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Corporate Farms Get Massive Water Subsidies in California

>From <>

December 30, 2004

Agribiz Gets Richer, the Fish Get Nothing

The Water Kings of California


A small group of wealthy farmers receive the vast majority of water and
subsidies from the federal Central Valley Project, concludes a
groundbreaking report issued on December 15 by the Environmental Working
Group (EWG).

The study was issued as Indian tribes, anglers, commercial fishermen and
environmental groups are challenging the negotiation of long term contracts
between the U.S. Bureau of Reclamation and CVP growers because of their
disastrous impacts upon salmon and other fish populations.

The EWG investigation is the first to name individual recipients of water
subsidies in California. It concludes that the CVP, authorized in 1936 to
support family farmers, is providing up to $416 million of subsidized water
at the expense of fish and the environment.

It dispels the erroneous notion that many people still have of agriculture
being made up of individual yeoman farmers in the Jeffersonian tradition
right out of the classic Grant Wood painting of a farmer holding a
pitchfork, with his wife standing steadfastly beside him.

"It confirms that large agribusiness operations not the small family
farmers that federal projects were intended to benefit are reaping a
windfall from taxpayer-subsidized cheap water," according to the report,
written by Bill Walker and others.

In 2002, the largest 10 percent of the farms received 67 percent of the
water, for an average subsidy worth up to $349,000 each at market rates for
replacement water, according to the study. Twenty-seven large farms each
received subsidies each worth $1 million or more at market rates, compared
to a median subsidy for all recipients of $7,076.

The report contends that one farm Woolf Enterprises of Huron, Fresno
County--received more water by itself than 70 CVP water user districts, for
a subsidy worth up to $4.2 million at market rates. Woolf Enterprises is a
member of the huge Westlands Water District, a district that Craig Tucker
of Friends of the River describes as the "Darth Vader of California water

Other revelations of the report include:

* CVP farmers get about one fifth of all the water used in California, at
rates that by any measure are far below market value

* In 2002, the average price for irrigation water from the CVP was less
than 2 percent of what LA residents pay for drinking water, one tenth the
estimated cost of replacement water supplies and about one eighth of what
the public pays to buy its own water back to restore the San Francisco Bay
and Delta.

The report says, "The original intent of the federal water projects, set
out in the Reclamation Act of 1902, was to encourage Western settlement by
small family farms. Today, artificially cheap irrigation water in the
Central Valley has led to a host of problems, including the inefficient use
of water, devastation of fish and wildlife habitat and severe toxic

George Miller (D-Martinez), the author of the Central Valley Project
Improvement Act that made fish and wildlife a purpose of the project for
first time, hailed the release of the study. Miller has been very critical
of attempts by the Bush administration to "fast track" Central Valley water
contract renewals without sufficient public notice and comment regarding
the impacts of increased water diversions on endangered and threatened

"We have known for years that the Bureau of Reclamation rewards its favored
customers with cheap water at the expense of everyone else, including the
American taxpayer," he said. "Now the Environmental Working Group has
calculated that price tag and at over $400 million, it is staggering"

"What is especially outrageous is that the Administration is secretively
negotiating long-term water contracts worth billions of dollars that would
provide these same handouts to these same special interests for decades to
come, while the rest of California is either running short of water or
paying top dollar for it. I wrote a water reform law in 1992 to end these
costly giveaways, but the Bureau of Reclamation is ignoring the law and the
public and trying to lock in these subsidies for generations"

Tupper Hull, spokesman for the Westlands Water District, blasted the study,
claiming that the report "completely cooks up a fanciful description of
the subsidies."

He said the actual cost of water to individual farmers in the district is
not 7 to 8 dollars per acre-foot, as the study contends. "That's the cost
to the irrigation district, he stated. "The individual farmer in the
district will actually pay $20 to 90 per acre foot."

He was particularly critical of the report's conclusion that the average
price of irrigation water was less than 2 percent of what LA residents pay
for drinking water.

"First off, LA is paying for taking the water twice as far, twice the cost
of conveyance. Then they have to pump the water over the Tehachapi
Mountains, all at enormous cost." he said. " Then the water is treated
with chlorine and then shipped through water systems to homes all of that,
too, at enormous cost. To make this comparison doesn't make much sense.
This is junk economics."

However, Walker emphasizes that CVP farmers are receiving between $60
million and $416 million in water subsidies each year, depending on how the
"market value of the water is defined. The subsidy amounts are the
difference between what should have paid for the water minus what they
actually paid. The subsidy was calculated at three different rates the
Bureau of Reclamation's "full cost rate ($60 million), the State
Environmental Water Account rate ($305 million), and the Replacement Water
Rate ($416 million).

The State Environmental Water Account rate is the difference between the
average CVP rate and the price paid for CVP water by the Environmental
Water Account, a state-federal joint agency, to restore fish and wildlife
habitat in the Bay-Delta. The Replacement Water rate is obtained by
comparing the average price for CVP water to the estimated coast of
replacement water supplies from proposed dams and reservoirs on the San
Joaquin River.

"No matter what market value is used for comparison, the total subsidy to
CVP farmers exceeds the actual amount they paid in 2002, about $48 million.
That means that CVP water users are getting a minimum discount of 55
percent below market value, ranging up to almost 90 percent, for the water
they receive, the report states.

As a solution, the study advocates far-reaching water policy reform.
"Reforms to make details of water subsidies public, limit the amount and
value of water subsidies to large farms, and encourage conservation by
pricing water at rates closer to market value are needed to end the
disaster for taxpayers and the environment by the Central Valley Project,
the report advises.

I commend Bill Walker and the other writers of the Environmental Working
Group study for doing the first real in-depth analysis of federal water
subsidies and their impacts in the Central Valley. For years, fishing
organizations, environmental groups and California Indian tribes have
complained about the cost of federally subsidized irrigation water projects
on fish and wildlife, especially on salmon and other anadromous species.
This report documents with hard data how a project meant to benefit small
farmers has in fact mainly served the needs of the Westlands Water District
and other large Central Valley agribusinesses with enormous costs to the
taxpayers, fish and the environment.

To read the full report, go to:

Dan Bacher can be reached at: