Tuesday, August 12, 2008

The Failures of Regulation

Anyone who has monitored the goings-on at the Borrego Water District (BWD) knows that the District has been trying for years to deploy strong arm, regulatory tactics against local farmers.

It has tried to levy a pump tax; it has tried to turn itself into a Community Facilities District with confiscatory assessment powers; it has expressed interest in becoming a Special Act District with similar powers; it has looked into enacting a water sustainability ordinance designed to limit farmers’ access to water; it has meddled in farmers’ permit applications to the county; and it has moved to consolidate its authority by merging with a local Community Services District (CSD).

At the last BWD meeting I attended, one director sounded almost gleeful about the possibility that the District might gain “latent” regulatory powers through the legal status of the CSD.

At the very least, the BWD has a clear eight or nine year track record of trying to gain strong arm enforcement powers over agriculture. The goal seems to be to coerce farmers to “voluntarily” give up their water rights, most recently through a dubious system of “water credits.” Voluntarily…right.

Fortunately, so far all of these schemes have failed, in part because the BWD has been unable to persuade fair-minded people that it should have the kinds of strong arm powers it seeks.

The kind of regulation the BWD has been pursuing will never work because it is designed to limit and control the local economy. William McDonough, one of the founders of the sustainability movement, has rightly pointed out that true sustainability must be based on growth and profitability.

Regulation represents a failure to find solutions. We need new ideas, market-based ideas. What are yours?

An Idea of How Water Leasing Might be Done

Water Conservation Leasing in Borrego

The Borrego Water District is currently pursuing a plan to offer local farmers “water credits” in exchange for fallowing their land. This plan is economically and practically infeasible for farmers and therefore ineffective. It also locks up Borrego’s excellent agricultural land by creating permanent legal impediments to farming at a time when most experts agree the nation and the world face a growing food crisis. Instead of all that, why doesn’t the BWD just lease water from farmers? Here’s how that alternative might look.


The goal of a Water Conservation Leasing (WCL) plan is: (1) to reduce agricultural water use in the Borrego valley; (2) to preserve agricultural and open space lands by discouraging premature and unnecessary conversion to residential and other urban uses; and (3) to preserve water rights for valley farmers so that they retain the versatility to farm their lands if they so desire and if that farming serves an economic and more general social value.

Basic Provisions

WCL represents an arrangement whereby private property owners contract with a local water distribution entity, the Borrego Water District (BWD) and the County of San Diego to voluntarily restrict their use of water on all or part of their agricultural land. The vehicle for these agreements is a rolling term contract (minimum 10 years) through which the BWD would annually lease the water that a property owner would otherwise use for agricultural irrigation on a contracted parcel of land. Because the leased water is no longer available for agricultural use by the property owner, contracted land is fallowed for the term of the contract, except for infrastructure plantings like landscaping that might be stipulated in the contract. This represents a lease of water only. No sale or permanent transfer of water rights occurs. No system of water-crediting is employed. Property owners retain the water rights associated with contracted parcels of land. A WCL contract is a legal document that obligates the property owner, and any successors of interest, to the contract's enforceable restrictions and obligates the BWD to compensate the property owner for lost income from agricultural use of the contracted water on a fixed schedule of payments. A WCL contract secures an enforceable restriction and creates an easement that gives both parties certain rights of access and use as stipulated in the contract. For example, while fallowed, contracted land in all other ways remains under the control of the landowner. Failure to meet the conditions of the contract may be considered a breach of the contract. In the case of a breach of a contract, either party may seek a court injunction to enforce the terms of the contract. A WCL contract would explicitly disallow any claim to prescriptive rights to receive water on the part of the BWD based on a long-term lease of contracted water.


The amount of payment is determined through market negotiation between the property owner and the BWD, and may be based on a per acre water use, either actual or estimated, agreed upon by both parties. A schedule of accelerated and additional restart payments will be payable to the property owner if the buyer does not renew the contract after its first term.

Limited Term Trades

A WCL contract includes the option of a Limited Term Trade (LTT) provision, which would allow the property owner to temporarily suspend the agricultural non-use of water for a fixed period of time not to exceed 4 years. This would allow the property owner to use water for agricultural purposes for a fixed period of time if doing so serves an economic or general social value as determined solely by the property owner. The suspended time period of an LTT is added to the end of the original contracted time. No more than 2 LTTs are allowed during each 10-year period.

Damages Caused by Reduced Agricultural Practice

As part of the WCL process, the BWD must develop a plan and/or formula of compensation to address any negative socio-economic third party impacts that the reduction of active farming would produce, for example the impact of the loss of farm labor and disposable income in the community. The WCL indemnifies the property owner from any liability in this regard.

Retention of Water Rights/Ability to Resume Agricultural Use

As part of the WCL contract, the County of San Diego guarantees that the property owner’s water rights associated with the contracted parcel will not be considered abandoned at any phase of the process or at the close of the contract period. No impediments will exist for the property owner to reclaim water use rights associated with the contracted parcel. The County further guarantees that it would waive its 5-year cap on clearing permits and resumed agricultural use on fallowed land.

