A smart grid is a transactive grid.
- Lynne Kiesling
Using Water Markets To Combat Drought

Via Tuscon.com, commentary on the use of water markets to encourage farmers to slightly reduce their consumption in exchange for financial help from municipal and industrial interests:

At Hoover Dam on May 20th, the U.S. Bureau of Reclamation hosted the seven Colorado River Basin states at a ceremony to celebrate the signing of the Colorado River Drought Contingency Plans. The jubilant mood of the dignitaries masked a grim reality facing the Basin states: legal rights to Colorado River water exceed the amount of water in the river, which supplies water to 40 million people and irrigates 5.5 million acres of farmland.

The act authorizing the plans, which Congress enacted in a rare display of bipartisanship, is only a few paragraphs long. It simply instructs the secretary of the interior to carry out the provisions of various state drought plans. Remarkably, these plans embrace water marketing as an essential policy tool.

Water markets involve the reallocation of water from one user to another through the sale or lease of water rights. For several reasons, markets have been an under-utilized tool for addressing water shortages in the American West. Antiquated federal and state laws impede or prohibit water transfers. Cumbersome, time consuming processes drive up transaction costs. And permissive groundwater rules prioritize drilling new wells over retiring existing wells.

Water markets can be controversial. The water that changes hands is usually agricultural water that had been used to grow a low-value crop, such as alfalfa. Those who often oppose markets, surprisingly, are those who would financially benefit from them: farmers. To understand farmers’ opposition, one must distinguish between the short-term outcome — a check from a city, developer or environmental organization, and the long-term outcome — a reduction in the amount of water available for the farming community in the future. Farmers often resist water marketing because they fear, sometimes correctly, that selling water to cities would doom the farm community to a less prosperous future.

The state drought plans move gingerly toward encouraging transfers of water by using clever euphemisms that avoid any mention of water marketing. The grim reality becomes a “structural deficit,” and the solutions include “intentionally created surplus,” “system conservation,” “forbearance agreements,” “water exchanges,” “dry-year options,” “mitigation payments,” “offset components” and “fallowing agreements.” The euphemisms share a common feature: one entity is paying another entity to change its water consumption.

These euphemisms are tools that usher in a new frontier in western water law that will increase resilience in the face of droughts, floods and forest fires fueled by climate change. These tools are helping water managers in the Basin states prepare for a future with catastrophic events.

Water marketing can become a robust tool of water policy only if the market protects the long-term viability of agricultural communities. That can be done through transactions that encourage farmers to slightly reduce their consumption in exchange for financial help from municipal and industrial interests.

Inefficient flood irrigation is still used on three-quarters of the irrigated lands in the Colorado River Basin. Center-pivot, micro-irrigation and sub-surface drip irrigation systems are highly efficient but quite costly to install. If the cities were to finance a program to modernize irrigation systems, farmers could grow the same volume of crops with slightly less water and cities could use the conserved water.

This program would protect rural communities as it frees up water for cities.

This entry was posted on Wednesday, July 24th, 2019 at 4:54 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Authors
Grid Unlocked is powered by two eco-preneurs who analyze and reference articles, reports, and interviews that can help unlock the nascent, complex and expanding linkages between smart meters, smart grids, and above all: smart markets.

Based on decades of experience and interest in conservation, Monty Simus and Jamie Workman believe that a truly “smart” grid must be a “transactive” grid, unshackled from its current status as a so-called “natural monopoly.”

In short, an unlocked grid must adopt and harness the power of markets to incentivize individual users, linked to each other on a large scale, who change consumptive behavior in creative ways that drive efficiency and bring equity to use of the planet's finite and increasingly scarce resources.