Relevant and even prescient commentary on news, politics and the economy.

King of California

David Zetland at Aguanomics offers this review of a topic that gets little national attention – the use of water between watershed areas, water rights, and how we value water to date at least in this area of the country. Use of water and policy on water use tends to be regionally and locally based, making a one size fits all answer to the problems of water use less than useful.

King of California — The Review

In this book, Mark Arax and Rick Wartzman illustrate the fascinating details behind a family that combined hard work, farming wisdom and political maneuvering to turn “lake-bottom land” into a farming empire, with help from government workers who may have ignored the Public interest and badly-written and ill-enforced government laws.
The book (subtitle: “JG Boswell and the Making of a Secret American Empire”) traces the story of the Boswell family, which left Georgia’s cotton lands for California. The Boswell began marketing cotton in Los Angeles and then moved into production, turning land, abundant water, and very sharp management into one of the largest farming operations in the US and world. I won’t summarize the fascinating, well-written story, but here are some notes I took on the way:

  • During a conflict over flows from the Kings river in the 1880s, Mr. Church raised his dam on the river, reducing water available to downriver farmers. This action — more akin to “possession is ownership” than riparian rights or prior appropriation — invoked a similar response: the farmers downstream blew up the dam and got “their” water. See this post on irrigation in the West 100 years ago, including how the government has to subsidize projects too risky and unprofitable for private companies.
  • Huge land grants from the Spanish and Mexican eras were mostly along the coast of California, not in the Central Valley. The Mexicans allocated huge tracts in the Valley just before California was annexed by the US in 1850. These tracts were reaffirmed by the US Land Commission for California. In 1871, 516 men owned 9 million acres of California land. Those who later abused the Reclamation Act of 1902 — including Southern Pacific — had lots of practice.
  • Miller & Lux, two German migrants based in San Francisco, owned 1.3 million acres in the Central and Santa Clara Valleys. Some of their land was irrigated by the San Joaquin River, but farmers upstream were taking enough water by prior appropriation (“first in time, first in right”) to reduce flows next to M&L properties with riparian rights (“take what you want as long as you do not damage your neighbors”). In resulting disputes, California “found a way to blend both riparian and prior appropriation rights under a formula of `beneficial and reasonable’ uses. What this meant on the ground was that the water generally went to those with the most creative lawyers and engineers.” [p. 80]
  • The abuses of the Federal laws took place when individuals/families/corporations acquired multiple 80- or 160-acre parcels from programs dedicated to assisting small farmers and assembled them into illegally-large parcels. Abuses of water-related programs occurred when farmers with large farms took water that was supposed to go to small farms or paid subsidized prices for that water. Subsidies were (and still are) huge: Farmers only paid a portion of the cost of delivering water, without paying the capital costs of the projects that constructed them, the interest on those costs, and so on.
    The worst part of these abuses was not that the Federal Agencies (Bureau of Reclamation or US Army Corps of Engineers) willingly helped big farmers abuse and avoid the rules. It wasn’t that politicians exempted abuses via special amendments in unrelated laws. It was that these very talented and rich farmers took the subsidized land and water instead of paying the market rate. That’s like Bill Gates paying $0.85 for his $2.00 Big Mac.
    Of course, this kind of corruption, of the rich and powerful working with government to become more rich and powerful, has a long and infamous role in US policies, including the recent financial crisis that bailed out Wall Street and left taxpayers with the tab.
    So these were crony capitalists, not free marketeers. (There’s one point in the book where Boswell says he “sent back” his cotton subsidy check. Yes, he did that once, but cashed the other ones.)
  • Harry Chandler (1864-1944) ran the Los Angeles Times for “what is good for real estate” [p. 214]. That’s because he owned large tracts in the San Fernando Valley (his maneuvers to add water to them are portrayed in the movie Chinatown), Tejon Ranch, and other places. He was perhaps a central character in the story that I traced in my dissertation, and more directly in “The end of abundance: How water bureaucrats created and destroyed the southern California oasis
  • In the late 1970s, the government looked set to break up Boswell’s empire, based on its use of water reserved for 160 acre holdings. Boswell and Salyer (another big land holder) spent big money to “get access” to politicians and staffers, to present their views. In the end, they won an exemption from the limit, based on the idea that their private water rights were not affected by laws dictating that access to infrastructure and water was reserved for smallholders. Boswell et al. stayed in the business of collecting subsidies. (The weirdest case [p. 379] was when they got money for flood damage on land that they claimed was going to be used for wheat but were paid (in-kind) to not plant in wheat. When the government ran out of wheat for “payment in kind” for fallowed land, it bought wheat from Boswell’s other operations, to give it to Boswell, who sold it again. Without any of these programs, the land would have been flooded. With them, Boswell’s triple was worth millions of dollars.)
  • We know that big farms are good for individual farmers who can make more money from their management expertise. But small farms allow more people to make a living off of farming. Is that more productive? Maybe. Is it more profitable? Maybe (especially if subsidies are removed; they tend to go to bigger farms*).
    But are small farms better than big farms for the community? In a 1946 study that compared the company town of Arvin (dominated by the DiGiorgo family) to Dinuba, a similar-sized town in the area with many small farms, social scientist Walter Goldschmidt found Dinuba to be better in every way.** This result indicated that the logic behind the Reclamation Act was sound, even as it pointed out how Reclamation (and most other subsidy programs for farmers) had undermined the existence of towns like Dinuba.
    I’m not worried so much about reducing the number of people working in farming (currently less than one percent of workers) as much as the jobs those people have: 85 percent of them are hourly laborers making $8/hour. Why does that bother me? Because it’s the result of government subsidies, not free market dynamics.
  • Arax and Wartzman ask an important question near the end of their book: big farmers like Boswell used federal subsidies to build huge farms on the bottom of a lake. They got rich and their crops were part of a vast system chasing yield. What were the costs? The Tulare Lake — the largest lake west of the Mississippi — was turned into farm land with troublesome runoff and little environmental value. Taxpayers sent huge checks to “welfare farmers.” Their workers were more like wage slaves than farmers. Communities (as Lloyd Carter has documented) were weak and troubled.

