Water Transfers and the Future of the West: Tradeoffs

This is the third part in a series (Part 1, Part 2) sharing my year-long research into agriculture-to-municipal (AMI) water transfers from scientific, ethical and practical perspectives. In this section, I examine the justification (or lack thereof) for trading rural livelihoods for urban growth, and I argue for legal protections for rural areas of origin, especially for third parties who are not part of the transaction itself.

Justifying Urban-Rural Tradeoffs

Fundamentally, AMI transfers are an issue of tradeoffs. The consequences of allowing them, unmitigated, can be quite severe. Rural denizens, businesses and governments can suffer the degree of impacts that motivate well-founded opposition to the practice. If, however, water were never transferred from agriculture to municipalities, individuals there would eventually be subject to a nontrivial risk of water shortage as cities grow, or cities would have to pursue the development of new supplies, which create their own brand of external costs that can be just as severe. These frightening possibilities come to motivate well-founded support for transferring water out of agriculture. In other words, a relevant theory of justice must not regard local consequences in isolation, but comparatively and in context. This points evaluation towards criteria like equity of costs and benefits (but without simplistic region-wide cost-benefit analysis) and, critically, toward the issue of consent. Are the losers in a transaction, if there are any, consenting to their burden? Is that burden excessive? Are we assigning costs and benefits too separately? These are the theoretical discussions that help to understand and critique the arguments- some of which do not deal directly on these terms- made by Western stakeholders vis-à-vis the issue of water reallocation.

One dispute is whether irrigated agriculture in the West is inherently worth saving. The West has always been enraptured with the idea of the small farmer remaking the desert on behalf of the nation. This idea rears its head throughout the history of the West, in the 1862 Homestead Act, the 1902 Reclamation Act, the narrative of Los Angeles and the Owens Valley, Western films and literature, and the hundreds of water projects built by federal largesse. The logical conclusion is either that agriculture is worth saving, or “deserves” water more than municipalities do, or both.[1]

The tradition of agrarian supremacy in this country is generally attributed to begin with Thomas Jefferson. Image from District of Calamity.

The tradition of agrarian supremacy in this country is generally attributed to begin with Thomas Jefferson. Image from District of Calamity.

The alternative principle, that all users have equal rights to water that they may put to use, is far more plausible. Ironically, this principle at first benefited small-holder agriculture, but now is one of the seeds of water reallocation. If rural communities deserve protection, it must be because they are inequitably harmed by water transfers, or harmed without their consent, not because of the special status of agriculture in the middle of “a semi-desert with a desert heart.”[2] Interestingly, urban water providers consistently argue that AMI transfers are the last option they would choose to pursue, either because of third-party effects or because of the elevated status of farming regions in the culture of the West. Nevertheless, purchasing agricultural water is often the first strategy a thirsty city enacts because it is cheaper, faster, and less controversial than developing a project from scratch.[3]

Irrigation accounted for 60% of water consumption in the United States in 2014. In the arid West, that figure is even higher. Image courtesy Brian Richter/ National Geographic.

Irrigation accounted for 60% of water consumption in the United States in 2014. In the arid West, that figure is even higher. Image courtesy Brian Richter/ National Geographic.

The particularities of agriculture appear in another fashion in the debate over the future of water and growth in the West. Agriculture is so much more water-intensive than urban development and uses such a large proportion of every state’s water resources that some argue that water can be transferred to cities with little harm done. Agricultural economists, for example, have argued that there is “only a limited basis for concern, and not much need for formal public action in response” to AMI transfers, because the amount of water transferred is comparatively small, and because losses in rural areas are more than made up. Many agricultural economists take the efficiency argument even further and argue for reducing restrictions and transaction costs in the transfer process, to promote this “highest and best use” of the resource.[4] It is true that Western agriculture is not threatened with extinction in this matter; perhaps ten percent of agricultural water supplies could provide for decades worth of urban needs.[5] It is also true that AMI transfers promote the most economically valuable use of scarce water supplies. Furthermore, water transfers are never a surprise. The water court or permitting process (depending on the state) takes significant time, especially if there are water users potentially injured by the change in type or place of use.[6] The argument therefore proceeds that every third party is not being harmed too much by water transfers, or can prepare adequately to the new reality of less water in their community, or can simply get a better job in a fast-growing metropolis.