Allowable Water Uses

The primary goal of WCL as part of an integrated water management plan is to conserve water and help water use in Borrego attain sustainable safe yield. The WCL contract requires the BWD, as the designated water distribution entity in Borrego, to store all leased water in the aquifer for the purpose of water conservation. No leased water may be used for other purposes, such as for current domestic or commercial supply, for additional development, or for any other local use, nor may it be transferred out the Borrego basin, either physically or as part of a water trade with another water management or distribution entity.

Nonrenewal and Cancellation

Unless either party files a "notice of nonrenewal," the contract is automatically renewed for an additional year at the end of the 10-year term, a period of time during which a new contract can be negotiated or agricultural water use by the property owner can be phased back in proportionally over the course of the 1-year period based on the per acre water use stipulated in the contract. Either the BWD or the property owner can initiate a nonrenewal process. A "notice of nonrenewal" starts a 1-year nonrenewal period. During the nonrenewal process, agricultural water use by the property owner can be phased back in proportionally over the course of a 1-year term based on the per acre water use stipulated in the contract. At the end of the 1-year nonrenewal period, the contract is terminated. Only the landowner can petition to cancel a contract. To approve a tentative contract cancellation, the BWD must make specific findings that are supported by substantial evidence. The existence of an opportunity for another use of the property is not sufficient reason for cancellation. In addition, the uneconomic character of an existing agricultural use shall not, by itself, be a sufficient reason to cancel a contract. The landowner must pay a cancellation fee as stipulated in the contract.


Although WCL provisions afford a great deal of flexibility to property owners in retaining their options for the resumption of agricultural practice, the nature of agricultural business planning, the climatic restrictions of the Borrego valley, and the fact that most crops grown in the Borrego valley are semi-permanent/long term perennial crops would in practice create a situation in which agricultural water use in the valley would be reduced long-term. Used in conjunction with other measures, such as water importation, conservation, conjunctive use, and reductions by residential and recreational users, WCL represents a useful means of addressing concerns about the sustainability of the Borrego aquifer without necessarily producing permanent legal impediments to farming. When the immense costs and other practical limitations of water importation are taken into consideration, WCL is cost-effective and relatively simple.

It’s time that the BWD actually starts talking to farmers. That’s how communities should address their challenges. Water transfers like the leasing plan described above are now new. They can work. For more information please contact Reuben Ellis of Ellis Farms at ellisfarms@earthlink.net

Water Leasing

It has seemed strange to me for a long time that the Borrego Water District (BWD) has never really tried to sit down and meet with local farmers in an effort to address concerns about the sustainability of Borrego’s aquifer. Wouldn’t that be the very first thing you would do if you wanted to be taken seriously as an effective conservation-oriented agency?

Instead, of any attempt at dialogue, there has been a steady stream of invective from the BWD and a handful of disgruntled “activists” who claim to know what’s right for everybody. At a public meeting a month or so ago, a BWD board member went completely over the top and compared local farmers to crack dealers. I hope that’s not the kind of careful analysis and consensus building for which the community elected this person.

The point is this. The Borrego Water District is currently pursuing a plan to strong arm local farmers into taking “water credits” in exchange for giving up their water rights. This plan is economically and practically infeasible. It will enable development and sprawl, not water conservation. It also locks up Borrego’s excellent agricultural land by creating permanent legal impediments to farming at a time when most experts agree the nation and the world face a growing food crisis. It’s a bad idea.

Instead of all that, why doesn’t the BWD just lease water from farmers? Leased water could be retained in the aquifer and farm land would be fallowed. In another ad elsewhere in this issue of the Sun, I lay out what a leasing plan like that could look like.

It’s time the BWD actually starts trying to communicate in good faith with farmers. That’s how healthy communities address their challenges. Water transfers like the leasing plan I mention here are not new. They are used all over the west. They can work.

I encourage you to ask the BWD why it isn’t pursuing all creative options in addressing concerns about Borrego’s water.

Global Food Shortages

The alarming news I’ve been reading lately about global food shortages reiterates for me the vital importance of sustaining our productive American farms.

Riots caused by food shortages in Haiti and protests in Mexico have been the most conspicuous, but this kind of unrest has also been occurring in the Philippines, Indonesia, and parts of Africa. The World Bank estimates that 33 countries are facing these problems as prices for rice have risen 75% and for wheat 120% within the last year. Closer to home, we’ve all felt the pinch at the grocery store these past months. Food inflation in 2007 was the worst in 17 years.

Climate change could be one cause of global food shortages. Increased energy costs certainly are, as are the use of food crops for bio-fuels and the sky-rocketing demand for food by the vast populations of India and China. The point is the results--human tragedy and political destabilization.

Let’s bring this context to our thinking about Borrego. Granted, not all farms in Borrego grow food, but they all could if the demand and market were there. Most of the anti-farming schemes I’ve heard, touted ostensibly to save water, would undermine or destroy that productive capacity. Converting farms to four acre “mini-estates,” imposing prohibitive pumping charges, or using “cap and trade” mechanisms that would outlaw farming would all do their part to whittle away at our agricultural resources.

