Napa, California Now Paying $3,140 Per AF (Acre Foot of Water) to Yountville (Aguanomics)

Feb.05, 2009 in Public Works, Water Crisis, Water Industry, Water Management, Water Rates, Water Rights

(Feb. 4, 2009, Aguanomics)

“The [Napa, California city] council unanimously approved paying Yountville $3.45 million for the permanent rights to 1,100 acre feet from the vast State Water Project. The city, which uses about 15,500 acre feet annually, already has rights to 20,800 acre feet each year.”

This price for permanent water rights is equal to an annual cost of $157/AF at a 5% discount rate. It’s also for less-than-sure supplies. The SWP is only delivering 15% of contracted amounts this year.

Some think that rights sales should be banned. This article quotes roving environmental attorney Michael Jackson as saying “if they have (surface) water they don’t need, it should be taken from them.” Apparently, Mr. Jackson has not thought through the implications of his use it or lose it philosophy, i.e., flood irrigation designed to maintain rights. A pity.

Bottom Line: Watch for more of these trades as cities put big money on the table for permanent (but unreliable) purchases of water rights. These transactions should be encouraged as the second cheapest (net cost of zero) way to address water shortages. The first best way is to raise prices, but it seems that water managers would rather pursue inferior solutions activities such as rationing, water cops, etc.

(Original Post Here)

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