Only farmers, not fish, can pay for the Central Valley Water Project

by CalWatchdog Staff | July 20, 2013 1:22 am

[1]July 20, 2013

By Wayne Lusvardi

For some time environmentalists and have been telling fish stories that Central Valley farmers are dodging timely repayment of the costs to build the massive Central Valley Project[2].  But it is the fish, not the farmers, that are not paying their fair share of the costs of the massive Central Valley Water Project.

The CVP was built in the 1930’s at a cost of $1.3 billion. The CVP is not the same as the California State Water Project[3], which was built five decades ago through state bonds.

To give an idea of the magnitude of the CVP, it delivers about 6 million acre-feet of irrigation water to about 3 million acres of farmland in the central San Joaquin Valley.  By comparison, the State Water Project supplies only about 1 million acre-feet of water to farmers.

The CVP also delivers water to cities and for wildlife refuges.

CVP was Depression Era Project

In the 1930s Great Depression Era, the federal government built the Central Valley Project when California was broke.  The federal government had to take over the state water plan to stimulate the agricultural economy and bail out California.  The federal government built the separate CVP water system mostly to supply water to farmers, and to reduce disputes between farms and cities.

But with the rise of environmentalism in the 1990s, farm water began to be diverted to “wildlife refuges.” The U.S. Bureau of Reclamation reports that there were no deficiencies in water deliveries for farms until the 1990s.  The CVP carries water to the Sacramento Delta, which is pending a massive re-engineering called the Bay Delta Conservation Plan. [4]

The enacting Reclamation Law[5] for the CVP required farmers to repay only the principal amount of the bonds, not interest, as long as they met the 960-acre limitation (1.2 square miles). Large corporations don’t get most of the water subsidies from the CVP. Individuals or families own 80 percent of California’s 64,000 farms[6].

The only water subsidy small farmers receive is the foregone interest on the bonds. Large corporate farms must pay their share of the full cost of the CVP, including interest, to receive their CVP water allocations.

CVP repayment audit

Congress ordered an audit of repayment for the costs of the CVP by farmers, which was completed in March 2013.  The audit, titled Central Valley Project California: Repayment Status and Payoff[7], indicated the bonds have 18 years remaining until repayment in 2030. But repayments are not keeping up with the repayment schedule due to the variability of water deliveries needed to generate agricultural product sales to meet contractual payments.

In 2011, CVP water diverted for wildlife refuges only amounted to 6.5 percent of total CVP water deliveries[8] (388,488 out of 5,886,610 acre-feet of water). But it is apparently large water users that are being disproportionately hit with reductions in water deliveries, resulting in repayments lagging behind schedule.  As the audit report[9] of the Office of the U.S. Inspector General of the U.S. Department of Interior states:

“To identify why repayment progress was not satisfactory, we reviewed water rate calculations and payment information for four irrigation contractors. We determined that for the 3-year period from 2008 to 2010, actual water delivered to these contractors was only 41 percent of estimated water deliveries used to calculate their contract water rate. The variance in water deliveries resulted in a $45 million shortfall in the contractors’ repayment of capital costs that USBR must recover in future years through rate increases. In the case of one contractor, we estimated that by 2030, their CVP water rate could more than double if current trends continue” (last paragraph on page 6). 

Contrary to the notion that large corporate farms are receiving larger farm water subsidies, their CVP payments face the prospect of doubling.

Farmers can fish, but fish can’t farm

In 2009, U.S. Senators Dianne Feinstein and Barbara Boxer, both California Democrats, snuck their $1 billion San Joaquin River Restoration Project[10] bill through Congress as a rider to the larger Omnibus Public Lands Bill (H.R. 146).  However, this rider bill only funded initial research costs and not implementation.  To fund implementation, the Feinstein-Boxer bill proposed to partly fund the costs of the river restoration project by accelerating the repayment of CVP project costs on the backs of Friant water users.

The Friant Water Authority[11] depends on CVP water from the Friant Dam[12] near Fresno and Madera Counties.

However, since coming back into the majority in 2011, Republicans in the House of Representatives have blocked Congressional funding[13] of the San Joaquin River Restoration Project.

The bottom line to the fish story about farmers reneging on timely repayment of CVP costs is that fish don’t have any money to make payments, but farmers do.  If Congress wants farmers to pay more to repay CVP costs on schedule, all it has to do is to quit reducing water deliveries to Central Valley farmers. Then farmers will pay for river restoration projects jobs programs[14].

Congress created this problem and also has the solutions in its own hands. To solve the problem of slow CVP payments, politicians and environmentalists first need to stop making up fish stories about how farmers are reneging on their CVP payments.

Source URL: https://calwatchdog.com/2013/07/20/only-farmers-not-fish-can-pay-for-the-central-valley-water-project/

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