I will soon post more on government failure in agricultural policy (Westlands).
Bottom Line: I give this book FIVE STARS as a fascinating history of a family that was good at farming and even better at working with bureaucrats and politicians to destroy the environment, local communities and small farmers for the sake of more subsidies, cheaper land, and free water.


* According to the USDA  [pdf], production and subsidies are shifting to larger farms that are run by wealthier people — and that’s only between 1989 and 2003!
** There is some debate over whether Goldschmidt was right to conclude that “similar” areas ended up having such big differences in farm size and quality of life. Hayes and Olmstead review them in this paper [pdf] with useful notes on the size of oil revenues and cost of water pumping on farm size and crop mix. They claim that small farms would pay almost double the cost of water in Arvin without considering shared pumping facilities. But even without such quibbled, they also agree that the larger farms — however they got there — were not contributing to community life. (In other words, Las Vegas differs from San Francisco for many reasons, but do you want government programs to encourage more cities like Las Vegas?)

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Water

Ten great cities dying of thirst in Wallstreet 24/7 points to a problem already serious in some cases, and during the 2007/2008 drought made readily apparent – our lack of will to address water infrastructure problems and replacement, and our use of water that is outstripping sources.

This report by Ceres and Water Asset Management (link repaired) shows that few participants in the
bond market—including investors, bond rating agencies, and the utilities themselves—
are accounting for growing water scarcity, legal conflicts and other threats in their
analyses. Some are even inadvertently encouraging risk by rewarding pricing and
infrastructure plans that encourage increased water use despite near-term supply
constraints. By overlooking these critical factors, all involved are allowing water risk to grow—and remain hidden—in the bond market.

Obsidianwings carries a post on water:

While the Republicans celebrate their historical victories, the Democrats lick their wounds, the bankers count their bonus money, and the rest of us try to hold on to our jobs, homes, and retirement savings, some large US cities are facing a real challenge:

They’re running out of water. (see above link)

No water is a real problem.

