Go With the Flow, Adam Smith Style : WATER WATCH: Key drought remedy gathers steam

Whispers of impending change in California water policy fused into a clap of thunder in Sacramento last week.

In a single stunning vote in the Assembly, agriculture lost a dominance that had stood up for decades. It happened over how California water, about 35 million acre-feet of it--which is 35 times what Los Angeles needs each year--is allocated. For the first time in memory, a coalition of legislators from both northern and southern urban areas gave notice that it will make the rules from now on.

DROPPING BARRIERS: The vote endorsed a bill, AB 2090, by Assemblyman Richard Katz (D-Sylmar). The measure is designed to clear away the last barrier to a free market in water, which is now the cities’ only hope for at least two decades of making up for water shortages that will occur even without drought conditions. If the Senate also passes the bill as expected, Gov. Pete Wilson would be hard-pressed not to back it.

The bill would help foster a free market in water, as in other commodities, by allowing farmers to sell water they might otherwise use to irrigate crops--whether the regional water agency that sells water to them likes it or not.

The concept may sound elementary and reasonable enough, but rural water agencies, which have always dictated terms for use of water they deliver to farms, fought the bill with everything they had.

What made the thunder sound even louder was that a month ago, nobody in Sacramento gave the Katz bill a chance of survival. The chairman of the Water, Parks and Wildlife Committee, Assemblyman Dominic L. Cortese (D-San Jose), opposed it, but he was not able to bottle it up in committee.

The Katz bill would have immediate effect on about 2 million acre-feet of water siphoned from the Sacramento River delta by the state and pumped south for use by cities and farms as far away as San Diego.

NEW WATER RULES: Under the Katz bill, farmers and city agencies could not sell water under just any old circumstance. Regions whose wells have been pumped dangerously low could not sell water outside the region. In response to complaints that agricultural communities would suffer if farmers sold their water rather than use it to grow crops, the bill would limit total sales outside a water agency’s service area. The maximum cumulative sale would be 20%.

The immediate effect of the bill would be to make it possible for all farmers, not just those with independent water rights, to join the state “water bank.” Water from the state system was used in the bank that Wilson created earlier this year to promote buying and selling of water to ease drought hardships in both rural and urban areas.

The Katz bill would assume even greater importance if Congress approves a bill by Sen. Bill Bradley (D-N.J.) to require the federal government’s Central Valley Project to operate by and large under California law. The federal project delivers 8 million acre-feet of water from the Sacramento delta to customers, most of them rural water agencies.

In their losing battle against the Katz bill, rural water agencies continued to emphasize the need to build new water projects such as a reservoir south of the Sacramento delta to increase storage facilities for water that could be pumped from the Sacramento delta in wet years.

But state government has no money to build even relatively small projects and California’s best hope is and has been a change in policies that allocate water supplies. Some water experts have suggested privately that California needed the pressure of a longer drought to do that.

The Katz bill resolves those doubts about the state’s ability to change. As we see it, the bill’s clap of thunder is a sign that it can start raining again any time it wants to.