'Civil War' Over Water: Farmers vs. Urbanites : Arizona: Although a federal project has provided a wealth of the Colorado flow, growers can't afford it. And cities are asked to pay the bill.

TIMES STAFF WRITER

On a cotton farm scraped from a desert plain here between Phoenix and Tucson, Carla Lacey and Vernon Prock have outlasted boll weevils, white flies, tightening credit and plummeting crop prices.

But even Lacey's accounting skills and Prock's experience in agricultural management may be overmatched by the problem that now threatens to drive their farm--and hundreds of others that have survived in the sizzling Sonora Desert--out of business within two years.

A $3.6-billion federal water project is carrying a wealth of Colorado River water to this agricultural stronghold in central Arizona, but the life-sustaining liquid is priced beyond the reach of the very farmers the aqueduct was built to serve for the next 40 years.

Now, city dwellers who weren't supposed to carry the burden of the Central Arizona Project (CAP) for decades are being asked to bail out the farmers who are failing under the burden of a host of bad conditions as well as the high-priced water borne by the 336-mile-long ribbon of concrete and steel.

That has sparked a veritable civil war between growers and urbanites, who are balking at proposals for saving financially ailing farmers who had been lobbying for the project since the late 1940s.

Historians say it is a contest of cultural dominance between growers, who helped lay the groundwork for settlement of the West, and the growing metropolises that have replaced them as sources of wealth and power. The outcome will shape the future of Arizona's growth and determine the role of agriculture in what one historian calls one of the great "hydraulic societies" of the West.

"Sacrificed may be an agriculture that was unsustainable in the first place because it depended on ground water and had essentially evolved into large-scale agribusiness with lots of cheap labor," said Donald Worster, a professor of American history at the University of Kansas who has studied the issue. "On the other hand . . . if the best (alternative) we can come up with is endless subdivisions in the desert with artificial fountains, green lawns, shopping malls and air pollution, then I don't think we've learned much."

Under an agreement approved by Congress, the water project was expected to sell most of its 1.5 million acre-feet of Colorado River water to agriculture until about the year 2030, when population growth in the cities and Indian water-rights settlements would claim the lion's share.

But farmers have been hit with serious, unforeseen setbacks: insect infestations, declining land values and a drop in cotton prices to World War II levels. With growers no longer able to afford the $25- to $52-an-acre-foot CAP water, demand for the water dropped by almost half in 1991.

These problems have fundamentally undermined the assumptions on which the Central Arizona Project was based, and embroiled the state in a battle over how CAP water should be distributed and how to repay Arizona's $2.3-billion debt to the federal government for building the project.

The project was originally proposed at a time when agriculture, ranching and mining were dominant industries. Today, although agriculture still uses 74% of Arizona's available water, it contributes only 5% to 15% to the state gross product, according to a recent survey.

Meanwhile, 90% of the state's population--and most of its financial and political clout--is rooted in and around the urban areas of Phoenix and Tucson, which currently draw their water from other sources and have no need for agriculture's unused water.

"The debate we are hearing in Arizona cities is this: Should we restructure this thing in a way that keeps agriculture in the game, or should we let the agriculture train wreck and pick up the pieces afterward?" said Betsy Rieke, Arizona's director of water resources.

One of the assumptions on which the project was founded was that farmers would be its largest customer in the early years. That now isn't possible because of the growers' problems.

Farmers generally buy their water through local irrigation districts, which provide water as well as a system of pipes and local canals to deliver it. Growers pay the districts not only for whatever water they use but also to service bond debt for the delivery systems.

Because of their economic problems, most farmers currently are having difficulty making these payments.

And the worst is yet to come. A year from now, on Jan. 1, 1994, growers, their irrigation districts and municipalities will be responsible for beginning repayments to the federal government for construction of the Central Arizona Project. They will owe $50 million to $60 million a year for 50 years. Irrigation districts also become obligated at that time to pay for all the water that the CAP makes available to farms, regardless of whether they use it or not.

Actually, this bill was supposed to come due on Jan. 1, 1993, But in October, after the growers and the irrigation districts said they could not afford it, the U.S. Department of the Interior agreed to give CAP customers an additional year to begin repaying the federal government. The move was designed to save hundreds of farmers from bankruptcy.

The delay followed a year of intense haggling among agencies including the U.S. Bureau of Reclamation, which built the project, and the Central Arizona Water Conservation District, which is responsible for repaying the federal government for its construction.

The cities argue that the CAP-related farms now provide so little to the economy of the state that they aren't worth saving. Some city folks compare the potential loss of these farms to that of a major manufacturer leaving the state--in other words, they say, it is a blow, but a blow that can be absorbed.

