California Drought-Fighters Turn to Australians for Help

California Drought Effect on Food Prices

Australian farms and cities manage almost every drop of available water to make the most of supplies on the driest inhabited continent. No wonder California is looking Down Under for help with its record drought.

Four years of historic water loss have left the most-populous U.S. state with depleted reservoirs, fallow farmland and billions of dollars in emergency spending to keep faucets open. Unlike Australia, where water is tightly regulated and tracked by meters, usage in parts of California is unmonitored, urban supply remains cheap, and aquifers can be tapped by almost any landowner with a permit to drill a well.

“We are very, very inefficient as a society on how we use water,” said Felicia Marcus, chair of the State Water Resources Control Board, which regulates supplies for 39 million residents in California, the nation’s biggest water user and top agricultural producer.

Cherry-Pick Ideas

While the state is a long way from copying a foreign system with different property-rights laws and the world’s only large-scale market for trading water, Marcus and about a dozen other state officials met in Sacramento with an Australian delegation in December to cherry-pick ideas. Some, like mandated monitoring and conservation, were among the emergency measures imposed by Governor Jerry Brown this month that included an order for cities and towns to reduce consumption by 25 percent.

The state probably will have to do more. Largely exempt from the new curbs is agriculture, which accounts for 80 percent of water consumption. California generated $46.4 billion of farm sales in 2013, including milk, nuts, fruits and vegetables. While most growers have seen their government water allocations cut to zero, many retain access to water rights and are drilling more wells on their land, straining aquifers as surface supplies get more scarce.

Trading Water

The system is different in Australia, where land and water rights are separated and tightly controlled. The country, about the same size as the 48 contiguous U.S. states, employs a market-based system created three decades ago that allows traders, farmers and government entities to buy and sell A$1.5 billion ($1.16 billion) of water annually through exchanges and brokers. Most of the trading is in the Murray-Darling Basin, an area twice the size of California that produces a third of Australia’s food, almost all its rice and cotton, and 45 percent of dairy output.

“We’ve developed some globally unique ways of managing our water resources” to provide greater efficiency of use, said Tom Rooney, co-founder of water broker Waterfind Pty in Adelaide.

Limiting Loss

A drought in Australia from 2002 to 2010 reduced water supplies by 70 percent but the nation’s productive capacity declined just 13 percent, Rooney said. The effects of the prolonged dry spell were limited by more efficient irrigation, while trading of water and water rights helped better allocate limited supplies, he said.

Water extraction is regulated, with meters tracking how much is taken to safeguard sustainability, said Kim Morison, a managing director at Brisbane-based Blue Sky Alternative Investments Ltd., which manages more than A$1 billion, including a fund that holds tradeable water rights.

“We are well ahead of the curve,” Morison said. “We have much more of a focus on water as the lifeblood of our communities and environment.”

Conservation Incentives

The nation’s regulated trading helps create incentives to conserve water. Australians apply treated wastewater to gardens and golf courses and mostly use dual-flush toilets that are more efficient. A 2007 campaign in Brisbane sought to cut water use to 140 liters (37 gallons) per person a day using timers that limit showers.

Mandated reporting of use data also allows the government to track every drop.

“That’s not the way California’s system works now,” Thomas Howard, executive director of the water control board, said by telephone from Sacramento, adding that the current crisis is certain to bring changes. The state consumes 10 percent of U.S. supply, more than New York, Texas and Nevada combined.

Better Toilets

The Pacific Institute, an Oakland-based environmental researcher, said in a 2010 report that farmers still irrigated more than half the state’s crops by flooding rather than more efficient drip systems. The Institute urged conservation measures, including high-efficiency toilets and washing machines, to cut California’s urban water use.

Americans don’t properly value water like other goods, and changing the system to reduce waste and encourage more efficient use could take decades, said Robert Glennon, a University of Arizona professor and author of “Unquenchable: America’s Water Crisis and What to Do About It.”

Separating Rights

The biggest challenge would be to separate water rights from land ownership, said Wes Strickland, a water attorney for Jackson Walker LLP in Austin, Texas. Such rights are linked to property, and when owners sell them, the transactions are mostly decentralized and don’t require state approval, said Andy Sawyer, assistant chief counsel for the water board.

The worsening drought is forcing California policy makers to consider all kinds of changes, especially after the winter snowpack in the Sierra Nevada mountains yielded the lowest water level in 65 years of record keeping. The state relies on melting snow to replenish streams and reservoirs. Farmer-drilled wells have eroded aquifers that may take decades to recover.

Crisis Motivates

“What causes change more than anything is crisis,” the water control board’s Howard said. “I do see us making progress and moving toward the ideal system.”

Even before state officials met with the Australian delegation, changes were under way. In November, voters approved Brown’s $7.5 billion bond to preserve water quality and increase storage and delivery to drought-stricken cities and farms. The state water board said April 3 that farmers probably will see supplies curbed in key watersheds. Last year’s curtailments led to more than 400,000 acres of fallow farmland and thousands of agricultural jobs lost.

First Steps

The water board, which is expected to vote May 5 on rules for the governor’s ordered restrictions, recommends investing in technology that measures current data on water supply and demand, which Australia has made a central part of its own system. Jackson Walker’s Strickland, who favors a registry of water rights, said better data collection would be a good first step for California toward better management of the resource.

“A drought hurts everyone,” said Rooney, the Australia water trader. “It hurts irrigators. It hurts the environment. It hurts the whole ecosystem. Australia’s got a great story to tell in relation to how it’s been able to be smarter with its water management.”

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