World Water, Valley Water

Be sure to check out this Economist story on water as the next scarce and fantastically expensive resource.

As an agricultural area that receives little rain, water also bears mightily on Shafter and its surroundings. In the 2000 census, 828 Shafter residents worked in agriculture, almost a quarter of the employed workforce. As such a large part of the economy, the pain and joy of agriculture is felt across the area's economy and while rarely a source of joy, water has the potential to cause great pain in the area. The main sources of water for Shafter farmers are politically vulnerable, as the recent run in with defenders of the Delta Smelt has reminded anyone who needed it.

The first signs of scarcity and scramble are beginning to show up in the still green-lawned residential life of Shafter's citizens.  Shafter is moving toward metered water billing under state threat and the massive Seventh Standard developments were postponed over water issues before they were postponed by market conditions.    If the Economist is right these are signs of things to come.  

Indeed, the growth of the Central Valley alone is enough to give pause.  The development of new housing has slowed, but the population projections are still for breakneck growth, partly because the Valley population is so young.  We can be sure that many of those kids are going to want lawns and pools.

The Economist says we should financialize the stuff and trade it like other commodities.

Better functioning water markets would be one way to share out water more efficiently. Once governments have defined water rights clearly, farmers, and others who use water, could be encouraged to trade, first with each other and with industrial and urban users.

The devil is the details and I have no idea how this would play out.  Those who stand to gain the most locally from a trading system are probably those who currently have water rights that they could sell to cities.   Their number is probably pretty close to the number of self-employed farmers - less than 200 in Shafter (as of the last census).  A pretty small number and the really bad news is that a boom in water is different from a boom in oil in that the water infrastructure is already in place.  No new investment is needed, no drilling, no pipelines to build and maintain.  In fact, at the extremes, this would likely decrease local investment, giving water owners a way of making cash directly without putting the water on the ground to grow things and create local jobs.