The factual components of this argument are sound when water transfers are small. But cities invariably prefer to buy from a small number of ditches to reduce transaction costs, and to deal with individual communities rather than a large set of them.[7] In other words, transitioning from the perspective of a state or national accounting stance to the perspective of persevering farmers or worried local governments in the counties that are targeted by urban water providers, the stakes are much higher. From this local perspective, AMI transfers are problematic for three reasons: first, they assign external costs that, because of geographic clustering, can be highly substantial. Second, they assign these costs without consent (although not without prior knowledge, as the slow pace of an AMI transfer suggests). Third, they assign benefits to entirely different parties and places, far away from the people and lands they have harmed. From this position, it is irrelevant that bankrupted business owners in Crowley County, Colorado or La Paz County, Arizona, can move to Denver or Phoenix. It is relevant but not convincing (more on this in Part 4) that they have years to prepare for the native weeds that will now continually harass them and that their burden is more than balanced by the gains of distant people. On grounds of equitable treatment of individuals and communities and on grounds of not burdening people without their consent, AMI transfers without some form of compensation are unacceptable.

There is an obvious objection that must be addressed here. People in rural areas are harmed without compensation and without their consent all the time, because of fluctuations in the business cycle, drought, or any number of other things. AMI transfers must be substantially different to justify action here but not there.

Lots of Westerners being harmed without their consent this week! Image courtesy United States Drought Monitor

Lots of Westerners being harmed without their consent this week! Image courtesy United States Drought Monitor

The response is twofold: first, they are different, because of how localized, massive and permanent the impacts are. AMI transfers assign costs to small, vulnerable communities with little economic and social alternatives to irrigation while leaving others alone- all because of the peculiarities of water rights and market pressures in those areas. Once the water leaves, it’s not coming back, and the writing is on the wall for some rural places, in a way that it isn’t in the case of a general recession or a drought. The second reason compensation may be justified here but not during a more distributed or temporary downturn in fortunes is a practical one. After an AMI transfer out of a small community, there are a small number of affected parties, easily identifiable, an obvious “new reality” to which they are transitioning and a beneficiary (the municipality) accruing benefits greater than the price of the transaction. None of these conditions hold in the comparison cases, so some “transitional” mitigation may be more justifiable after an AMI transfer than after, say, a depression in food prices. Whether because of the nature of AMI transfers or these practical considerations, the impacts seem different enough to motivate at least temporary compensatory mitigation.

If impacts are sizable and inequitable enough, perhaps we should go one step further and find our water somewhere else. After all, AMI transfers are but one of a suite of options for supplying municipal demand.[8] Cities might be required to develop new junior water rights and wring maximum conservation, efficiency and reuse savings out of their accounts rather than cause harm to any third parties in rural areas. This is certainly a bridge too far. Outlawing the practice would step between willing buyers and sellers and rob farmers of their most valuable asset. Furthermore, relying on the limited and diminishing yields of conservation and reuse would subject urban residents to nontrivial risk of shortage as their cities grow, and junior water rights are unlikely to be a reliable source for the majority of Western cities. Furthermore, appropriating new water and building large reservoirs carry even greater environmental impacts than purchasing existing supply, and unappropriated water is rarely in a convenient location nearby to a city, because those streams were the first to be developed.[9] Requiring cities to rely on these strategies when there are willing sellers who can meet their needs more reliably and at lower cost places an undue burden on urban water providers and their customers. Therefore attention must turn to a middle ground: mechanisms that still transfer water from farms to cities, but reduce the impact on third parties in areas of origin to more acceptable levels, without adding such high transaction costs that transfers are no longer in the cities’ interest.

Next in this series: how to turn theory into practice: policy options for designing a more justifiable AMI transfer.

[1] This intellectual history is endlessly fascinating and quite relevant to present policy problems, but is unfortunately beyond the scope of this series. Limerick, 265-69.

[2] Walter Prescott Webb, quoted in Marc Reisner, Cadillac Desert: The American West and its Disappearing Water (New York: Penguin, 1993), 5.

[3] Nichols, Murphy and Kenney, 145-46.

[4] Robert A. Young, “Local and Regional Economic Impacts,” in Engelbert, ed., 263.

[5] Metzger, 59-60.

[6] Nichols, Murphy and Kenney, 144-46.

[7] Charney and Woodard, 1198.

[8] Nichols, Murphy and Kenney, section III.

[9] Ibid, 89-93.

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