By Scott Hamilton, President, Hamilton Resource Economics
“Water Supply Challenges and Solutions: 2022 Outlook”—such was the topic for a panel at the 2021 Almond Conference held in-person in Sacramento in early December. Water issues are on the minds of many—the session attracted a capacity crowd. The first two speakers, Dave Orth from New Current and Paul Gosselin, Deputy Director of the California Department of Water Resources (DWR), focused on the Sustainable Groundwater Management Act (SGMA). The need to achieve groundwater sustainability, and how the associated reductions in groundwater pumping will be implemented, is creating anxiety for many farmers. Mr. Orth provided much needed background on SGMA noting that an estimated 6.9 million acres in the San Joaquin Valley are critically overdrafted. Deputy Director Gosselin made several key points: reduction of groundwater use should be done strategically, the State supports accelerated groundwater recharge efforts, and coordinated management of surface and groundwater storage facilities can increase the volumes of groundwater storage. DWR is beginning the daunting process of reviewing groundwater sustainability plans (GSPs). Mr. Orth had noted that very few GSPs should expect an “A” grade and that many should expect something below a “passing” grade. To date, 50% of the plans reviewed have been found to be acceptable and 50% deficient, being sent back to the groundwater sustainability agencies (GSAs) to strengthen their plans. DWR is looking for evidence that the plans are real—that currently existing adverse impacts such as falling groundwater levels and land subsidence will indeed be corrected. The Department is not the bad guy. Deputy Director Gosselin is trying to work with the GSAs to develop strong plans. If plans are ultimately determined to be non-compliant, management of the groundwater is transferred from local control to the State Water Resources Control Board.
The third speaker, Scott Hamilton, presented the Blueprint’s concept for an ultimate solution—a plan to capture more flood water from Valley rivers and the Delta through new fish friendly diversions, new and restored conveyance facilities to get the Delta water to the subbasins that need it, and for greatly expanded recharge facilities to store the flood water underground. Any new water from the Delta is a minimum of 10 years away. Dr. Hamilton was followed by Jesse Roseman from the Almond Board of California. The Almond Board has been working with growers to expand on-farm recharge capacity—perhaps the most economical of the various recharge methods. While on-farm recharge will not work for everyone due to soil types, geology, and water supply availability, for those who can manage it, it offers the potential for increased farm groundwater levels.
There was only one question from the audience: one farmer had noted that while the information the panel presented was interesting, none of that helps when he is trying to decide to plant a new almond orchard and determine the water supply availability for the 20-year investment.
Long term investment decisions are challenging given the inherent uncertainty of future prices. SGMA has added to that uncertainty. The availability of future water supplies, both surface and groundwater, varies greatly between water districts and GSAs, as do the policies of boards that manage those resources. Farmers should have a good understanding of their water district’s or GSA’s plan moving forward.
Some key questions: how will pumping be reduced over time? Is there a system of ground water credits that can be carried forward from one year to the next (i.e., if a farmer doesn’t use all of the groundwater the farm is entitled to one year, can the unused amount be carried forward to future years)? Can farmers buy water if the districts can purchase it? If the district has surplus water and is recharged on-farm, will any of the quantity recharged be credited to the farm groundwater account? Can a farmer buy additional water and recharge it using surplus capacity in district facilities and get a groundwater credit? If a farmer owns land in two neighboring districts can the pumping allocation be transferred from one district to the other? Does the district plan to acquire more water? Are surface supplies at risk, for example due to climate change or water rights challenges? Is there a plan for the district or GSA to buy land and take out production that would then increase groundwater allocations for the remaining water users?
With these questions answered it should be possible to develop a water budget and develop a strategy based on that budget. For example, suppose that over the next 20 years a farmer anticipates having only half the water, in total, needed to fully plant a block of land, with plenty of groundwater available early, and very limited supplies by year 20. If the district allows credits to be carried forward, the farmer might decide to plant only half of the available land, say to almonds, carrying groundwater credits from years 1-10 to make up for projected deficits in years 11-20. The other half of the land might be dry-farmed or converted to recharge ponds for use in wet years that might also provide hunting or habitat benefits. If water supplies prove to be better than expected, the option still exists to plant more land later.
There are no easy, quick, or cheap solutions to solving the water shortages in the San Joaquin Valley, currently estimated to be around 3-million-acre feet. The low hanging fruit has already been picked. As districts needing more water struggle to build more facilities and capture or buy more water, water costs are likely to increase – creating challenging times for the long-term investor.
