Cities pay much more than agricultural areas for water

from Rachel Becker and Natasha Uscategui-LiggettCalMatters

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California cities pay much more for water average compared to districts that supply farms — some urban water agencies pay more than $2,500 per acre-foot of surface water, and some irrigation districts pay nothing, according to new research.

A report released today by researchers at UCLA’s Institute for the Environment and Sustainability and advocates for the Natural Resources Defense Council sheds light on the vast disparities in water prices in California, Arizona and Nevada.

The true cost of water is often hidden from consumers. The household bill may reflect the cost of suppliers to build pipelines and pump water from reservoirs and rivers to farms and cities. A local area may receive water from multiple sources at different prices. Even experts struggle to decipher how much water suppliers pay for the water itself.

The research team spent a year searching state and federal contracts, financial statements and agency records to compile a dataset of water purchases, transfers and contracts to receive water from rivers and reservoirs. They compare many different water suppliers with different needs and geographies, buying water from delivery systems built at different times and paid for under different contracts.

Their overall conclusion: One of the West’s most valuable resources has no consistent value—and is sometimes worth nothing.

“It costs money to move water,” the report says, “but there is no price and no price signal for the actual water.”

That’s a problem, the authors say, as California and six other states in the Colorado River basin decide how to allocate the river’s declining flows — squeezed by federal ultimatumsand harsh conditions in the two large reservoirs of the river. The study warns that the price of water does not reflect the increasing scarcity and discourages conservation.

“We’re dealing with a river system and a water source that’s in absolute crisis and facing massive shortages … and yet we’re still treating it as if it’s an abundant, unlimited resource that should be free,” said Noah Garrisondirector of the Environmental Science Lab at UCLA and lead author of the study.

Jeffrey Mount, a senior fellow at the Public Policy Institute of California, applauded the research effort. Although he has not yet reviewed the report, he said there are many complications built into California’s water infrastructure itself and enhanced by climate change. Moving, storing and treating water can add to the cost and are only sometimes included in the price.

“We have to be careful about pointing fingers and saying farmers get a free ride,” Mount said. Still, he agreed that water is undervalued: “We’re not paying the full cost of water – the full social, the full economic and the full environmental cost of water.”

Coastal cities pay the most

The research team looked at how much suppliers above a certain purchase threshold spend on water from rivers and reservoirs in California, Arizona and Nevada.

They found that water suppliers in California pay more than twice, on average, what districts in Nevada pay for water and seven times more than suppliers in Arizona.

The highest costs span the coast between San Francisco and San Diego, which the researchers attribute to shipping costs to those regions and water transfers that raise the price every time water changes hands.

“In some of these cases, it’s almost a geographic penalty for California to have greater transportation or transportation needs and infrastructure, depending on where the districts are,” Garrison said.

Agricultural water districts pay the least

In California, the authors found, cities pay an average of 20 times more than farm water providers — about $722 per acre-foot, compared to $36.

One acre-foot can supply approximately 11 Californians for a year, according to the state Department of Water Resources.

Five major agricultural suppliers have paid nothing to the federal government for nearly 4 million acre-feet of water, including three in California that receive Colorado River water: Imperial Irrigation District, Coachella Valley Water District and Palo Verde Irrigation District.

Tina Underholt Shields, water manager for the Imperial Irrigation District, receiving the single largest share of Colorado River watersaid the district’s contract with the U.S. government does not require payment for the water.

Cities, by contrast, received less than 40,000 acre-feet of water for $0. However, the report notes that the Metropolitan Water District of Southern California, a major urban water importer, spends just 25 cents per acre-foot on about 850,000 acre-feet of water from the Colorado River.

Bill Hasenkamp, ​​Metropolitan’s manager of Colorado River resources, said the true cost of that water isn’t reflected in the 25-cent fee because the cost comes from moving it. By the time Colorado River water reaches the area, he said, it costs several hundred dollars.

Plus, he added, the district pays for hydroelectric power, which helps cover the cost of the dams that store the water supply. “That allows us to pay only 25 cents an acre foot to the feds on the water side because we’re paying the cost of Hoover Dam on the energy side.”

Federal supplies are cheapest; transfers increase costs

Much of the difference in water prices in the three states comes down to the source: those whose supplies come from federally managed rivers, reservoirs, aqueducts and pumps pay much less on average than those who get their water from state-run distribution systems or through water transfers.

Garrison and his team proposed adding a $50 per acre-foot surcharge on low-cost federal supplies to shore up infrastructure against leaks and losses or to pay for large-scale conservation efforts without using taxpayer dollars.

But growers say it would devastate California agriculture.

“It’s important to note that the ‘value’ of water is priceless,” said Alison Febbo, general manager of the Westlands Water District, which supplies farms in the San Joaquin Valley. The report estimates the district pays less than $40 per acre-foot for water from the Federal Central Valley Project, although Notes on Westlands rate structure another $14 charge to recovery fund. “The effects of unavailable water can be seen throughout our county: fallow fields, unemployment, declines in food production…“

The Imperial Irrigation District’s Shields said the surcharge would be inconsistent with their contract, difficult to enforce and unenforceable for growers.

“It’s not like farmers can just pass it on to their buyers and then move it down to the consumer level where it can be ‘manageable,'” Shields said.

The most expensive water in California is more than $2,800 per acre foot

The most expensive water in California, Arizona, or Nevada flows from Northern California’s rivers, down California’s state-run system of aqueducts and pumps to San Gorgonio Pass Water Agency in Riverside County. Total cost, according to the report: $2,870.21 per acre foot.

Lance Eckhart, the agency’s general manager, said he had not spoken to the study’s authors but that the number sounded plausible. The price would make sense, he said, if it included a share of the cost of building and maintaining the Length 705 miles water supply system as well as the electricity needed to pump water over the mountains.

Eckhart compared water transportation to a railroad, and his water agency to a station far, far away. “We’re at the end, so we have the most railroads to pay for and also the most energy costs to get them there,” he said.

Because the water system to San Gorgonio Pass took decades to build, the water agency included some of that cost in local property taxes before the water even arrived, rather than in the water bills of the cities they supply. As a result, his mostly municipal customers pay as little as $399 per acre foot, Eckhart said.

“You can’t build it into prices if you’re not going to see your first gallon for 40 years,” Eckhart said.

The study does not interrogate how the wholesale price of imported water translates into household bills. Water managers point out that cheap supplies such as groundwater can help reduce the cost of expensive imported water.

The Los Angeles Department of Water and Power, for example, buys water imported from the Colorado River and Northern California to fill gaps left by local groundwater supplies, supplies from the Owens Valley and other locally managed sources, said Marty Adams, the company’s former general manager. (The Los Angeles Department of Water and Power was unable to be interviewed.)

Because the amount of water needed can vary from year to year, it is added as an additional charge on top of the base rate, Adams said. “If you have to pay for purchased water somewhere, when you add up all the numbers, the total comes out,” he said.

“Purchased water becomes a wildcard all the time.”

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.