Gino Celli draws a water sample to check the salinity in an irrigation canal that runs through his fields near Stockton, California. AP Photo/Rich Pedroncelli

One startup wants to fix California’s water market. But shouldn’t the state be doing more?

There’s no “solving” California’s drought, as so many headlines suggest. Drought is a regular feature of the Western climate cycle. Future droughts are almost certain to be more frequent and more severe.

But there are ways of managing a drought, and one Colorado startup has a new one: A mix of technology that might streamline water sales between California water-rights holders. It’s a welcome new addition to the state’s water market, which has long been cumbersome and opaque. Sustainable Water and Innovative Irrigation Management (SWIIM) proposes to help fix that, while making it easier for farmers—who use 80 percent of the state’s water—to conserve. Mother Jones reports:

Using data from irrigation districts, field instruments, weather reports, satellites, and low-altitude flights, [SWIIM’s] software calculates in real time how much of a farm's water is consumed and how much returns to underground flows … Once a farmer plugs in how much water he wants to unload, that information becomes available to water managers, who can then offer the water to farmers, companies, or urban water districts.

Farmers are paid anywhere between $200 to $450 per acre-foot, which is how much it would take to cover an acre with a foot of water. SWIIM takes a cut from every exchange. "It provides an incentive for conservation," said Kevin France, CEO of SWIIM, and "that is probably one of the biggest things missing from this equation."

France is getting at one of the main reasons some farmers mightily resist conservation: Under California law, if water-rights holders do not consistently use some portion of their allotted water, they can permanently lose their rights to it. Although this doesn’t mean farmers are legally bound from conserving water, it’s not easy to figure out much water actually gets conserved with new irrigation techniques simply, as Mother Jones points out. Farmers have to factor in how much excess water has historically trickled off of their land and onto another’s.

Plus, water, in all its naturally occurring forms, is hard to measure to begin with. As Nathaniel Johnson of Grist once wrote, “Because water is liquid in the physical sense, it is not at all liquid in the financial sense.”

These vagaries are a big part of the reason California’s existing water market is so intimidating. First, you have figure our how much water you actually have to sell, which can require hydrologists. Convincing your buyer that you’re legitimate, then sealing the deal, can require lawyers on both sides. And the meters are running for all involved. All told, selling water is a long, complex, and expensive process.

What SWIIM is offering is a science-backed assessment of how much water farmers actually have to sell, and a less costly, more efficient way of selling it. That’s pretty remarkable — but it’s not a silver bullet.

Robert Glennon, Professor of Law and Public Policy at the University of Arizona and a national water-policy expert, notes that farmers who use SWIIM would still have to go through state regulatory processes to finalize the sale.

He also points to another issue that has plagued California’s establishment of a true market-based water exchange: There are virtually no limits on drilling new wells to tap into California’s dwindling groundwater supplies. “That’s a problem for SWIIM,” says Glennon. “Why should I buy someone else’s water rights when I can just drill my own well? For major commercial farmers, it’s usually cheaper”—and presents fewer hoops to jump through.

Farmer Gino Celli climbs out of a irrigation canal that is covered in dried salt on a field he farms near Stockton, California. (AP Photo/Rich Pedroncelli)

Another barrier is that many local irrigation districts have the final say over customers’ water rights. These districts have the power to block a water sale, especially if it’s to someone in another district. This isn’t just for fear of losing rights; when one major farmer farms out her water, it means fewer jobs for local agricultural workers, lower seed and pesticide sales, and less tax revenue.  

Glennon argues that a stronger water market would internalize these costs. A report he co-authored for the Hamilton Project at the Brookings Institution lays out a novel way to do so: “Municipal and industrial folks should pay farmers modernize their irrigation infrastructure, in exchange for the water conserved,” he says. “By doing that, farmers would use less water, but grow the same amount of product so that they stay in business.”

Not only could the state help facilitate these kinds of short-term water transfers, it could also buy up agricultural rights and sell them off to interested parties interested for a clear-cut price. That’s the kind of robust and centralized water “bank” Glennon thinks the state needs. SWIIM and other companies like it could exist alongside it. And if SWIIM proves itself effective this summer—it plans to pilot its model on farms throughout California this summer—it might help push forward the legislative reforms necessary for a more effective market.

“I’m delighted to see this company enter the field,” Glennon says. “SWIIM is trying to make the opportunity for trade more transparent. And right now, where would I go if I wanted to buy water?”

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