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.

Goals

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.

Compensation

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.

Outcomes

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