Even among experts the cost of water supplies is hard to pin down. A new study reveals huge differences in what water suppliers for cities and farms pay for water from rivers and reservoirs in California, Arizona and Nevada.
By Rachel Becker and Natasha Uzcátegui-Liggett, CalMatters
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California cities pay far more for water on average than districts that supply farms — with some urban water agencies shelling out more than $2,500 per acre-foot of surface water, and some irrigation districts paying nothing, according to new research.
A report published today by researchers with the UCLA Institute of the Environment and Sustainability and advocates with the Natural Resources Defense Council shines a light on vast disparities in the price of water across California, Arizona and Nevada.
The true price of water is often hidden from consumers. A household bill may reflect suppliers’ costs to build conduits and pump water from reservoirs and rivers to farms and cities. A local district may obtain water from multiple sources at different costs. Even experts have trouble deciphering how much water suppliers pay for the water itself.
The research team spent a year scouring state and federal contracts, financial reports and agency records to assemble a dataset of water purchases, transfers and contracts to acquire water from rivers and reservoirs. They compared vastly different water suppliers with different needs and geographies, purchasing water from delivery systems built at different times and paid for under different contracts.
Their overarching conclusion: One of the West’s most valuable resources has no consistent valuation – and sometimes costs nothing at all.
“It costs money to move water around,” the report says, “but there is no cost, and no price signal, for the actual water.”
That’s a problem, the authors argue, as California and six other states in the Colorado River basin hash out how to distribute the river’s dwindling flows — pressed by federal ultimatums, and dire conditions in the river’s two major reservoirs. The study sounds the alarm that the price of water doesn’t reflect its growing scarcity and disincentivizes conservation.
“We’re dealing with a river system and water supply source that is in absolute crisis and is facing massive shortfalls … and yet we’re still treating this as if it’s an abundant, limitless resource that should be free,” said Noah Garrison, environmental science practicum director at UCLA and lead author on the study.
Jeffrey Mount, senior fellow at the Public Policy Institute of California, applauded the research effort. Though he had not yet reviewed the report, he said complications abound, built into California’s water infrastructure itself and amplified by climate change. Moving, storing and treating water can drive up costs, and are only sometimes captured in the price.
“We’ve got to be careful about pointing our fingers and saying farmers are getting a free ride,” Mount said. Still, he agreed that water is undervalued: “We do not pay the full costs of water — the full social, full economic and the full environmental costs of water.”
Coastal cities pay the most
The research team investigated how much suppliers above a certain purchase threshold spend on water from rivers and reservoirs in California, Arizona and Nevada.
They found that California water suppliers pay more than double on average than what Nevada districts pay for water, and seven times more than suppliers in Arizona.
The highest costs span the coast between San Francisco and San Diego, which the researchers attributed to the cost of delivery to these regions and water transfers that drive up the price every time water changes hands.
“In some of those cases it’s almost a geographic penalty for California, that there are larger conveyance or transport and infrastructure needs, depending on where the districts are located,” Garrison said.
Agricultural water districts pay the least
In California, according to the authors, cities pay on average 20 times more than water suppliers for farms — about $722 per acre foot, compared to $36.
One acre foot can supply roughly 11 Californians for a year, according to the state’s Department of Water Resources.
Five major agricultural suppliers paid nothing to the federal government for nearly 4 million acre-feet of water, including three in California that receive Colorado River water: the Imperial Irrigation District, the Coachella Valley Water District and the Palo Verde Irrigation District.
Tina Anderholt Shields, water manager for the Imperial Irrigation District, which receives the single largest share of Colorado River water, said the district’s contract with the U.S. government does not require any payment for the water.
Cities, by contrast, received less than 40,000 acre-feet of water for $0. The report notes, however, that the Metropolitan Water District of Southern California, a major urban water importer, spends only 25 cents an acre-foot for around 850,000 acre-feet of water from the Colorado River.
Bill Hasencamp, manager of Colorado River resources at Metropolitan, said that the true cost of this water isn’t reflected in the 25-cent fee, because the expense comes from moving it. By the time the Colorado River water gets to the district, he said it costs several hundred dollars.
Plus, he added, the district pays for hydropower, which helps cover the costs of the dams storing the water supply. “That enables us to only pay 25 cents an acre foot to the feds on the water side, because we’re paying Hoover Dam costs on the power side.”
Federal supplies are the cheapest; transfers drive up costs
Much of the difference among water prices across three states comes down to source: those whose supplies come from federally managed rivers, reservoirs, aqueducts and pumps pay far less on average than those receiving water from state managed distribution systems or via water transfers.
Garrison and his team proposed adding a $50 surcharge per acre-foot of cheap federal supplies to help shore up the infrastructure against leaks and losses or pay for large-scale conservation efforts without tapping into taxpayer dollars.
But growers say that would devastate farming in California.
“It’s important to note that the ‘value’ of water is priceless,” said Allison Febbo, General Manager of Westlands Water District, which supplies San Joaquin Valley farms. The report calculates that the district pays less than $40 per acre foot for water from the federal Central Valley Project, though the Westlands rate structure notes another $14 fee to a restoration fund. “The consequences of unaffordable water can be seen throughout our District: fallowed fields, unemployment, decline in food production…”
The Imperial Irrigation District’s Shields said that a surcharge would be inconsistent with their contract, difficult to implement, and unworkable for growers.
“It’s not like farmers can just pass it on to their buyers and then have that roll down to the consumer level where it might be ‘manageable,’” Shields said.
The most expensive water in California is more than $2,800 an acre-foot
The most expensive water in California, Arizona or Nevada flows from the rivers of Northern California, down California’s state-managed system of aqueducts and pumps, to the San Gorgonio Pass Water Agency in Riverside County. Total cost, according to the report: $2,870.21 per acre foot.
Lance Eckhart, the agency’s general manager, said he hadn’t spoken to the study’s authors but that the number sounded plausible. The price tag would make sense, he said, if it included contributing to the costs for building and maintaining the 705-mile long water delivery system, as well as for the electricity needed to pump water over mountains.
Eckhart compared the water conveyance to a railroad, and his water agency to a distant, distant stop. “We’re at the end, so we have the most railroad track to pay for, and also the most energy costs to get it down here,” he said.
Because it took decades for construction of the water delivery system to reach San Gorgonio Pass, the water agency built some of those costs into local property taxes before the water even arrived, rather than into the water bills for the cities and towns they supply. As a result, its mostly municipal customers pay only $399 per acre foot, Eckhart said.
“You can’t build it into rates if you’re not going to see your first gallon for 40 years,” Ekhart said.
The study didn’t interrogate how the wholesale price of imported water translates to residential bills. Water managers point out that cheap supplies like groundwater can help dilute the costs of pricey imported water.
The Los Angeles Department of Water and Power, for instance, purchases water imported from the Colorado River and Northern California to fill gaps left by local groundwater stores, supplies from the Owens Valley, and other locally managed sources, said Marty Adams, the utility’s former general manager. (The Los Angeles Department of Water and Power was unable to provide an interview.)
Because the amount of water needed can vary from year to year, it’s added as an additional charge on top of the base rate, Adams said. “If you have to pay for purchased water somewhere, when you add all the numbers up, it comes out in that total,” he said.
“The purchased water becomes the wildcard all the time.”
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