A better approach would conserve agricultural water over the long run, but keep water ownership in the hands of farmers so it would always be available practically and economically for agricultural use. More on this later.

The "Regulation Clique" is at it Again

The “government regulation clique” in Borrego is at it again. Apparently not satisfied with the Borrego Water District’s (BWD) efforts to impose on its customers an exorbitant rate increase ostensibly in the name of water conservation, a couple of these folks are proposing even bigger and better government control for Borrego.

One scheme recently suggested to the BWD is that the district could acquire status as something called a “Special Act District,” which would give it power to regulate all water use in the valley, even by people who are not BWD customers. That’s a little like the cable company telling you you’re watching too much television…even when you don’t have cable. Acquiring that kind of power would require an act of the California Legislature. The BWD’s attorney has suggested that the district’s lobbyist could help with that. Great.

And then there is this. One local resident, who anonymously publishes an angry and alarmist website devoted to scaring people about an alleged “water crisis,” seems to be mounting his own campaign to invite state regulatory agencies into Borrego to take control of the valley’s water, or as he puts it, to make Borrego “subject to the state’s regulatory and enforcement powers.” While disguising his identity online, this web-poster compares Borrego managing its own groundwater to “leaving a hog to guard a cabbage patch.” That is colorful language, of course, but not very community-spirited to my way of thinking, and certainly off the mark in every other way.

So this seems to be what the “government regulation clique” has in store for us next—more restrictions and ridicule for anyone who dares to object. If you like the sound of that, you’ll be happy when these schemes are under way. Personally, I don’t believe that either giving the BWD enforcement power over water use by non-customers or giving the state direct control of Borrego’s water has merit or is either necessary or desirable.

If you agree with me, I urge you to watch carefully for early signs these schemes are being put into motion.

Misconceptions about Borrego's Farms

I appreciated the opportunity to attend the Borrego Water District’s (BWD) “Town Hall Meeting” on March 19. In spite of the tortuously manipulated format that discouraged the expression of public opinion, I felt the meeting had value. Quite a few Borrego farmers attended the meeting. It was a chance to listen and learn about other people’s perspectives.

I do want to point out, however, that a couple of people made remarks about Borrego farms that simply are not true. I’d like to set the record straight.

First of all, one gentleman asserted that Borrego farmers “get their water for free,” implying that that is not fair when BWD residential customers have to pay for the water run through their meters. In point of fact, access to agricultural water in Borrego is far from free, or even cheap.

A typical Borrego farmer pays tens of thousands of dollars each year in pumping costs, and that’s on top of the hundreds of thousands of dollars he or she has invested in capital costs like wells, pumps, tanks, and irrigation lines. Like some other water users in Borrego, we conserve our water, in part because of the bottom line. No one should be using water carelessly.

Second, one person suggested that Borrego farms are just “corporate agri-business,” implying that our interests are somehow impersonal and unethical. There’s nothing true about that. In point of fact, most farms in Borrego are family owned. Three generations of my family, for example, have worked at Ellis Farms. I’ve pointed this out before, so when people persist in denying it, I tend to take the “agri-biz” remarks as a kind of prejudiced or self-interested slur against farmers.

Finally, one person speaking at the meeting implied that Borrego farms do not contribute to the local economy. This too is wrong. Local farm payrolls exceeded $3.1 million the last time I checked a couple of years ago, and most of this money is spent locally. Many local merchants know how important that is, particularly during the summer. Local farms employ over 120 full time and over 200 part time workers.

We are your neighbors.

Better Science?

It’s great to be back writing Borrego Farm Corner again after a brief absence. Thanks to those of you who told me you missed seeing it.

Let me begin by saying that I’m glad the Borrego Water District partnered with the state Department of Water Resources to charge a panel of groundwater scientists to develop a plan for continued study of the Borrego aquifer. Last fall Representative Duncan Hunter asked BWD lobbyists how they knew there was a problem with the aquifer. The fact that no one was able to provide a convincing answer clearly highlighted to the BWD Board the need for more research.

So the BWD’s project is a positive step, and while the results may never be more than theoretical—that’s the nature of science—we may eventually gain a fuller understanding of the aquifer on which to base better water management decisions in the decades to come.

Here’s the problem. Even without the convincing evidence we are told we now need, a small clique of folks in Borrego who either have vested interests in controlling Borrego’s water or who have apparently never met a government regulation they didn’t like have already been busy for several years trying to incite alarm about a so-called water crisis in Borrego allegedly caused by local farmers. They have engaged in a campaign of half truths and sometimes personal attacks against farmers.

I believe that it has been unconscionably dishonest of the “government regulation clique” to scheme to undermine the integrity of local farmers and their right to pursue their livelihood in the valley without having adequate evidence that damage has been caused. Trying to use regulation to force someone from their property is not a trivial matter, and it should concern the entire community, not just farmers.

At the September 26, 2007 meeting of the BWD Board, Tim Ross of the Department of Water Resources (and a member of the BWD’s panel of scientists) argued persuasively that Borrego “produces some of the finest of California agriculture” and that farms have a legitimate long-term role in the valley. I agree.