no way to avoid Shasta,” Freeman said. Some of Westlands’ biggest purchases are coming from Sacramento River Contractors. “That water remains in Shasta until the transfer window opens July 1. If our farmers can’t get the water in July, August and September, then it becomes a problem. It’s a risk.”

The San Luis & Delta-Mendota Water Authority, made up of more than 20 federal contract agencies from Fresno to Santa Clara counties, has been buying water from north-of-delta sellers for the better part of a decade and has proposals to buy more than 68,000 acre feet up for review by the Department of Water Resources. The authority is buying water at between $425 and $575 an acre foot. While that’s lower than other prices, the authority typically buys water in the $300-per-acre-foot range, according to an authority spokesman.

The potential to make money selling water, especially this year when the emergency drought declaration eased some water transfer restrictions, has attracted a few newbies.

“This is our first year putting in for this,” said John Taylor, president of the Tudor Mutual Water Company, which provides irrigation water to farmers about 10 miles south of Yuba City in Sutter County.

Tudor Mutual uses groundwater and has a small water right on the Feather River. But that right was cut in half this year because of the drought. The company is hoping to sell about 1,200 acre feet of its Feather River water down stream for $630 an acre foot, or $756,000.

“Our little district has had financial issues, so we started looking at water sales to help improve efficiencies in irrigation and general maintenance without raising assessments on our growers,” Taylor said. “But we have to do quite a bit of work to get state approval.”

A few years ago, ag folks would have been shocked by $630 an acre foot.

“Ten years ago, these prices would have been astronomical to us,” said Eric R. Quinley, General Manager of the Delano Irrigation District. “But given how dry it is, and (the state’s new Sustainable Groundwater Management Act) and growers just trying to keep permanent plantings alive, well, it’s more understandable when you look at all the factors on the table.”

SJV Water is an independent, nonprofit news site dedicated to covering water in the San Joaquin Valley. Get inside access to SJV Water by becoming a member.

Receive Notifications

Enter your email address to receive INSTANT ALERTS of new articles and to be added to SJV Water’s WEEKLY NEWSLETTER

NEWS SEARCH
Water Resources

Maven’s Notebook is an excellent daily accounting of California water happenings statewide.