In a just universe, this is known as price-gouging, right?
"Drought prompts water sale in Calif.; Farmers seize profit opportunity" by Garance Burke, Associated Press | January 27, 2008
FRESNO, Calif. - With water becoming increasingly precious in California, a rising number of farmers figure they can make more money by selling their water than by actually growing something.
Because farmers get their water at subsidized rates, some of them see financial opportunity this year in selling their allotments to Los Angeles and other desperately thirsty cities across Southern California, as well as to other farms.
"It just makes dollars and sense right now," said Bruce Rolen, a third-generation farmer who grows rice, wheat, and other crops in Northern California's lush Sacramento Valley.
Instead of sowing in April, Rolen plans to let 100 of his 250 acres of white rice lie fallow and sell his irrigation water on the open market, where it could fetch up to three times the normal price.
Water on California's open market typically sells for $50 per acre-foot in wet years. But now it is expected to go for as much as $200.
Farmers, however, pay $30 to $60, rates that are set under state and federal policy. (An acre-foot is enough water to cover an acre to a depth of one foot.)
Because of rising costs, the huge water agency for the Los Angeles metropolitan area recently proposed a rate increase for next year of 10 to 20 percent on the water it sells to cities.
What effect these water sales by farmers will have on produce prices remains to be seen, because the negotiations are still going on and it is not yet clear how many acres will be taken out of production.
Environmental restrictions, booming demand for water, and persistent drought along the Colorado River have combined to create one of the worst water shortages in California in the past decade, and prices are shooting up in response.
The would-be water sellers include farmers who grow rice, cantaloupes, and tomatoes around Sacramento and the San Joaquin Valley. Rice, in particular, requires a lot of water; the fields have to be flooded.
Individual farmers don't actually sell their water themselves. Instead, their local water districts represent them in negotiations with other water agencies.
"It's been a good decade since there's been this much interest in buying and selling water on the open market," said Jack King of the California Farm Bureau Federation. "We're prepared to see significant fallowing in several key parts of the state."Some environmentalists are troubled by farmers' efforts to sell their water, and warn that such deals don't begin to address the long-term problem.
"Essentially these farmers are getting water for a subsidized price and selling it to taxpayers at an elevated rate," said Renee Sharp of the Environmental Working Group."
