CALIFORNIA DRYING UP : Kept From Selling Water, Farmers Naturally Waste It : Some fair and simple reforms could end the critical imbalance between farm and city needs.

Suppose you are an irrigation farmer raising 600 acres of rice in the Sacramento Valley. The evapotranspiration rate of California rice irrigation--the amount of water that’s lost to the air or to the metabolic needs of the plants--is about 3.3 feet of water per acre per year. Simply by leaving half of your acreage fallow--rice is a commodity the government usually considers “overproduced”--you could yield to a potential buyer about 990 acre-feet of water annually, which is more than enough for the city of Ojai.

What are permanent rights to 990 acre-feet of water worth? In Colorado, where permanent water rights are freely bought and sold, the farmer would earn $2 million. In California, where a free market in water does not really exist, no one knows.

In other Western states, nearly all water buyers have been cities, and nearly all sellers have been farmers. But if our hypothetical rice grower buys his water from the Central Valley Project, as many do, he can’t sell any of it to Los Angeles. Under federal law, project water has to be used (with few exceptions) within the Central Valley. Moreover, if a rice farmer buys his water from the the Central Valley Project, he probably cannot sell it for profit--the Bureau of Reclamation has said as much--which means he has no real incentive to sell.

Even if his irrigation district developed its own supply, if it is like many Central Valley water districts it won’t allow the farmer to sell water beyond the district boundaries. The largest such district, the Westlands, does allow members to trade water beyond its borders, but only if no other grower within the district is short.

What are the odds that no other West lands grower wants a fellow member’s water? “Almost nil,” says Jerry Butchert, the Westlands general manager, “even in normal years.”

If this situation seems absurd to Southern Californians, they have their forefathers to blame. There is not a rural community in California that doesn’t dread being turned into the next Owens Valley, outmaneuvered by water-hungry big-city interests. Such fears are reinforced by what’s happening in rural La Paz County, Ariz., where Phoenix development interests now own half the land and water rights. Or rural Californians might want to visit the Arkansas Valley in Colorado, once a prosperous fruit-growing region, now a slowly expiring victim of metastatic urban growth.

It isn’t as if the Metropolitan Water District hasn’t tried to buy agricultural water rights. Several years ago the Berrenda Mesa Water District tried to sell MWD about 50,000 acre-feet; it was overruled by the Kern County Water Agency, which is the direct contractor with the State Water Project and is unalterably opposed to letting entitlement water leave Kern County. And it isn’t as if there aren’t farmers who want to sell.

Throughout the San Joaquin Valley, about 1 million acres of land are threatened by salinity and waterlogging. Tens of thousands of acres face imminent doom unless a giant drainage system is built, so quite a few farmers have expressed interest in curtailing irrigation-dependent crops if they could sell water rights for a handsome profit. None has succeeded because of the obstacles mentioned above.

To some degree, such restrictions on water sales make sense. An Owens Valley tragedy should never be allowed to recur. And why should a farmer who, for 40 years, has received taxpayer-subsidized water to raise a price-supported crop such as rice now be allowed to sell his water rights for $2,000 per acre-foot?

But the result is the virtual imprisonment of water within geographic confines for arguably ludicrous uses. Ten thousand gallons of water are needed to raise enough San Joaquin grass or alfalfa to produce a two-pound steak. That’s enough for one person’s daily five-minute shower for a year. In 1988 we raised 2 million acres of grass and alfalfa in California. Doesn’t it make more sense to import more beef and dairy products from states where grass and alfalfa grow on rain than to dream about importing other states’ rain?

Legal obstacles--not a lack of dams or available water--are the real reason Southern Californians may have to reduce their water consumption by 50% this year. If farmers could sell water, they would, because even the most exorbitant price would be cheaper for cities than the $1,900 per acre-foot that they may end up paying for water from desalination plants.

Here are some reforms that most people might be able to live with:

-- Any urban water agencies seeking agricultural water rights has to do three things in sequence: Pay the farmers to install water-saving technology and take the resulting surplus; pay farmers for using some of their water only during drought years, and then, as a last resort, begin negotiating for permanent rights.

-- Amend the legislation authorizing the Central Valley Project to allow its water to be used anywhere in California. It has enough water, in normal times, for 70 million domestic users, and after all, the taxpayers paid for most of it.

-- Permit farmers to profit from sales of federally subsidized water, but limit the profit. One noble idea is to extract an environmental tax from both seller and buyer in the form of water donated to rivers and wildlife and fisheries. Oregon has already passed such a law.

-- Amend the California water code to allow the State Water Resources Control Board to overrule (selectively, perhaps) water district prohibitions against out-of-district transfers.

Such reforms would result in a fair amount of marginal, low-value acreage either permanently retired or replanted, if possible, with high-value crops that use less water. Most such crops are not only more profitable per acre but more labor-intensive, so the harm caused rural economies might be quite minimal. In fact, water conservation is by definition labor-intensive, which is why some farmers don’t like it. Irrigation schedules and systems have to be managed far more carefully, and innovations like drip systems require a lot of maintenance.

Water perestroika would mean that the farmer could use less water, make more money and create more jobs. But as long as farmers are buying subsidized water that’s almost free, or water they aren’t allowed to sell, they’ll go on doing what they’ve always done: waste it.