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Farm vs. City: California Landmark Water-Sharing Deal May Be Crumbling

The state’s biggest urban supplier hopes to divert water from farms in the Palo Verde Valley by encouraging conservation. But the move may endanger an existing water-sharing deal that has become a model of cooperation.

Written by Matt Weiser Published on Read time Approx. 6 minutes
The Colorado River Aqueduct, owned by Metropolitan Water District of Southern California. Met uses the aqueduct to divert water saved on farms in the Palo Verde Irrigation District through a celebrated fallowing program.Photo Courtesy Metropolitan Water District

One of the nation’s most successful partnerships between farm and urban water agencies has lately run into serious turbulence, potentially threatening an important Colorado River water-sharing deal.

Twelve years ago, the Palo Verde Irrigation District in Blythe, California, signed an agreement with the powerful Metropolitan Water District of Southern California. It allowed the latter to pay Palo Verde farmers to fallow up to 35 percent of their acreage in times of water scarcity, and take delivery of the unused irrigation water, via canal, to serve its urban customers in the Los Angeles area, some 200 miles away.

It’s been a great deal for both parties. Palo Verde farmers made millions “loaning” their water. Met gained access to the irrigation district’s senior water rights in the Colorado River, which remain available when the water district’s other supplies are restricted during drought. It also became a promising alternative to the so-called buy and dry deals that have taken farmland out of production permanently in other parts of the West.

But suddenly, tension is humming along that canal between Blythe and L.A.

In September, Palo Verde filed a lawsuit against Met, alleging the urban water giant violated state law when it purchased 12,000 acres of farmland within the Palo Verde district in 2015, adding to 10,000 acres it had bought previously. This made Met the largest single landowner in the valley, controlling almost 20 percent of the entire district, in addition to lesser control over more land via the fallowing contracts.

Met has leased the land to other farmers under terms that encourage water conservation, with a goal to divert any conserved water to the L.A. metro area.

Palo Verde officials fear the era of cooperative fallowing is over, and Met is now engaging in a new kind of “buy and dry” program that will eventually harm the rural region’s economy.

“This is simply a play for water,” said Bart Fisher, a farmer in the Palo Verde Valley and a member of the irrigation district’s board of trustees. “The only possible reason for them to own farmland is to try to take water from it.”

Fisher said he and others at the irrigation district feel betrayed by Met’s actions, and worry that it aims to make their region another Owens Valley by draining off all their water. In the early 1900, Los Angeles covertly bought farmland and water rights in the eastern California valley, leaving the Owens Valley with a legacy of toxic dust storms.

“I really can’t express how surprised and upset we are about this,” he said. “We basically opened the door to them and brought them into our valley in a trusting relationship. They grew roots into our organization and relationships with our farmers. Then, suddenly, they are willing to blow it all up in order to acquire water.”

Jeffrey Kightlinger, Met’s general manager, said there was no intention to seize water, but merely to improve existing cooperative relationships with farmers to use water more wisely. He said he was “disappointed” Palo Verde resorted to a lawsuit.

“If we wanted to be aggressive and just do nothing but acquire more water, we would just simply fallow all the land we bought. But we’re not doing that,” Kightlinger added. “The idea is that it would generate water for us and, at the same time, create a revenue stream to keep farming vibrant in the valley.”

It remains unclear if leasing land really will produce any water for Met.

The way the deals work, Kightlinger said, is that farmers pay the market rate to lease land, around $250 per acre (0.4 hectare), if they irrigate using an average amount of water on their crops (about 4.2 acre-feet per acre). If they use more water, their lease cost increases to $400. But if they take measures to conserve water and use less than average, their lease payments drop to only $150.

In the latter case, Met believes it will be able to claim the saved water and have it delivered to L.A.-area consumers.

“We’re trying to come up with some high-tech ways to keep farming productive and efficient and save water also,” Kightlinger said.

It might not be that simple. The Palo Verde board of trustees would have to approve the transfer of that saved water to Met, and Fisher said that isn’t a given.

An irrigation canal and farmland within the Palo Verde Irrigation District, which holds the highest-priority rights to Colorado River water in California. (Photo Courtesy Metropolitan Water District)

Palo Verde Valley is unique, he said. Property owners hold the highest-priority rights in California to water from the Colorado River – much higher than the water Met currently receives from the river. But those farm water rights are held in trust by the irrigation district. That means that when farmers need irrigation water, they don’t just turn a valve – they have to request the water from the irrigation district. As a landowner, Met will have to do the same, and the district might not want to release the water knowing it will not be used for agriculture.

“Any conservation program that occurs within our valley is water that belongs to the irrigation district. It doesn’t belong to Met,” Fisher said. “They disagree with that. They think they are legally entitled to that water. Hence the dispute.”

He asserts that if Met succeeds with the leasing plan, there could be grave consequences. And not just for the Colorado River, but for any other region where a wealthy urban water agency can buy up farmland. Essentially, Fisher said, Met’s farm leases are an attempt to leapfrog ahead in the water-rights priority system.

“Met is the junior water-right holder in California, and yet they are essentially hijacking first-priority water,” Fisher said. “This would allow an urban water agency such as Met to go anywhere they have potential conveyance and just acquire farmland, and use the farmland as a spigot that they can turn off and on depending upon their need for additional water.”

Some don’t see the situation in such dire terms.

Robert Glennon, a law professor at the University of Arizona who specializes in water issues, said the best way to preserve farms and farm communities is to improve water conservation. The saved water can be used to grow more valuable crops, sold to other farmers or to urban areas.

In addition, farmland that conserves water continues growing food, whereas fallowed acreage doesn’t.

In this case, Glennon said, Met’s leasing program is using market forces – in the form of variable lease payments – to drive water conservation. He advocated this very approach in a 2014 paper he co-wrote for the Brookings Institution.

“I’m thinking this is perfect for their farmers,” said Glennon. “If you have the municipal interests pay for the farmers to be more efficient, and then the municipal interest gets the water that’s conserved, this is better than the fallowing program for the long-term viability of the Palo Verde Valley.”

Palo Verde’s lawsuit alleges Met violated state law in two ways. First, by setting up the leasing program without first doing an environmental impact report. Second, by purchasing the land without conducting an appraisal. Fisher said Met paid twice the going rate for farmland in the Palo Verde Valley, and has a duty to its ratepayers to justify that price.

Kightlinger denied both claims and said Met plans to move for dismissal of the lawsuit.

Glennon noted the disagreement has the potential to escalate in some unsavory ways.

Met could decide to simply fallow all the farmland it now owns, then try to divert all that water to urban consumers. This would generate nearly as much water as the existing cooperative fallowing program, while saving Met millions of dollars in fallowing payments. But it would cut local farmers out of the proceeds entirely.

Or, if Met cannot persuade the irrigation district to transfer the water saved through its leasing program, it could begin buying up more farmland until it attains a voting majority on the district’s board.

This could create a situation in which the nation’s largest supplier of urban drinking water becomes a kind of benevolent dictator, controlling the fate of a far-flung rural area that depends entirely on farming.

“If they’re willing to pay two-times agricultural land values, there are a lot of people who would raise their hand and exit the valley,” Fisher said. “It’s a scary proposition for those of us who live here.”

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