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September 4, 2009

arrowWhat about this $73 million water deal?

pipe.jpgSome readers have called and commented on a Kings County farm district selling water to Southern California for $73 million. But we had far more comments 16 years ago on a much smaller water deal.

That deal was proposed by Areias Dairy Farms. The pitch: about 32,000 acre-feet of water for about $5.6 million to Metropolitan Water District of Southern California. It was the first long-term, farm-to-city water sale with federal project water.

Then, as now, people worried that many farmers would sell their water to Southern California for millions of dollars and leave huge tracts of land barren.

You can't really compare the two deals. The latest one was on the State Water Project, and the 1993 proposal was the first attempted on the federal Central Valley Project. They have different rules and different approaches to the water business. Plus, the Areias deal went down in political flames.

But look at the price per acre-foot. The Areias water would have gone for about $175 per acre foot. The water sold last month by the Sandridge Partners in the Kings County area is $5,250 per acre foot.

Considering that price, the anxiety in farm country is understandable. But there were more comments in 1993 about the Areias proposal. Does anyone have thoughts about this sale in Kings County?



Comments:

This means a project like the Coalinga Solar/biomass incineration/hybrid power plant will have to value the 2,000 acre feet of water they propose to use at $10 million per year. This should be enough, under CEQA, to force them to go to air cooling of their turbines which would cut their annual water use over 90%. It makes the greater cost and lowered efficiency of air cooling at power plants a no-brainer.

It also means the price of food has to compete more and more with demand for water in LA. In other words, fewer jobs and higher food prices for low-income residents.

Posted by: airqualityguy at September 4, 2009 9:53 AM

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Thanks for the interesting comments. Points are well taken.

Anyone else?

Just to refresh your memory: This is Northern California water used to irrigate almond trees near Kettleman City. Now it's going to the Mojave Water Agency in Southern California.

The almond acreage is owned by a Bay Area company that might eventually fallow the ground.

Posted by: Mark Grossi at September 4, 2009 12:17 PM

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This is just the beginning of the end to farming in the Central Valley, unless the Governor, Legislature and the people wake up and solve the water shortage issues currently plaquing our state and, in particular, our region. Farming is a business, not unlike any other, in that, in times of distress, the business' owner must seek alternatives that ensure his financial survival ... such as selling assets. Due primarily to environmental overkill (ESA), farmers find themselves in this situation. And, sale of their only asset of value, rights to water, just might be the only way they can survive, financially.

Posted by: Ross Borba, Jr. at September 5, 2009 3:48 PM

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Reverse the sale of water!! Why are private companies allowed to sell water destined for San Joaquin Valley? This state gets what it deserves, lawmakers spinning their wheels over the budget, and ignoring the true fiscal/water needs of California.
There are usually 2 to 3 drought years, and 8 to 9 normal water years in each 11 year weather cycle in California. And people still don't get it.
I don't think any of the legislators use any geologists for groundwater recharging advice, even though the state University system has many geology experts.

Posted by: Larry Hendrickson at September 10, 2009 11:03 AM

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Are you kidding me??? That was my first reaction to reading about the sale of 14,000 acre-feet of water from the San Joaquin Valley to San Bernardino (Fresno Bee, September 2, 2009; “Kings Co. district sells water to SoCal – by Mark Grossi). The Valley is undergoing one of the worst water shortages in a long while yet we have a water district selling water out of the Valley to development interests in Southern California. This has got to be one of the most irresponsible acts to be perpetrated on the agriculture industry of the Valley.

However, once I began an internet search on the principals in the matter – the Dudley Ridge Water District and the Sandridge Partners – I immediately realized that I was dealing with a very complex but unabashed assault on the agricultural water supplies of the Valley. I very quickly entered into the morass of the Kern County Water Agency, Paramount Farming, the Kern Water Bank, the Metropolitan Water District, and the huge development conglomerates that own much of the large tracts of farmland and, therefore, large amounts of State Water Project water in the San Joaquin Valley.

