MWD Eyeing San Joaquin Valley : Purchase of Farm Acreage Would Include Water Rights

The Metropolitan Water District of Southern California is investigating the purchase of thousands of acres of farmland--and the water rights that go with it--from economically pressed San Joaquin Valley growers, a move that would allow the district to channel millions of gallons of California aqueduct water to urban users.

Kern County farmers, facing possible default on California Water Project bond repayments, are considering selling as much as 100,000 acres, and the accompanying water rights. If the MWD buys the land, it could take it out of production and send the water to homes and businesses in Southern California.

Every acre of farmland sold and taken out of production would free three acre-feet of water a year for use elsewhere. Southern Californians use 1.5 million acre-feet of water a year, much of it imported from Northern California through the California Aqueduct. There are 325,851 gallons in an acre-foot, enough to flood one acre a foot deep.

“We are very interested in this (land purchase) idea,” said MWD General Manager Carl Boronkay. “Engineers estimate as much as 200,000 acre-feet may be available.”

That amount of water--10% of total delivered yearly by the state project--would go a long way toward meeting MWD’s projected end-of-the-decade needs and in the interim could be used to cushion urban water shortages during drought years, Boronkay explained. Any agricultural lands owned by the district might even be leased back to farmers in wet years, he added.

This unique proposal--the most popular of several alternatives under discussion in recent weeks by growers, water district engineers and state Department of Water Resources officials--would reapportion more water to urban areas and could idle large farming areas along the aqueduct, experts agree.

The plan, still in a formative stage, also appeals to environmentalists who oppose expansion of the Water Project. They contend that water reapportionment would help bail out economically depressed farmers and might also eliminate some of the need for costly additions to the Water Project.

The fact that farmers have proposed giving up any of their water rights--after many years of fighting with Southern California urban interests over state project allocations--is yet another measure of how deep the farm depression is in the state. Until recently any Kern County water expert suggesting selling water rights to MWD would certainly have been branded a heretic.

The State Water Project--which impounds Northern California rivers and ships the water south through the aqueduct--is financed by bond sale. Urban and agricultural users are obligated to repay their pro-rated share of the multibillion-bonds through annual water charges and tax assessments. And many farmers are now having trouble meeting those payments.

No one is certain just how many farmers no longer can afford state water, but already thousands of acres along the west side of the valley have been idled or are being switched to dry land farming. In the 55,000-acre Brenda Mesa Water Storage District alone, farmers accounting for 15% of the acreage are delinquent $646,000 in water charges, officials reported.

There is no suggestion that enough users are in trouble to seriously threaten the financial underpinnings of the state project, but officials are worried.

“We can’t believe what we’re seeing; farmers are saying now is the time to get out of agriculture. It’s a complete reversal of what was happening even a year ago,” said David R. Schuster, executive director of the State Water Contractors, an association representing 28 of the 30 urban and agricultural districts using water from the state project. For weeks, he said, he and other water officials have been trying to find ways to “do something before the situation gets more serious.”

Massive Project

The State Water Project is a 25-year-old multibillion-dollar effort designed to ultimately deliver 4.2 million acre-feet of Northern California water to the central and southern parts of the state. The system carries just over half of that amount now.

In the 1960s, when farmers formed water districts and contracted with the state to finance and deliver this water, state officials predicted that the water would cost farmers about $20 an acre-foot, delivered. But that price has tripled and quadrupled in the years since, due largely to the spiraling cost of energy used to pump the water south.

As energy costs soared, the farm economy was sliding into the worst recession in half a century. Most San Joaquin Valley farmers are caught in this economic crisis, but the effect is more severe along the west side of Kings and Kern counties because these areas are at the southern end of the state project’s service area, where the costs of delivering water are the highest.

Kern County farmers import 1.4 million acre-feet a year through both the federal Central Valley Project on the east side of the valley and the State Water Project on the west side. Even that isn’t enough to irrigate their crops, so they also pump 300,000 acre-feet a year from deep wells.

