water market under SGMA.
Is that accurate?
REMSON: Other groups are talking
about doing a groundwater market
as part of their GSP, but so far nobody
has done it in the formal, secure way
that is being undertaken by FCGMA,
where there are trading rules and pricing
SOURCE: What are The Nature
REMSON: Our primary concerns are
that the market fairly implements the
rules developed by the Water Market
Group — who can trade, what can be
traded and when, the bidding procedures
and reporting rules. The GSP is required
to consider groundwater dependent
ecosystems, and we wanted to be sure
that the water market didn’t negate any of
what we were working on in the plan.
It turned out to be a lot more work
than we anticipated. Massaging years
of FCGMA data to work with the water
market pilot was difficult. Evidence of
under-reporting in the past generated the
need for advanced metering. This required
selection of a vendor, development of
a data portal, installation of meters on
all wells in the basin and protocols for
who would own and maintain the wells.
Imagine you’re a pumper and you’re got
to put AMI meters on all your wells at a
cost of $3,000 for each well.
SOURCE: So, the NRCS grant was
REMSON: The grant provided money to
help subsidize installation of the meters
and FCGMA matched it. Eventually it
was established that the pumpers would
own and maintain the equipment.
SOURCE: What challenges
should other GSAs considering a
groundwater market be aware of?
REMSON: The workload. FCGMA is
sized for the routine work of monitoring
and administering the rules of the
groundwater basins it manages. SGMA
and the development of the GSP put a
strain on these resources; developing the
water market added a new load.
Pumping allocations were the most
contentious factor we had to deal with. If
you’re going to have reductions or control
the amount of extractions, you’ve got to
have an allocation system so people know
how much they have to trade. Many
engaged pumpers suggested different
types of systems, which fundamentally
boiled down to a proportional allotment,
whereby everybody gets so many acre-feet
of water per acre or each pumper gets
a percentage of its average historic use.
Eventually the ordinance was written
with the allotment based on historic usage
over a 10-year period ending in 2014, the
year SGMA went into effect.
SOURCE: Are there other
challenges associated with
REMSON: There are two — carrying
over unused allotments and borrowing
forward. Carrying over allows growers
who don’t use all their allocation in one
year to bank that amount over to the next
year to either use or sell. We thought that
was fair because it encourages people
to save. Maybe they’ll change their crop
type or invest in more efficient irrigation
technology. If you look at the total
volume that could be pumped over the
next 20 years, carryover will never allow
that to be exceeded. The growers are
only using what they’ve saved.
Borrowing from yourself for the
future would allow growers to pump
more than their annual allotment,
banking on the fact that they can make it
up in a wet year. They go into water debt.
Say you’re a farmer growing the same
crop as your neighbors and there have
been some dry years; you’re up against
the wall with your allocation. All your
neighbors are betting on a coming wet
year, so you’re also going to borrow. If the
wet year doesn’t happen, there are going
to be nothing but buyers in the market
and no sellers. The only way to repay the
water debt would be to fallow ground or
pay very high penalties. If a number of
growers did that, it would be a disaster for
the basin, the growers and FCGMA, which
wouldn’t be able to meet its GSP goals.
Eventually it was decided that
carryover would be part of the allocation
system but borrowing forward
SOURCE: What happens in a wet
year when no one needs water?
REMSON: The market will fluctuate,
which is what you would expect. Some
growers who might have been thinking
of putting in a new crop like fruit trees,
which need a lot of initial water, may
decide now’s the time when water prices
are low. Without a groundwater market
in a dry year, fallowing land because of
insufficient water could destroy a farmer.
The water market provides farmers a way
to achieve some economic relief. One
grower decides to plant and wants to
buy water. Another can sell his water and
fallow that year, taking the income from
the sale of his water.
SOURCE: Do you foresee that
market membership will expand?
REMSON: I can see a day when
municipalities, industrial users and
environmentalists will be allowed to
participate. Say we have a long-term
drought with the water table going down
and cities hitting their limits. Instead of
spending millions of taxpayer money to
bring in alternative sources of water, they
could go to the market and buy however
many acre-feet they need, which would be
cheaper and more equitable than spending
millions of dollars on infrastructure
that is only needed during droughts, or
THE SOURCE INTERVIEW
WHAT’S AT STAKE?
Fox Canyon Groundwater
manages groundwater extraction
2 basins are in
Growers could face up to
40% cuts by 2020.
Agriculture uses 57% of
Ventura County water and
2/3 of that supply comes from