The Association of California Water Agencies (“ACWA”) released a report at its Spring Conference and Exhibition advocating for voluntary water markets. The policy recommendations made in the report build from the improvements that were made to the water transfer process in the 1990s to meet current drought-related needs and facilitate water management improvements.
“These recommendations not only address water needs during a multi-year drought, they create the foundation for more effective water management in the future,” said ACWA Executive Director Timothy Quinn. “Legislation in the early 1990s helped improve the water transfer process, but more can and should be done, especially as the state looks to implement a comprehensive water management policy.”
ACWA’s recommendations fall under two goals: “1) improve the water transfer approval process by making it more efficient, and 2) enhance access to water markets by making information more readily available and accessible.”
Improve the water transfer approval process. ACWA made 11 specific recommendations for improving the water transfer approval process, including:
- Expanding the timeframe for transferring water across the Delta, which would require the California Department of Water Resources (“DWR”) and the U.S. Bureau of Reclamation (“Reclamation”) to consult with their respective wildlife agencies to revise the Biological Opinions that impose the current July-September window
- Continuing to consolidate State Water Project (“SWP”) and Central Valley Project (“CVP”) places of use, as needed
- Developing criteria that would allow DWR or Reclamation to expedite approval of transfers under their jurisdiction that will not impact other water users, in-stream uses, third parties, or local economies
- Making the Water Transfer White Paper durable, which includes minimizing significant changes from year-to-year, providing a more transparent process for short-term transfers, improving stakeholder engagement, and avoiding making changes during a transfer season after parties have already committed to transactions
- Updating the Water Transfer White Paper to provide incentives for water use-efficiency-related transfers
- Facilitating water use-efficiently-related transfers
- Developing and implementing pilot transfers to quantify the consumptive use rates by crop and region
- Improving quantification of water rights and emphasizing that sellers should have valid water rights, not water service contracts
- Providing more transparency about how Delta carriage losses are calculated
- Establishing or documenting protocols for access to conveyance facilities
- Clarifying the definition of third-party impacts and providing examples.
Enhance access to water markets. ACWA recommends three implementation actions for making information more readily available and accessible to enhance access to water markets, including:
- Creating a water transfer database that is more comprehensive and user-friendly than the current information hosted by DWR, including mechanisms for finding counterparties, and explaining the pathways through the water transfer process
- Establishing a clearinghouse to improve the transparency of water market transactions by collecting data on volume, pricing, delivery details, environmental transaction costs, identity of the parties, and the associated water rights. ACWA emphasizes that this clearinghouse would not be a broker and participation should be voluntary
- Creating market mechanisms for access to capital for water use efficiency programs and infrastructure projects.
ACWA maintains that “water transfers are a proven effective way to supplement California’s water needs, especially during the current drought,” but emphasizes that voluntary market transfers are preferred to regulatory reallocation. The association sees regulatory reallocation as undermining the water rights priority system, but by using price incentives to move water, voluntary transfers are less costly and less controversial.
The California Legislature is already considering two bills that would create a water transfer information clearinghouse to improve transparency of information and that would create a water market exchange for California. (See “Dodd Introduces Bill That Would Pave The Way For Robust Water Market To Improve Water Management,” JOW February 2016 and “Levine Introduces Bill Creating A Centralized Water Market Exchange For California,” JOW March 2016).
Written by Marta L. Weismann