Price of water going up as the snowpack shrinks

March 4, 2020
by Lois Henry
Lois Henry

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Another block of water has been offered for sale in Kern County at $950 per acre foot.

With a dry January and extremely dry February, California’s water outlook has worsened.

And that has bumped the price of water for those who have it to sell.

Buena Vista Water Storage District on the western edge of the valley in Kern already sold 4,500 acre feet of water at $770 per acre foot, said General Manager Tim Ashlock.

And this latest block of 4,000 acre feet at $950 per acre foot is going fast.

“We put it out for sale on Monday and about 75 percent of it is already spoken for,” Ashlock said on Friday.

Almost all of it has been sold to growers in western Kern water districts that have no usable groundwater, including Berenda Mesa and Lost Hills water districts and Belridge Water Storage District.

Ashlock said one grower had bought only half of what he needed from the $770-per-acre-foot block in January hoping storms would come in and “turn the market around.”

“When that didn’t happen, he wasn’t going to hedge against the market again and bought what he needed,” Ashlock said.

When Buena Vista put its first block of water up for sale in January, growers in the so-called “white lands,” or lands outside of water districts were shocked by a price of $770 per acre foot. The price of ag water under state and federal contracts is much less, typically around $100 to $150 per acre foot.

Rosedale-Rio Bravo Water Storage General Manager Eric Averett told the white land growers in that January meeting that as the Sustainable Groundwater Management Act starts to restrict groundwater pumping throughout the valley, $770 an acre foot would seem cheap.

His warning was proved prescient as dry weather caused both the state and federal water projects to project they would be able to deliver only 15 percent of what ag districts have water contracts. Statewide, the snow pack is at 40 percent of normal.

Ashlock said growers who are buying from Buena Vista haven’t complained about the prices.

“We’re helping them solve a problem,” he said.

The Buena Vista board approved selling a total of 20,000 acre feet this year. So after this latest block of water is gone, the district could offer up  another 11,500 acre feet.

Buena Vista has strong Kern River rights, plus a State Water Project contract and it has been highly focused on building recharge ponds and working with its growers on land fallowing programs.

It started a fallowing program last year where it pays its growers $500 per acre to idle land during dry years. It didn’t get many takers last year. But this year, it was able to fallow a little more than 2,800 acres, Ashlock said.

That’s  savings of 8,500 acre feet, assuming an average of three acre feet of water is used to irrigate each acre of land.

Ashlock said the money received from water sales is used to fund programs such as the fallowing effort, as well as to build new water infrastructure, including 30 miles of pipelines, which reduce water seepage and evaporation, and new recharge and banking facilities.

“I don’t see a lot of other water districts doing these (programs),” he said. “And there are a lot of districts that are further out of balance (pumping more water than they’re bringing in). You’d think they more of them would do this. But they don’t.”

The fact that Buena Vista is selling its water to growers, in particular growers within the Kern subbasin, is a good thing, according to Tommy Esqueda, Associate Vice President for Water and Sustainability and Executive Direcor of the California Water Institute, both at Fresno State.

The Fresno State groups held a “listening session” at the campus for growers and heard a lot of concern about the potential for farm water to be sold to southern California, or developers for more subdivisions in the valley.

“So, this is great news,” Esqueda wrote in an email. “Water staying in the SJ Valley for growers.”

As to price, he said, that’s a moving target. Perhaps growers buying Buena Vista water at $950 an acre foot had already bought much cheaper water when supplies were high and prices low, say around $20- to $50-per-acre foot. When “blended” with more expensive water, that brings the cost down to $400 or $600  per acre foot, he wrote.

A larger issue that could be seen over time is a change in crops. Right now, nut crops bring in a higher profit, so those growers can afford pricier water. As the Sustainable Groundwater Management Act limits pumping and climate change reduces the snow pack and water prices continue to increase, that could mean fewer melons, peppers, tomatoes and citrus will be grown in the valley as farmers shift to crops that can afford higher-cost water.

One thing’s certain, “Water sales are going to get more and more scrutiny as time goes on . . . who’s buying the water (urban, ag), where is the water going (in-basin or out-of-basin), what crops are receiving the water, etc.,” Esqueda wrote.

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.


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