Guess what, folks; we have our own version of “Chinatown” right here in the San Joaquin Valley. You remember the movie “Chinatown”, don’t you? It was the 1974 movie starring Jack Nicholson, Faye Dunaway, and John Huston. It’s the movie with the backdrop of the 1920’s Los Angeles Water and Power Company executives dumping fresh water into the ocean to give the impression of a serious drought. Without water to irrigate their citrus groves and lettuce fields, the local LA farmers had to sell their land cheaply to developers who then redirected the water back to the former farmland thereby increasing its development value of the land.

The San Joaquin Valley version of Chinatown has corporate conglomerates that have farming as one of their businesses. They buy up large parcels of land, create and/or take over local water districts, then manipulate the State Water Project rules that allow them to then transfer water to their real estate developments in Southern California.

The first clue I found that indicated there was something amiss with this $73,000,000 water sale was the common thread that ran through the deal. If you look at the entity that bought the water (Sandridge Partners) and the entity that sold the water (the Dudley Ridge Water District), you’ll find John Vidovich’s name. Vidovitch is a developer from Los Altos Hills that also has interests in San Bernardino County. A quick check on the internet on Sandridge Partners shows a veritable ownership spider web of the Vidovich family. Another search of the Dudley Ridge Water District also finds John Vidovich as one of the directors (according to the District’s letterhead of January 9, 2008) of the water district… conflict of what?

I’m sure that Mr. Vidovich recused himself from any and all discussions of the sale of the water to his company. Also, the Dudley Ridge Water District passed a policy that “divvies up” its share of the State Water Project to the eight mega-farming corporations that make up the 37,000-acre water district. By the way, you might remember the names Sandridge Partners and John Vidovich from the controversies surrounding the 2008 Farm Bill: Vidovich receives the largest total farm subsidy in the nation - $1,064,000.

This isn’t the first time this process has been foisted on the Valley, either. In 2004, the Berrenda Mesa Water District transferred 8,000 acre-feet of water to a 193-lot subdivision in Stanislaus County. And of course, there’s the 16,000 acre-feet of water that they sent south to Coachella Valley. So, there you have it: the huge agribusinesses in the San Joaquin Valley have jockeyed themselves into the position of having dominion over the largest water project in the in the nation. And you thought this was just some puny little water district acting on its own to get a few bucks for ditch repairs.

If water districts cannot be trusted to keep agricultural water in the Valley, then we the people must take matters in our own hands to stop these water transfers. The level of irresponsibility by the likes of the Dudley Ridge Water District and the Berrenda Mesa Water District cannot go unchallenged. Desperate times call for desperate measures and, by all accounts, California’s water situation is desperate. The State has reached the end of its plentiful water supply. The easy water impoundments have already been developed, the extensive canal system that carries water south from the Sacramento Delta is already in place. Only a peripheral canal and a Westside drain are needed to complete the entire water system… throw in the Temperance Flat reservoir for good measure. But the future of water for the Valley’s agriculture will continue to remain uncertain if water districts are allowed to sell “their” water to the highest bidder.

O.K., water districts, you asked for it. If you cannot be trusted to keep the Valley’s number one industry – agriculture - viable by maintaining its life blood – water – then it’s the time for California to radically and completely overhaul its water laws.

First new water law: all water – both surface and groundwater - will revert to State ownership and, as such, all water rights will revert to the State: no more adjudication based on filing date, no more water rights being held by private ownerships or water districts. No more take over of water districts by developers so they can wheel and deal the water south.

The first priority for the State’s water would be the existing human population – emphasis on “existing”. This means that any new developments would have to get their water from a totally new source – meaning that any new source of water has to come from outside California either though purchases from adjoining states or through desalinization of seawater. All groundwater would belong to the State as well and, as such, would be assumed to already be being used to its fullest capacity so simply drilling a well would not be considered a new source.

Threatened and endangered species that rely on instream water would come second in priority. The Delta smelt, salmon, tui chub – whatever the species – that relies on instream water would have claims on the next water.