And not just an “I can’t water my lawn” problem. A”my city can’t generate electricity”, or “these millions of acres can no longer be productive agricultural land” problem, or “it’s going to cost me five times as much for water next year” problem.

Or, a “this city can no longer support it’s population” problem.

This country and its economy has, to a great degree, been living off of infrastructure built years ago. Decades ago. It’s wearing out, being used up, being overwhelmed by the increasing demand being put on it. It will take effort, and costs money – a lot of money – to rebuild.

I’m not seeing that happening. We have a reduced tax base because the FIRE sector blew the economy up, and because we’ve moved all of the non-tech middle class jobs offshore. It’s worth a Congressperson’s political life to suggest raising tax rates, on anyone, in any form, for any reason.

World bank and water describes the transnational ownership and distribution trade in water infrastructure, distribution, and human dimension for access to water for drinking and sanitation.

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Today is International Toilet Day

And, if I were a better person, you would be reading my interview with David Kurla, CEO of IkoToilet/Ecotact in this space.

But I’m not, so go to his website, especially the links for school, urban, and slum toilet provisions, and then see this John Sauer piece at the Huffington Post, and check out the information at Sauer’s organization, Water Advocates.

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GAO report on the Great Lakes

The GAO reports on the inability to measure small amounts of toxins in the Great Lakes that can cause harm. The same is true, as described in other posts, for unborns and babies. Is this a worthy function of government to oversee, water and babies being crucial also to us? How would a free market handle this?

“In 1990, following a series of binational agreements aimed at improving
environmental conditions in the Great Lakes Basin, the Congress passed
the Great Lakes Critical Programs Act. This act, which amended the Clean
Water Act, required the Environmental Protection Agency (EPA) to
publish water quality guidance on minimum water quality standards and
antidegradation policies for protecting existing water quality. In response,
in 1995, EPA published the Final Water Quality Guidance for the Great
Lakes System, otherwise known as the GLI, to control over 100 toxic
pollutants and protect aquatic life, wildlife, and human health. Through the
GLI, EPA established stringent water quality criteria—numeric values to
be used by states to set pollutant discharge limits for point sources—for 9
BCCs and 20 other pollutants found in the basin. In addition, the GLI
established methodologies that the states are to use in developing criteria
for the remaining pollutants. Meeting the criteria established by GLI
requires sensitive analytical methods that allow measurement of pollutant
concentrations at or below the level established by GLI water quality

The ability to accurately and reliably measure pollutant concentrations is
vital to successfully implementing GLI water quality criteria. Without this
ability, it is difficult for states to determine if a facility’s discharge is
exceeding GLI water quality criteria and if a discharge limits are required.
For example, because chlordane has a water quality criterion of 0.25
nanograms per liter but can only be measured down to a level of 14
nanograms per liter, it cannot always be determined if the pollutant is
exceeding the criterion. As we reported in 2005, developing the analytical
methods needed to measure pollutants at the GLI water quality criteria
level is a significant challenge to fully achieving GLI goals. Although
methods have been developed for the nine BCCs for which GLI water
quality criteria have been established, EPA has only approved the methods
to measure mercury and lindane below GLI’s stringent criteria levels.
Analytical methods for the other BCCs either have not received EPA
approval or cannot be used to reliably measure to GLI criteria levels.
criteria.”

Table 1: Status of BCC Analytical Methods
BCC Status of method to measure GLI water quality criteria
Chlordane Measures above the GLI criterion
Dieldrin Measures above the GLI criterion
DDT Measures at the GLI criterion but not yet approved by EPAa
Hexachlorobenzene Measures above the GLI criterion
Lindane Measures below the GLI criterion and approved by EPA
Mercury Measures below the GLI criterion and approved by EPA
PCBs Measures above the GLI criterion
2,3,7,8-TCDD Measures above the GLI criterion
Toxaphene Measures above the GLI criterion
Source: GAO analysis of EPA information.

