Most notable impact is the high revealed price for water auctioned by the Buena Vista Water Storage District. Reclamation also is planning to facilitate and participate in markets this year.
On January 15, 2014, the Buena Vista Water Storage District (BV) Board of Directors approved the short-term transfer of 12,000 AF of water to be used for agricultural purposes in Kern County. On February 5, BV received 50 bids totaling 63,000 AF at prices ranging from $650/AF to $1,350/AF.
Between the time the BV Board of Directors authorized the auction and bids were received, Governor Brown declared a drought emergency and DWR announced a zero percent allocation for all State Water Project contractors.
BV has proposed increasing the transfer to 12,206 AF—which allows them to zero out their carryover and exchange accounts. Of the total 600 AF would go to Harris Ranch, who offered $1,350/AF for 300 AF and $1,200/AF for 300 AF.
Overall, the transfer would generate $13.96 million for BV, which it plans to use for a land fallowing program to reduce groundwater demands.
The remaining 11,606 AF would go to growers in Berrenda Mesa Water District, Belridge Water Storage District and Lost Hills Water District. Because much of the carryover water that is being transferred is “trapped” North of the Delta behind Oroville Dam, due to hydrologic conditions preventing it from being conveyed through the Delta, these entities would take delivery “in system” rather than at a delivery a point in Kern County. According to BV staff, the risk these entities are absorbing by taking delivery “in system” stresses the severity of the drought, emphasizes the need for a Delta transfer facility and demonstrates how project operations have become constricted by environmental regulations. However, they were careful to note that their statement should not be taken as an endorsement of the BDCP.
The BV Board of Directors will consider whether to increase the volume to 12,206 AF and ratify the sales at its board meeting on February 19, 2014.
While the BV auction was not held in response to the drought, the responses demonstrate the need for additional water supplies. The U.S. Bureau of Reclamation (Reclamation) is also mindful of that need and, in light of the drought, is further streamlining transfer approvals and investigating the use of Warren Act contracts (which allow the use of CVP facilities to transfer non-CVP water) as part of its 2014 Central Valley Project Water Plan. These to transfer-related strategies are expected to meet up to 170,000 AF of demand.
Reclamation also intends to enter the market as an acquirer seeking to acquire 10,000 AF by transfer or exchange. They plan to give priority to proposals that would address multiple purposes and objectives. Reclamation will also use its portion of Component 1 water acquired under the Yuba Accord for CVP purposes. A total of 60,000 AF is available under Component 1, but is split between Reclamation and DWR. After accounting for conveyance losses, Reclamation’s share will total about 21,000 AF.
Also expect to see the emergence of sellers in the market. Columnist Lois Henry reported in the Bakersfield California that Jim Nickel of Nickel LLC is offering between 2,000 AF and 4,000 AF of groundwater. The article also noted that Kern County Water Agency is in talks with Nickel to determine a mechanism to keep his 10,000 AF from their right in the county this year. The water has been sold to developers in Santa Clarita and Tejon Ranch, but the developments are still in planning stages and do not have a demand for the water.
Written by Marta Weismann