Before the development of the Water Project, much of the land on the valley’s west side was barren and idle. When water was delivered in the 1960s, state water experts projected that the 1985 annual repayment bill for the Kern County Water Agency would be only $17.5 million. However, cost increases pushed that figure up to near $44 million this year and the 1986 bill may go even higher, district officials report.

“The (higher) cost of this (state) water is making it impractical to farm. . . . Farmers are talking about selling off those lands where water costs are the highest,” said Stuart Pyle, general manager of the Kern County Water Agency, which holds the master state water contract and subcontracts water deliveries to the individual municipal and agricultural water districts.

The 145,000-acre Wheeler Ridge-Maricopa Water Storage District, tucked up against the mountains in the south end of the valley, is one of the hardest hit. Farmers in this district include corporate giants like Tenneco-West, Chevron, Southern Pacific Railroad and the Tejon Ranch. The 37,000-acre Superior Farms, owned by the Mobil Corp., has been up for sale for months.

“We’ve had some (repayment) delinquencies, maybe 5%,” said Arnold S. Rummelsburg, engineer-manager of the district. Even so, the district is in good financial shape and has enough reserves to meet its obligations, he added.

However, he warned, there is a “real danger” that “defaults will occur” if something isn’t done to offset the escalating cost of water. He suggested that selling farmlands to urban districts like MWD would have economic advantages and wouldn’t necessarily mean the lands would be lost to farm production.

The Los Angeles and San Diego areas currently have enough water during normal years but are looking for added supplies to guard against shortages during droughts, he said. “They could purchase the land, pay the obligations of the district . . . and lease the land back for agricultural purposes during many of the years. . . . Only in dry years would it be necessary for the land to remain idle,” Rummelsburg suggested.

According to Rummelsburg, it would be less costly for urban areas to obtain more water this way than it would be to expand the California Water Project facilities to meet its water commitments, as is now planned.

The Environmental Defense Fund, a staunch opponent of any State Water Project expansion, favors selling farmland as a way of reapportioning water rights, according to Tom Graff, the fund’s water expert. “Urban consumers should have an absolute first priority over state water in case of drought,” Graff said.

“And, if that land is going to lie fallow, we’d like to see some of that (unused) water made available for environmental purposes to increase flows out through the (San Francisco) Bay Delta and to increase the water levels in Mono Lake,” he said.

Not everyone in Kern County is convinced that any water rights should be given up. “Politically it is a mistake to transfer water out of Kern County,” said Robert McCarthy, President of the Kern County Water Agency.

“We do have some serious short-range problems,” McCarthy acknowledged. But he said that in the long run the county needs more, not less, water. Transfering water rights would jeopardize those long-range needs, he said.

Thus far all talks of water-rights reapportionment through land sales have been made on an informal basis and most of those interviewed emphasized that no formal negotiations are under way. MWD officials say they are in no hurry to conclude such talks because the district currently has ample supplies. Nor are they discussing price and how much a buying program might cost the district.

The farm crisis prompted farmers and irrigation district officials to start discussing ways to get out from under some of the Water Project economic burdens in October and it was they who took the idea to the MWD.

No timetable for formal talks have been set. Any transfer of water rights, whether by land sale or other means, must have the approval of the state, but Kennedy said the Department of Water Resources foresees no problems in approving such reapportionment.

During the discussions among the state, the Kern agency and its member districts, other alternatives have also being discussed, according to Pyle. These include possible deferment of bond repayments for five years, a step that would add to the overall cost of the water, and the possibility of asking the Legislature to appropriate a “bail-out fund” to help farmers over the crisis.

If the agricultural economic crisis continues, forcing farmers and eventually their water districts to default on state bond repayments, the Kern County taxpayers must ultimately stand behind the debt, paying higher taxes, if need be, to repay the obligation, Pyle said.