The third priority is agriculture. The State needs to set strict guidelines on the operation of all water districts – if water districts even remain after the State takeover. A water district would only receive the amount of water that it is currently beneficially using; i.e., water for domestic and agriculture uses. No more sales of “excess” water to other entities. No more voluntarily fallowing land to create an artificial “excess” of irrigation water, either, Those “other entities” – assuming that they are supplying water to the existing population or agriculture in California - would already have a proven supply of water and would already be receiving their share of water. Therefore, there would not be any need to sell water to any other entity in the State.

The next measure in the desperate category for water is that all water delivery systems – canals, ditches, water control structures, turnouts, etc. - would have to be either lined or put into a pipe to prevent losses to deep percolation. That means all water districts would have to get to work lining and piping their entire water delivery system. That would have been a great stimulus package project for the Obama administration to have funded. Farmers would have to do their share, also. The USDA cost-share program that deals with irrigation system efficiency would have to be augmented significantly to help farmers convert to efficient irrigation systems. This would probably mean no more flood irrigation in the State.

Well, you say, what about recharging aquifers that are already overdrafted? The State would have to come up with a practical recharge plan for those aquifers that were being overdrafted. However, no more new wells would be allowed in those recharged aquifers.

Why the emphasis on lining the delivery system? Here’s an example of why this is important: The Anderson-Cottonwood Irrigation District (ACID). From a 1982 river basin study by the then Soil Conservation Service (now the Natural Resources Conservation Service) shows that ACID diverts roughly 130,000 acre-feet of water from the Sacramento River. It’s the first irrigation district downstream from Shasta Dam. Of that 130,000 acre-feet, 92,000 acre-feet of water is lost due to its leaking deliver system of unlined canals, ditches, flumes, and other water control structures. NINETY-TWO FREAKING THOUSAND ACRE-FEET!!! About 30,000 acres of Valley agricultural land could be irrigated with that amount of water. ACID looses almost 75% of the water it diverts – and it’s not like the area that is being irrigated is a prime agricultural producing area. The area is mostly hobby farms, horse pastures, and subdivisions. The Tehama-Colusa canal system just downstream from ACID is also unlined as are most of the irrigation systems in the State. It could be said that, “We don’t have a quantity problem, we have a distribution problem.

With the scarcity of water already upon us and the prices being paid for water for subdivisions going out of sight, it’s not hard to see why graft, corruption, and greed has entered into the water picture. $73,000,000 would tempt many a farmer to sell their water. The solution is to make it so that it’s not “their” water anymore. The “tragedy of the commons” is being played out here in the San Joaquin Valley with water as has many other of the Nation’s natural resources that aren’t highly regulated. Humans haven’t proved that they can manage our communal environment without regulation; global climate change, overgrazed Federal rangelands, clearcut forests, over-fished lakes, streams, and oceans; paved over prime farmland are just a few examples. It’s sad, but true and, if the water districts cannot – or will not – clean up their act and keep the Valley’s water supply coming to agriculture, then it’s time to implement some desperate measures to make it so.

Posted by: Ron Harben at September 10, 2009 2:19 PM

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Here is where SJV's water is going:

Dr Pepper's Wet Dream: Water, Government Subsidies and Transfer of Wealth in the Middle of the Desert
By Yasha Levine, AlterNet
Posted on September 8, 2009, Printed on September 11, 2009
http://www.alternet.org/story/142504/

VICTORVILLE, Calif. -- On a sun-baked afternoon in October 2008, a group of soft-drink executives and city officials gathered for a groundbreaking ceremony at an old Air Force base on the outskirts of the city, 100 miles east of Los Angeles.

They were standing on the edge of the Mojave Desert, one of the driest, most inhospitable terrains in America. Yet there they were, posing for photographs, gold-plated shovels in hand, to mark the construction of a massive new bottling plant and distribution hub for the Dr Pepper Snapple Group, a facility that will to suck up hundreds of millions of gallons of water a year from this water-scarce area to supply soft drinks to 20 percent of its domestic market.

A bottling plant in the middle of the desert? It sounds too absurd to be real. But in the warped "pro-growth, pro-business" logic of a city on the frontier of Southern California's urban sprawl, the plan made perfect economic sense.

