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 Calif. farmers want to sell water
http://news.yahoo.com/s/ap/20080125/ap_on_re_us/farming_water;_ylt=Av_NUcFzB

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By GARANCE BURKE, Associated Press Writer 1 hour, 30 minutes ago

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.

What effect these deals 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. But California grows most of
the nation's winter vegetables and about 80 percent of the world's almonds,
and is the No. 2 rice state, behind Arkansas.

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.

The farmers looking to buy water are generally farther south in the San
Joaquin Valley and the Los Angeles area and grow such crops as pistachios,
almonds and grapes. Because of the heavy capital investment they made in
their trees and vines, these farmers cannot afford to stop irrigating their
crops and let them die. In contrast, rice, melons and tomatoes are planted
anew each year.

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."

As for what this will mean for the cost of food at the supermarket, "it's
still too premature to say where prices will settle, but I can say that
virtually every agricultural district in the Sacramento Valley is thinking
about selling their water this year," said Laura King Moon, assistant
general manager of the State Water Contractors Association, which
represents 29 water agencies.

Water from Northern California rivers irrigates central California's farm
fields and keeps faucets flowing in the Los Angeles area. But it must be
shipped south through a network of pumps, pipes and aqueducts, and that
system recently developed a kink when a federal judge ordered new
restrictions on pumping to save threatened fish.

At the same time, Southern California's other main source of water, the
Colorado River, is in its eighth year of drought.

Because of the resulting shortages, Long Beach cannot run fountains, and
restaurants there are not allowed to serve customers a glass of water
unless they ask for it. Near Bakersfield, in central California, almond and
pistachio growers will have to perform triage of sorts and decide which of
their nut trees can be saved. And cities across California are drawing down
underground supplies of water rather than buying it.

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 recently proposed a rate increase for next year of 10 to 20
percent on the water it sells to cities.

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.