California has a real water market — but it’s not exactly liquid

California has a real water market — but it’s not exactly liquid

By  : grist – excerpt

When I started reporting on California’s drought I heard a lot of people complaining that farmers were growing crops that would simply be prohibitively expensive if they had to buy and sell their water at a fair market price.

That seemed like a big problem. I wrote:

The best fix would be a comprehensive overhaul of the laws to make the price of water clear and responsive to scarcity. If the price of water moved according to the laws of supply and demand, ecological limits would provoke change.

But then I learned that, actually, California already has a water market. Farmers can buy and sell water. In theory, this market should distribute water to where it’s needed most. That is, if there are people who can make more money growing food on their land than I can on mine, they’d buy my water.

And for the most part, it works. Farmers trade water all the time — especially from the east side of the San Joaquin Valley to the west. “The people who are doing those deals really do have a pretty good idea of what the market price of water is,” said Ellen Hanak, director of the Water Policy Center at the Public Policy Institute of California…

California has the infrastructure to move water: giant dams, pumps, canals, tunnels that run under mountain ranges, and pipes that go over them. A farmer on the Trinity River, 200 miles north of San Francisco, can sell water to Los Angeles, and the system can actually make that delivery. But the journey is risky… (more)

Selling water rights

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