Conflict within irrigation districts may limit water transfer gains

This is the first of two articles offering different views on who wins and loses in water trades. The first, by Mike Rosen, analyzes possible effects of three policies by winch irrigation districts might distribute water transfer gains. The second, by Rodney Smith, reinterprets the Rosen data and defends a “negotiated certificates” water trading scheme. FA.

The Imperial Irrigation District and the Metropolitan Water District (MWD) of Southern California have recently concluded an agreement which is historic because of its long-term nature and the volume of water to be transferred. Imperial will transfer 106, 110 acre-feet of water to MWD annually for 35 years in exchange for MWD providing funds for Imperial conservation projects. The projects are to be completed by 1994 and paid for by MWD over a 35-year period for a total cost of $222 million. The effective price of water to Metropolitan will be about $100 per acre-foot per year.

Proposals for alternative uses for these funds could become a major source of conflict within the Imperial district. Three potential policies are examined in this article. At present, Imperial receives and controls the funds, but the district is contemplating ways to allow district landowners and farm operators to receive funds directly.

Water transfers have been promoted as voluntary transactions in which there can be no losers. But decision-making within water districts is collective in nature, and intra-district conflict may arise. Individual members of districts may have reason to oppose transfers, and aggregate benefits may not be realized.