Critics of California’s farmers are challenging a
U.S. Bureau of Reclamation requirement to renew 231 water
contracts for water districts, farmers and cities served by the
Central Valley Project (CVP). If successful, the disruption of
this process could lead to dramatic impacts in California’s
water supply, its economy and environment.
California farmers produce more than half the
nation’s fruits, nuts and vegetables, generate approximately $28
billion in gross receipts annually and employ 1.1 million
people. These activities create $60 billion in economic activity
through transportation, packaging, equipment sales, wholesale,
service industries and other businesses that depend on
California farms for their livelihood.
One third of California’s farmland – roughly three
million acres – relies on the CVP for critical water supplies.
The CVP also furnishes municipal and
industrial water for about one million households and generates
clean hydroelectricity to meet the needs of about 2 million
The CVP delivers more
than 800,000 acre feet of water each year to fish and wildlife
protection and habitat restoration and provides 410,00 acre feet
to state and federal wildlife refuges and wetlands.
As required by federal
statute, the U.S. Bureau of Reclamation, which manages the CVP,
has executed or is renegotiating new long-term contracts for CVP
water supply with water districts, cities and farmers throughout
Reclamation conducted a thorough environmental
analysis of the proposed contracts, beginning in 1993 with a
Programmatic Environmental Impact Statement and more recently
with Endangered Species Act consultations with state and federal
agencies. The agency also conducted detailed water needs
assessments for every CVP contract before determining the amount
of water deliveries incorporated into new agreements.
Water rates in the new CVP contracts are set by
federal statutes: The Reclamation Reform Act of 1982 and
Central Valley Project Improvement Act of 1992. The
contracts require that rates be based on full repayment of
project costs by 2030.
Settlement Contracts were predicated on an
exhaustive analysis of historic water use for each settlement
contractor. Challenging these settlement quantities would
undermine Sacramento River water allocations and cause a need
for Sacramento River water basin adjudication. This would
result in chaos and disputes over water that would last for
decades and would disrupt urban and agricultural water plans.
State and federal policies create incentives that
encourage voluntary water transfers. Farmer-to-farmer
water transfers, or transfers between farmers and cities,
provide important flexibility to address shortages through
voluntary market mechanisms. The CVPIA, championed by
Senator Bill Bradley and Congressman George Miller, encouraged
the use of water transfers.