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Water in the works in December 07

The Great Lakes Water Resources Compact was signed last December by the governors of the eight states that border the lakes — Minnesota, Wisconsin, Illinois, Indiana, Ohio, Michigan, Pennsylvania and New York — and the premiers of the Canadian provinces of Quebec and Ontario. The agreement requires approval of state legislatures before it is sent to Congress for final approval. Ohio’s Legislature is expected this week to become the first to approve the pact. New York’s may approve it later this month.

“This is not a water grab,” says Sam Speck, director of the Ohio Department of Natural Resources. “It’s a commitment to protect a resource in the face of climate change and other challenges.”

The Great Lakes contain nine-tenths of the nation’s fresh water and supply drinking water to 30 million people in Chicago, Toronto, Buffalo and elsewhere. The lakes are an economic engine and the cultural centerpiece for much of the upper Midwest. But the fragile ecology of the lakes has suffered from pollution, invasive species of fish and the diversion of water to support Chicago and other cities.

The new agreement would control who can use the water and how much.

………………………………………………………………………

Grand Water Plan Downstream Pact” Last week’s agreement was truly significant, the most important changes since the first compact was drafted in 1922. And the manner in which it came about — no real winners or losers, but a cooperative regional effort to solve problems — was as surprising as it was refreshing.

“This is truly an historic moment,” said Interior Secretary Dirk Kempthorne. “Celebrate this day. This is huge.”

The new water deal has four basic elements to manage the water in the Colorado River and its tributaries.

1. The new guidelines establish rules for shortages – specifying who will take reductions and when they take them. This is essential for prudent water planning in times of drought.

2. The new operational rules for Lake Powell and Lake Mead will allow these two massive reservoirs to rise and fall in tandem, thereby better sharing the risk of drought.

3. The new guidelines establish rules for surpluses, so that if the basin is blessed with ample runoff, the Department of the Interior will have rules to distribute the extra water.

4. The new rules will address the ongoing drought by encouraging new initiatives for water conservation.

Previously, the compact divided the states into Upper and Lower Basins, with each to get equal allotments of 7.5 million acre feet per year. But some believe that the 1920s was a wet period, and the allocations were based on an assumption of 16.4 million acre in the basins. Today, the long-term average annual water flow is assumed at 13.5 million acre feet, so it is no surprise that increased demand, because of rampant population growth, had increased interstate tensions. The river provides water to utilities that serve 30 million people. (The eight states in the Southwest water sharing area).

I was hoping STR could post on the Great Lakes compact, and the very direct agreement not to ship water out of the current boundaries.

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Reclaiming water

The LA Times reports on one way to deal with a shortage of drinking water:

As a hedge against water shortages and population growth, Orange County has begun operating the world’s largest, most modern reclamation plant — a facility that can turn 70 million gallons of treated sewage into drinking water every day.The new purification system at the Orange County Water District headquarters in Fountain Valley cost about $490 million and comprises a labyrinth of pipes, filters, holding tanks and pumps across 20 acres.

Almost four years after construction began, the facility is now purifying effluent from a neighboring sewage treatment plant run by the Orange County Sanitation District, a partner in the venture.The finished product will be injected into the county’s vast groundwater basin to combat saltwater intrusion and supplement drinking water supplies for 2.3 million people in coastal, central and northern Orange County.But before that can be done, state health officials must certify that the reclaimed water meets drinking water standards. Officials expect the approval to be granted before opening ceremonies Jan. 25.”Our sources from the delta and the Colorado River are becoming unavailable,” said Michael R. Markus, general manager of the water district. “This will help drought-proof the region and give us a locally controlled source of water.”Last month, for example, a federal judge in Fresno ordered a 30% reduction in fresh water pumped from the Sacramento-San Joaquin Delta to protect the tiny delta smelt, a threatened species. The region, which is facing myriad environmental problems, is the hub of California’s water system.If the reclamation plant’s full potential is realized, officials say, up to 130 million gallons a day could be added to the county’s fresh water supply, lessening the region’s dependence on outside sources.Basically, the facility takes treated sewage, which would have been discharged into the sea, and runs it through an advanced filtration system.

Update: Chuck sends this link to NPR and a more complete story.

