by Nan Frobish
Governor Brown has unveiled a sweeping new strategy, “Brown is the New Gold,” to simultaneously make California more robust to drought, secure private water rights, buffer California’s growers against disastrous losses from a looming national trade war, and facilitate a market for environmental water.
“Leadership has not been clever enough, or strong enough, or perhaps visionary enough,” Brown said in a “Meet the Press” interview in 2017. “It takes a certain vision, how the hell do we get out of this? And it takes some political skill at the same time.”
And his vision proved prescient: with a potential trade war threatened between the Trump administration and China, California’s wine, nut, and fruit industries stood to lose billions.
“What’s the next most valuable thing our ag industry has besides the food it provides?” asked Brown. “Water. And someone always needs it.”
And now, Brown’s vision and a quirk in California’s water law have combined to form a system that secures farmer’s water, increases water for fish, and solves the problem using a market strategy – without one penny of government funds.
Brown began quietly laying the groundwork through the end of the recent drought. Reductions in urban water use, largely from the browning of outdoor landscapes, greatly reduced urban water use with minimal economic impact. This promises to make more water available for agricultural and environmental uses into the future.
During the drought, farmers also faced large cutbacks, and in some cases farmers sold some of their water by browning their fields to that other farms could continue to prosper.
But most may remember the exemption to agriculture during the recent drought – while mandatory reductions were require for cities, farmers were largely left alone. While public outcry railed against what seemed to be a lopsided victory for farmers at the expense of cities and streams, the Brown administration was playing the long game.
The key lies in California’s requirement that water right holders can temporarily transfer their right for another purpose or to another user without losing it – but only the portion of their water right that would have been used by the crop they are growing. Some of their water right is used to transport water from the stream to their fields, and the some is used by the crop; only the water used by the crop can be transferred.
So while fruit and nut growers have often been criticized for their profitable, water-demanding crops, their conversion of millions of acres to orchards has reclaimed millions of gallons of water as consumptive use – and thus provided a huge reservoir of tradable water in the event that these commodities take a hit from a global trade war.
Water markets have long been in place in California – the Central Valley Project water users have bought and sold water with each other for decades in ag-to-ag transfers. Ag-to-fish transfers are a newer market, but follow the same principle: a buyer needs water for the environment, a seller has water that might be more profitable as fish flow rather than orchard production, and they agree on a price.
“Fruit, nuts, fish,” says San Joaquin grower Lin Stuart. “It’s going to be what it’s going to be. We’ll still make money.”
“You can’t be a superpower and wallow in dysfunctionality,” said Brown. “As the world’s sixth largest economy, California is practically a superpower unto itself. We are going to show the nation what leadership truly looks like, rather than goofing off and averting our gaze.”
Under one provision of the new plan, the State would be able to sell farmers environmental water if crop prices are high. During the drought, environmental flow change orders allowed over one million acre feet of Delta outflows to be reduced. Had this water been sold on the market, it would raise more money for the Delta environment than most water bonds have.
Professor Harold Hotelling of UC Atwater commented, “This scheme will bring market business solutions to all of California’s water problems.”
The State Water Board is considering introducing a WetCoin currency to ease water market transactions.
Nan Frobrish is the Director for Expedition Education at the Center for Watershed Sciences. She recommends first-hand interactions with stream hydraulics.
Hanak, E. and Jezdimirovic, J. Just the Facts: California’s Water Market. Public Policy Institute of California.
UC Davis Center for Watershed Sciences. Drought’s Economic Impact on Agriculture.
Arax, M. A Kingdom from Dust. California Sunday Magazine.
Mitric, J. If China Strikes Back On Tariffs, California Tree Nut Exports Could Take A Hit. Capitol Public Radio.