The evolution of California’s water transfer market (albeit a bit dated)

Eric Cutter and I wrote a paper in 2002 that extended my dissertation chapter exploring how the state’s agricultural water management institutions, i.e., special districts like irrigation and California water districts, affected water transfer participation. We had built the first extensive transfer database in 2000 (On-Tap) for USBR and CDWR, using secondary sources, and used that analysis for the paper. Ellen Hanak of PPIC reconstructed a data set from primary sources a couple of years later, and updated it in 2012, so this data has been superseded. (Her 2012 coauthor Liz Stryjewski is now a consulting associate with M.Cubed.)

The paper discusses two important aspects not often touched upon: 1) the search and transaction settlement mechanisms are important to market success, and 2) the nature of the institutions managing agricultural water can affect willingness to participate. Another important aspect is that California already has about 10 MAF in long-term permanent water transfers embedded in the CVP and SWP contracts. The 2 MAF in short-term and more recent long-term transfers are on top of those already occurring. So California has already has a viable market contrary to ill-informed observations by others; the question is whether that market can and should be expanded further.

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