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Oil and water do not mix to our benefit

The Albuquerque Tribune editorializes:

In oil drilling, the question is always who suffers and who benefits – not in the abstract but in the details of daily lives.

Sure, the American economy needs more American oil. But mining and property laws are often ruinous to ranchers, farmers and homeowners who are beset by drillers, their wastes and their high-handed assumption that their right to profit is greater than the property rights of those they traumatize.

Gas drilling in the San Juan Basin has brought huge profits to drillers – and destroyed the livelihoods of many ranchers, killing their cattle with drilling waste.

And the ranchers have absolutely no recourse. It amounts to the privatization of eminent domain, in which a company with mineral rights can use someone else’s surface rights, despoil their land, their peace of mind and their property value, all to make money just for themselves.

The chief problem with drilling in the Galisteo Basin is soil and water pollution. Tecton, the Texas company drilling in the basin, claims to have new, cleaner technologies. But oil and gas drilling around water cannot be accomplished without damaging the water. It’s a physical impossibility.

Here’s a partial list of potential wastes that come from exploratory and production drilling: huge quantities of brine, or “produced water,” associated with oil and gas deposits; water runoff from cleaning rigs and vehicles; engine coolants and water- and oil-separating antifreeze; benzene; drilling fluid, sometimes called “mud,” with its clays and chemical additives that cools and lubricates the drill heads; drill cuttings; the various lubricants that keep the drill tubes going; hydrogen sulfide from bacteria on field equipment, killed only by dangerous biocides; oil debris in filters; dirty diesel; and halons and other ozone-depleting chemicals used as fire and explosion suppressants.

The issue here is simple. Pollution is no longer a cost-saving irresponsibility. It has to be cleaned up, and that costs lots of money and takes a long time. And the water might never be drinkable again.

In a rush to mine coal and oil, two huge behemouths collide in the Soutwest. Surface dwellers be careful. Do you actually know what your water rights are? Or what dwells beneath?

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Ecuador and water

Ecuador’s experiment in private water markets is not ending well.

It is a well kept secret that Bechtel won a contract to privatize the water in Ecuador’s largest city, Guayaquil, just months after the massive citizen protests that threw Bechtel out of Bolivia.
In October 2000, a local Bechtel subsidiary, Interagua, signed a 30-year concession contract to run the water and sanitation services in Guayaquil. The privatization process was promoted by loans from the Inter-American Development Bank and a guarantee from the Multilateral Investment Guarantee Agency (MIGA), a World Bank agency.
Now, more than six years later, the residents of Guayaquil are demanding damages from the company for water contamination, an end to water cut-offs, and a return to local, public control.

Interagua’s operations in Guayaquil earned $300 million in revenue. Despite these profits, Interagua did not initiate the rehabilitation programs it had promised. Concerns and complaints mounted over broken pipelines, floods due to malfunctioning sewage systems, exorbitant water rates, poor water quality, and environmental damage due to the lack of wastewater treatment during this first five-year period.

I suppose there is no proof public or a public-private partnership would have done better, but it does not add to Bechtel’s resume. While there were humanitarian concerns, that was not the market failure. They did not spend the money on contract items.

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Water Wars Updated

For the past two decades metro Atlanta has grown in a wild, crazy, largely unplanned and largely unregulated frenzy.

Many business owners and workers prefer the lack of a significant winter and the lower taxes. Yahoo!

No one, apparently, thought about the long term or the lack of infrastructure much, as those topics don’t win elections, and low taxes are always good, right?

Well, with no additional water storage capacity, Atlanta metro may be the first metro area in American history to run out of water.

Florida, Georgia and Alabama are fighting over various water sources and uses, and all of them want the federal government to “do something.” What exactly the federal government can “do” is a mystery, beyond possibly reshuffling what water is still there.

No to rub it in, but if I were to set a drill rig on my back lawn and drill for two hours I would likely hit an aquifer with almost infinite water, and I live in the drier part of our area.

Businesses are welcome in the rustbelt, where we have almost limitless water for use (not for pumping to other parts of the country though). Housing is cheap right now, but there will be a winter, there always is.

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