If the scheme is pulled off without a hitch, Dr Pepper will fire up one of its biggest production nodes in America sometime near the end of 2010.

The $120 million plant will occupy 57 acres, with 200 low-skilled workers manning almost 1 million square feet of warehouse space. Using 250 million gallons of water a year, six production lines will crank out 350,000 gallons worth of liquid refreshments a day, shipping perennial soft-drink favorites like Dr Pepper, Snapple, 7UP, A&W, Hawaiian Punch and 50 other brands all across the West Coast and Southwest.

The Victorville plant was a steal for the beverage manufacturer, receiving tens of millions of dollars in subsidies from the city. Local officials have painted it as a win-win situation, talking up the jobs and tax revenue it will bring to a community hard-hit by the recession and housing market collapse.

Yet, no one has seriously addressed the big wet elephant in the room: water. Where will it come from, and at what cost to the local population?

California is on the verge of a water-related calamity. For the past three years, the state has been in the grips of a devastating drought. Up and down the Golden State, water deliveries have been cut by more than half of the normal allotment.

In the fertile Central Valley, the bosom of America's agricultural powerhouse, fields stand fallow because of water rationing. Farmers are losing their jobs, lines for emergency food rations are become a common sight, and some agricultural communities are going bust for lack of water.

The scenes are eerily reminiscent of the Dust Bowl. The situation has become dire enough for the Obama administration to say "California's ongoing water crisis is a major national priority, akin to restoring the Chesapeake Bay or Florida's Everglades."

But as far as Victorville is concerned, this drought might as well be happening on Mars.

"This is a great day for High Desert residents," City Councilman Terry Caldwell said at the plant's groundbreaking ceremony. "When a company like Dr Pepper Snapple chooses Victorville for its new West Coast facility, it means we have arrived, and others will follow. This means hundreds of new jobs for our local residents."

Victorville, a sprawling commuter exurb of Los Angeles, is a pro-growth, pro-business city. Its free-market free-for-all approach to governance and abundance of cheap unexploited land made it the second-fastest-growing city in 2007.

Fueled by securitized subprime mortgages, its population doubled to 100,000 in less than a decade, and the city swelled with some of the cheapest tract-home developments in California.

Most of the growth was built on empty promises. Victorville was supposed to become the industrial and manufacturing capital of Southern California. Now completely bankrupt, the city has some of the highest unemployment and foreclosure rates in California, with home prices shrinking to 1989 levels.

To Victorville officials, the advantages of job growth, no matter how minuscule, far outweigh any concerns over the increased water use. But some locals are not convinced that the plant is such a good idea. Because no matter how you slice it, corporate interests and political ambitions come out as the only real winners.

Victorville is the biggest and most powerful of the half-dozen closely packed cities and towns and smaller unincorporated desert communities that make up Victor Valley. The 350,000 people who call this place home are a varied bunch -- ex-military types, retirees, lower-income subprime mortgage fodder -- but they are all linked by a common and very limited resource.

"How does what happens in Victorville affect the rest of us? The water that we have in this valley is a shared resource that is supposed to be controlled by a California Supreme Court ruling," says Paul Bosecki, a council member for the city Hesperia, Victorville's neighbor. "Victorville has made more than a few bad choices lately. The full-speed ahead, pedal-to-the-metal attitude has consequences when it fails to deliver. It comes down to public interest versus private interest, with the public interests such as water for the residents of this valley coming after Victorville's business ambitions."

Standing on the sandy turf where the future bottling plant will stand and looking around at the Joshua trees and tumbleweeds stretching out as far as the eye can see, it's easy to see why people like Bosecki are worried.

Victorville receives 5 to 6 inches of rainfall a year. For comparison: Death Valley gets 2 inches, semi-arid Los Angeles gets 15 and New York City gets 28. Not surprisingly, a recent poll conducted by the Mojave Water Agency found that 90 percent of the local population was concerned about the availability of water.

Out here in the desert, water will soon become more precious than oil. Underground water reserves have been shrinking for decades. In fact, local aquifers here have been in overdraft -- with more water being pumped out than is replaced naturally -- since the 1950s.