"We have to be practical enough to understand that some species become extinct, and whether it is the dinosaur or the cotton grower, it may the natural way of things," says James (Bing) Brown, spokesman for the Phoenix Waste Water Department, which already uses nearly 200 million gallons of CAP water a day.

Said Paul Wilson, a University of Arizona agricultural economist: "Basically, agriculture got its way around here for a long time. Now, the tables have turned and the cities have the power and are saying: 'We're coming to get you guys.'

"I've never seen so much hatred between urban communities and agriculture," Wilson said.

Realists among the ranks of Arizona's ranchers and farmers know that development will eventually overrun them. But they want to be the ones to profit when the time comes.

"We know if we can hang on long enough the potential for urban development in these fields is tremendous--every acre will support five homes," said Robert Ralston, a cotton farmer who tends 640 acres about 30 miles south of Phoenix. "What we can't understand is why the cities are in such a hurry to push us off the cliff."

The dispute comes at a time when drought-stricken California and burgeoning Las Vegas are prowling for additional water sources. If Arizona does not use the water, officials here fear that California's increasingly powerful congressional delegation and those of other neighboring states will try to grab it, permanently.

"The fear is that California . . . will try and steam-roll us," Rieke said. "We'd be fools to think all the water Arizona is not using can stay in the Colorado River forever."

In any case, unless irrigation districts and cities can agree on a way to reschedule the debt for the colossal project, CAP-related agriculture will be largely extinguished within a few years, along with an estimated 3,300 jobs and a large chunk of rural culture and values, state water and agriculture officials said.

If that happens, the cost burden of the CAP will be borne solely by the federal government and cities in Arizona.

One proposal would have the federal government and the Central Arizona Water Conservation District assume half of agriculture's debt in return for half of its CAP water, which would be reallocated to Indian reservations and cities.

Central Arizona Water Conservation District spokesman Larry Dozier predicted that fixed costs of $30 million a year for maintaining the project's siphons and canal system will inevitably be passed on to big urban users like Phoenix, Tucson, Glendale and Mesa through 20% increases in average monthly water bills.

As for the future of CAP-related agriculture, Dozier said: "Some farming, maybe 20% to 30% will survive. To those that don't make it, I would say: 'You worked hard, you did your best, it's not your fault.' "

In California, a similar strengthening of municipal control of federal water occurred in October when President Bush signed into law a controversial water bill expected to loosen agriculture's 50-year grip on the Central Valley Project, which supplies 20% of California's developed water. The bill wrests large portions of that water away from farms to benefit the environment and urban centers.

State and federal water officials suggest that what is happening in California and Arizona signals a major shift in national water policy in the West away from faltering farms and toward cities, recreation and the environment.

"The problems plaguing the Central Arizona Project are a reflection of changes occurring all over the West," said Rep. George Miller (D-Martinez), chairman of the House Interior Committee, who has long been concerned about subsidies involved in reclamation payments.

"The old policy of single-mindedly . . . walling off water from market forces and urban needs, and of giving Indian claims and environmental values short shrift, is basically bankrupt," Miller said. "A sound, forward-looking water policy must pay more attention to these and other, long-ignored needs."

While growers and cities remain far apart on the issues, discussion of conciliation is growing amid fears that the federal government will step in and impose its own solution to the repayment dilemma.

"Everybody knows there will have to be a bargain in which cities take some of the (financial) margin in return for some of the water," said Bruce Babbitt, a former governor of Arizona and Bill Clinton's appointee to be secretary of the Interior. "My guess is the federal government will invite farmers and cities to settle it themselves and try to avoid dictating a solution."

At risk are rural communities like Eloy, Coolidge, Picacho Peak, Red Rock and Maricopa--all of which have thrived for years on cotton, vegetable and pecan farms and the fuel depots, chemical warehouses, equipment repair shops and restaurants that depend on farm workers for business.

Eloy's Lacey and Prock may turn out to be the losers.

"Carla and I have the finest crop in the country, but that doesn't mean we'll make money off it," grumbled Prock, his 53-year-old calloused hands gripping the wheel of his dusty pickup truck as it bounced along the dirt road slicing through his 1,210-acre spread. "If it doesn't pencil out, I'll look for a city job. But what does Phoenix want with an unemployed farmer?"

"We're not after mansions, hell, we don't even want a clean pickup truck--just one that's paid for," said Lacey, who mortgaged her home a year ago to keep the farm. "It's sad and it makes me want to cry."

Who'll Pick Up the Tab?

A 336-mile-long ribbon of concrete and steel brings water from the Colorado River to central Arizona. City dwellers are being asked to bail out farmers who can't afford the high-priced water.

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