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“Water Market” Concept Betrays Public Interest, New Report Shows

Oct. 31, 2005

“Water Market” Concept Betrays Public Interest, New Report Shows

Commodifying Water is Detrimental to Consumers, California’s Environment and Economy

OAKLAND, Calif. – Creating water markets in California, a system that would allow for open sales of water and water rights and enable water distribution to be run by the highest bidder, would irreversibly harm consumers and the state’s agricultural system, said Public Citizen today in a new report. The consumer group called on Gov. Arnold Schwarzenegger and the California State Legislature to re-prioritize the state’s interest in protecting water as a public trust.

When water is treated as a commodity rather than a public good, conflict arises between poorer rural areas and wealthy urban neighborhoods, Public Citizen has found. Public Citizen’s report, Water for People and Place: Moving Beyond Markets in California Water Policy, shows that the largest buyers of water in the state are Southern California water agencies and private development corporations, predominantly located in Southern California. The purchased water comes from the vast agricultural lands in the Central Valley and the Imperial Valley, which depend upon imported water supplies.

While these valleys house the wealthiest agricultural region in the United States, they are also home to the poorest populations in California, and the rural communities—cut off from the agricultural canals and aqueducts—have the highest number of drinking water quality violations.

In California, it is likely that the rural areas in the north and the dry agricultural valleys will be further neglected as water increasingly goes to nourish Southern California property values and subdivisions built by developers who can pay more for water than farmers.

“Water is not the same as sneaker designs, Hollywood movies or pizza crust; there are no consumer choices,” said John Gibler, author of the report and a California researcher for Public Citizen. “Everyone needs water to drink and bathe. Everyone develops thirst equally. In a water market, those with access to the most capital can decide, by the power of their checkbooks, whose thirst is most valuable.”

California houses one of the largest and most complex water infrastructures in the world. Taxpayers and ratepayers across the state and country paid to build the many dams, canals, pumping stations and hydroelectric power stations that make up this system. The movement of water in the state, from the rainy and less populated north, to the dry agricultural valleys in the middle and the highly populated cities of the south, depends entirely upon the publicly funded water projects. With hundreds of dams and thousands of miles of aqueducts and canals, agribusinesses and Southern California cities have bloomed beyond imagination, while rural, farm-working communities have stagnated, left to pull water from aquifers that have been depleted and contaminated by industrial agriculture.

Water has long been a controversial issue in California as its population continues to grow and its urban areas explode with growth without any consideration of water usage or needs, threatening the viability of agriculture as well as the rural communities that provide the industry’s labor force. Among the biggest proponents of the notion of water marketing are corporations involved in urban housing development.

The California constitution declares that the public owns the water. Over time, however, changes to state and federal laws have made it possible for people and businesses with water rights to sell those rights on a temporary, long-term or permanent basis.  In 1982, the legislature directed California’s Department of Water Resources, the State Board, and “all other appropriate state agencies to encourage voluntary transfers of water and water rights.”And in 1992, Congress passed the Central Valley Project Improvement Act (CVPIA), allowing contractors with the federal water project to sell water to cities or developers outside the project. No such sales of federal project water have yet taken place, although the CVPIA is credited with spurring a recent increase in state water sales and trading. 

The two largest proposed urban development projects in California—Newhall Ranch and Tejon Ranch’s Centennial—illustrate the longstanding inequities in land ownership and water subsidies. Both projects are business ventures pursued by corporations, focused on new urban development outside of any existing city. Both projects lack a sufficient natural water supply to serve future residents. And both projects plan to buy rights to drinking water for future residents from Central Valley agribusinesses or descendents of old-time land and water magnates.

Public Citizen calls on the governor and state legislature to reallocate water based on need, not price. The report recommends banning all for-profit water sales between private entities and establishing a statewide task force to study water use in California to identify urgent drinking water needs in rural parts of the state as well as wasteful water practices.

“Treating water allocation—who gets water and how much—as a business disempowers communities and environmental advocates by cutting them out of the decision-making process,” said Gibler.

To read the report, click here.