Water games: Madera farmers set to test market

January 20, 2021
by Lois Henry
Lois Henry

Farmer questions

During a Jan. 13 workshop to discuss the Madera County Groundwater Sustainability Agency’s pilot water market simulation, Madera farmers had lots of questions that show how complex trading groundwater will be.

Following is just some of their questions:

Q: What’s the percent of buyers vs. sellers?
A: That’s up to the players and will likely change every year.

Q: Will there be accounting to make sure sellers have water to sell?
A: Yes.

Q: Can groundwater from grazing land be sold?
A: For the game, only water from irrigated acreage can be sold. Water allotted to range and grazing lands in real life is a more difficult issue being sorted out. Ranchers have the right to use water on their land for “reasonable and beneficial uses.” They don’t have the right to sell it as groundwater rights are tied to the land.

Q: Who oversees the administration of the trades? Will there be an audit?
A: Not for the pilot, but if an actual market is developed, the GSA will hire an outside administrator and it will be audited.

Q: Why are farm units different from trading zones?
A: That may change but for the pilot, trading zones need to be monitored to see if there’s excessive pumping in any one zone.

Q: How much water can a farmer carry over year after year?
A: For the purposes of the game, just one year.

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Madera County farmers are getting ready to play what could be the “game” of their livelihoods.

The county groundwater sustainability agency will launch a groundwater market simulation, or game, next month as a way for growers to see if selling and trading their groundwater helps make the most of what will become a severely limited resource in coming years.

Groundwater markets have emerged throughout the San Joaquin Valley as potential tools to help reduce groundwater pumping per the Sustainable Groundwater Management Act.

Most are just listed as possible projects in groundwater sustainability plans and have yet to be sketched out.

One market is already in place in the Rosedale-Rio Bravo Water Storage District in Kern County. It is a market open only to farmers in Rosedale-Rio Bravo and would only kick in if the district’s SGMA goals weren’t being met.

It was conceived and partly funded by the Environmental Defense Fund and operates as a sort of “Craigslist” for trades between farmers.

Water in the white lands

The Madera County GSA pilot market would operate differently as the GSA’s lands are outside of established water districts.

Those undistricted areas are known as “white lands.”

White land farms and ranches have little to no surface water and rely almost exclusively on groundwater.

Considering Madera County white lands cover more than 215,000 acres mostly in the Madera subbasin, with small amounts in the Chowchilla and Delta Mendota subbasins, they represent a significant pull on the region’s aquifers.

Without access to surface water to recharge aquifers, white land farms must cut groundwater pumping to bring basins into balance by 2040 per the Sustainable Groundwater Management Act.

That cut will be painful — approximately 50% of what they pump now.

Finding a path to that reduction that also allows farmers the most flexibility is where the groundwater market “game” comes in.

Deliberate deliberations

Over the next nine months, the Madera County GSA will monitor how well, or not, a simulated groundwater market works for farmers within the white lands that it oversees.

Getting to this point has been a two-year process funded by a nearly $200,000 WaterSMART grant from the federal Bureau of Reclamation, said Stephanie Anagnoson, director of Madera County’s GSA and its Department of Water and Natural Resources.

“We did it this way deliberately in order to have a lot of conversations with stakeholders,” Anagnoson said of the long lead time. “And we’ve had a lot of interest and a lot of concerns.”

Early in the process, she said, the GSA hosted a simple game to simulate a groundwater market.

“It was hard!” she said. “Especially for those of us who don’t farm. It was close to impossible for us to understand all the calculations and operational factors farmers have to take into consideration.”

The goals of the market are simple: Find the most efficient allocation of a limited resource; protect domestic water supplies; and decrease negative impacts.

Setting up a groundwater market — even a game — with rules that achieve those goals, however, is anything but simple.

Gamer guardrails

The county had to find ways to protect smaller growers from being priced out of the market.

It had to deter concentrated pumping in certain areas to protect domestic and municipal groundwater supplies.

And it has to account for dry years versus wet, commodity price fluctuations and a host of other variables.

Growers who choose to play the game will be testing all those rules and more to see how the market responds, Anagnoson said.

Each player will be assigned a “sustainable native yield” amount of water they can keep or sell.

Native yield refers to water that naturally recharges the aquifer from rainfall, streams, seepage, etc. The sustainable portion is how much each grower can pump without exceeding that natural recharge.

The assigned amount of sustainable yield will have a cost that players must factor into whether they want to sell or buy water on the market.

Once the market opens, the county GSA will match groundwater offers and bids, keeping in mind the need to protect small farmers and domestic supplies.

The market simulation will start Feb. 1 and run for nine months with market administrators changing rules along the way to see how players react.

The game will have between 50 and 70 players, Anagnoson said.

Meanwhile, IRL

While the market game plays out, the county GSA will be sorting out the sticky issues of how much water each grower will be allocated and how much it will cost in real life, Anagnoson said.

That includes sustainable yield and “transition water.”

Transition water is a slug of groundwater above the sustainable yield allotted to growers that will be ramped down in coming years to get to the 50% pumping reduction by 2040.

Each type of water will have a fee attached so the GSA can pay for projects to bring in more surface supplies, Anagnoson said.

At the same time, the county GSA is creating a fallowing program under which it would pay growers to retire or “rest” their lands to reduce groundwater pumping.

While Anagnoson would prefer to bring in more water to replenish the aquifer, she said, there’s a limit to that option.

“So, we are left with demand reduction.”

The hope is a water market combined with voluntary land conservation program will curtail groundwater pumping with the least disruption.

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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