To recharge its underground sources, the Mojave Water Agency has been purchasing water from the State Water Project via the California Aqueduct, which pumps water hundreds of miles via concrete rivers, all the way from the Sacramento Delta. But the recent subprime-fueled population explosion, combined with a total lack of water regulation and California's persistent drought conditions have put the overdraft process into overdrive.

Victor Valley residents use an average of 200 to 250 gallons per day, more than twice the national average. Not surprisingly, the aquifer is being drained at record levels. Victorville old-timers say that at the turn of the century, groundwater was so abundant in some parts of the city and so close to the surface that springs would pop up overnight and wash away pavement and roads. Now, wells that tapped fresh water at a 1,000 feet two decades ago have gone dry.

The more rustic parts of Victor Valley seem to be more mindful of water usage, with gravel-filled and desert-landscaped yards a common sight. Victorville proper is not as keen on conservation. The city is not trying to sell the desert lifestyle, but attempts to re-create the suburban ideal of green lawns, lush trees and golf courses.

But as water rates continue to climb, conservation efforts are starting to kick in. Victorville is promoting the "Cash for Grass" program, which offers 50 cents per square foot to replace lawn with low-water-use landscaping. Some communities are striving for a 20 percent reduction in water consumption.

Yet these efforts are dwarfed by the enormity of the Dr Pepper Snapple plant's water usage. In a single day, the facility would use a decade's worth of per capita water consumption. The 250 million gallons of fresh water it uses over the course of one year would be enough to supply 1 percent of Victor Valley's population.

"While the rest of the high desert is faced with ever-increasing water bills and told to conserve in every way possible, Victorville keeps creating huge water-guzzler projects that only benefit private interests," Bosacki said. "You got this juxtaposing of people getting fined for watering their lawns, while you have this plant using 1 million gallons a day for private profit. There is a different standard here, which should encourage some outrage."

Victorville's city officials say that the plant will not lead to higher water rates, nor the need for increased conservation. Without consulting neighboring cities, the city council voted against commissioning a "lengthy and costly" environmental impact study. Instead, it cited a flimsy five-page report prepared by a city engineer that did not even address the issue of water consumption, instead focusing on burrowing owls, desert tortoises and what to do if Native American artifacts would be discovered during the construction process.

To allay fears and quiet critics, Victorville politicians have been talking up a $40 million water-reclamation facility in the works, which they say will conserve 70 percent of the plant's water usage -- nearly 700,000 gallons a day -- by using it to water the city's golf course and to cool the reactors of a nearby privately owned power plant. (Called the High Desert Power Project, the plant has been using 3.5 million gallons of fresh water a day for nearly two decades and has been criticized for its wasteful water usage.)

The treatment facility was somewhat of a coup for Dr Pepper Snapple Group. To make Victorville more attractive for the company, the city agreed to bankroll the whole thing, and it even threw in a several million dollars worth of roads and assorted infrastructure for the bottling plant. (It was a noble gesture considering Standard & Poor's Rating Services downgraded Victorville's credit worthiness to "junk status," forcing the city to float five-year municipal bonds at a subprime rate of 12 percent to finance the wastewater reclamation plant, while at the same time cutting most city services by almost 50 percent.)

But the Dr Pepper Snapple plant is being subsidized with public funds on an even bigger and more sinister level.

There is no doubt that the bottling plant's oversized water consumption will have a real effect on the future cost of water in the area. So, not only is the city making locals pay for the construction of the plant, but will actually end up funding Dr Pepper Snapple's corporate profits with future water-rate hikes, giving the company access to cheap water now by making it more expensive for everyone later.

"They are shifting and deferring the cost to the public in order to bring them to Victorville," Bosacki said.

Put simply, the plan is nothing less than a transfer of wealth, a slow privatization of a scarce public resource and further plundering of taxpayer wealth by the shareholder class.


Read more of Yasha Levine's work at eXiledonline.com.

© 2009 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/142504/

Posted by: Ron Harben at September 11, 2009 11:08 AM

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