Super-sized dam could be a cash register for California farmers

New federal contracts give water districts more than they need

  • A new round of federal contracts and water projects - including raising the height of Shasta Dam, shown here - may put farmers in a stronger position to sell their water to cities.

    Philip James Corwin/Corbis
 

At a time when some dam engineers are biting the environmental bullet and tearing down the concrete that once defined their existence, the Bureau of Reclamation is trying to figure out how to make the largest dam in California even bigger.

The Bureau is in the process of renewing its 25-year contracts with the more than 200 water districts that receive water from the 20 dams and reservoirs that make up the Central Valley Project, or CVP. 

The Bureau has been able to make full deliveries to the districts in only 13 of the last 17 years. But late last year, Reclamation Chief John Keys pledged to deliver full quantities to water districts under the new contracts. At the same time, the Bureau has promised to meet growing urban water demands and restore the San Francisco Bay Delta under the CALFED program (HCN, 9/30/02: Delta Blues).

Doing all this will require expanding dams or developing other water projects, all at taxpayer expense. Ironically, this could give water districts more water than they can actually use, at incredibly cheap prices: $15 for an acre-foot, or 325,851 gallons. Cities can pay between eight and 33 times that.

Although most irrigation districts say they just want to make their supplies more reliable, some critics claim that the districts will be able to market their extra water to thirsty cities. The watchdog organization Environmental Working Group speculates in a March report that the new contracts "will set up the districts to reap windfall profits by reselling water at much higher prices." 

More water than land

Essentially, Reclamation has committed to delivering about 1 million more acre-feet of water than is available in the Central Valley Project today. To capture that water, the agency is considering an array of possibilities: enlarging either Shasta Dam near Redding, Los Vaqueros Dam in the San Francisco Bay area, or Friant Dam near Fresno; or building a brand-new dam northwest of Yuba City. The Bureau is also contemplating storing water on islands in the Bay Delta or in underground aquifers.

The most likely option, because of its comparatively cheap cost, is raising Shasta Dam. Currently, the reservoir can hold more than 4.5 million acre-feet of water. Adding another 6.5 to 18.5 feet to the dam will increase its storage capacity by 6 percent to 14 percent. The environmental impact statement on the dam-raising should be finished by 2007.

One of the biggest beneficiaries of a taller Shasta Dam will be Westlands Water District, arguably the largest agricultural district in the United States. With more than 600,000 acres and nearly 600 farms, Westlands receives 14 percent of the water in the CVP. 

But to cope with dwindling supplies in dry years, Westlands, like many water districts, has fallowed land and lined ditches with concrete. Farmers in Westlands have already taken 11 percent of their land out of production, and the Bureau of Reclamation is now considering fallowing another 39 percent because it is contaminated with selenium (HCN, 4/14/03: Westlands farmers sell out).

Nonetheless, Westlands’ new contract will guarantee it the same amount of water it was promised 25 years ago. "That’s the irony of all this," says Hal Candee, senior attorney with Natural Resources Defense Council. "They’re proposing to renew the contract at the full amount, while simultaneously the same agency wants to take half the land out of production."

Rep. George Miller, D-Calif., who has long pushed to reform the CVP, has raised concerns about the districts reselling their water. In a February letter to Interior Secretary Gale Norton, Miller asked whether the government was essentially trying to "outsource the management of the CVP water supply to current CVP contractors — who collect substantial personal profits from sales."

Bureau spokesman Jeff McCracken says the view that water districts will sell any excess water is "probably an illusion." He says, "No one is getting rich selling CVP water." 

Will water flow south?

The most likely customer for water is the Metropolitan Water District of Southern California, which supplies water to 18 million people in Los Angeles and San Diego. After California agreed in 2003 to end its overuse of Colorado River water, the agency has been scouting out replacement supplies within the state. Metropolitan has tried to lease Central Valley Project water several times, though it has never actually completed a deal.

In 2002, Metropolitan signed a $125 per acre-foot deal with one CVP customer, the Glenn-Colusa Irrigation District north of Sacramento. But the agreement only allows Metropolitan to lease water from farmers whose rights pre-date the water project — and only during drought years. Metropolitan is still interested in pursuing actual CVP water. 

"We’d consider any seller," says James Roberts, the chief deputy general counsel for Metropolitan. One hurdle that has kept his agency from pursuing CVP water more aggressively is the $50 to $60 per acre-foot fees the Bureau would impose on such transfers. Those, he says, "would put that seller at quite a disadvantage."

That’s likely to change, however, as demand for water increases and the market gets tighter during the next 25 years. Says Candee, "It’s safe to say that heavily subsidized CVP water is an extremely valuable asset for any irrigation district."

The author writes from Paonia, Colorado.

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