Can a river run through the open market? - Central Arizona Project

Insight on the News, March 21, 1994 by Gayle Hanson

Farmer Kelly Anderson sustains a dream as clear as the blue sky that stretches above sunbaked Arizona. That dream, passed on by three generations of his family and shared by his friends and neighbors, holds that if a man works hard and husbands his resources, he can make the driest desert bloom. All he needs is skill, a little luck and a heck of a lot of water.

Water -- and the desire to control it and profit by it -- saturates the history of the American West. observed at the turn of the century, "Whiskey is for drinkin' and water is for fightin.'" Since then, the seven states that fight over the Colorado River on its 1,500-mile journey from the Rocky Mountains to the Pacific Ocean have worked up a mighty thirst. And no two states have gone at each other with more gusto than Arizona and California.

For the most part, arguments over the Colorado have centered on allocation. During the Depression, for example, the governor of Arizona called out the National Guard to stop some enterprising Californians from damming the river. Today, southwesterners no longer quarrel about who gets how much water -- the Supreme Court pretty much decided that issue 30 years ago. Rather, they are debating a more subtle question: Should those who hold water rights be permitted to sell them (or their unused water) across state lines.

Those calling for the creation of water markets claim that government control has created false economies. The Bureau of Reclamation's massive dams and aqueducts have acted like a huge federal subsidy for western farmers, they say, giving them access to water at much lower rates than municipalities and industries and reducing their incentive to conserve.

As of 1991, California farmers controlled 83 percent of the 34 million acre-feet of water captured by federal and state projects, notes Marc Reisner, an expert in water marketing. Nearly 20,000 farmers pay from $2.50 to more than $19 per acre-foot for irrigation water, while Southern California's Metropolitan Water District pays as much as $230 per acre-foot for residential water. Reisner also points out that four agricultural industries -- cotton, rice, alfalfa and irrigated pasture -- used one-third of California's captured water in 1986 while contributing only $1.7 billion to the state's $60 billion gross domestic product.

In the meantime, taxpayers have begun to grumble about footing the bill for developments like the federal Central Arizona Project, which locks farmers into contracts for water they can't use.

Until the early 1920s, the "law of the river" was based on the notion of "first in time, first in right" -- those who got to the water first had the right to use all they needed. But the upper basin states of Colorado, Wyoming, Utah and New Mexico were convinced that the lower basin states of Nevada, Arizona and especially California were getting more than their fair share of water. In 1922, Congress created the Colorado River Compact, which formally divided the river into upper and lower basins and established water apportionments for each state.

This truce was short-lived. California soon proposed to construct the world's largest dam -- Hoover (also known as Boulder) -- on the Colorado River between Arizona and Nevada. Arizona tried to block its construction, but the Supreme Court threw out the complaint. That dam and others were built, reservoirs filled up and Arizona continued to press its case for more "surplus water" -- triumphing, in a way, when the Supreme Court in 1963 turned down California's bid for an increase in its water allocation.

California then took its case to Congress. In exchange for casting their votes for a bill authorizing a massive construction project in Arizona to supply water for irrigation and other uses, California representatives demanded a legislative guarantee that their state receive 4.4 million acre-feet of water from the Colorado every year.

In 1972, the Bureau of Reclamation began building the Central Arizona Project, a 336-mile aqueduct from Lake Havasu on Arizona's western border to three counties in the middle of the state. CAP would deliver 1.5 million acre-feet of water each year to 85 cities and towns, 12 Indian reservations and 23 irrigation districts. The legislation limited the amount of land farmer could irrigate, but ambitious grower like Kelly Anderson circumvented the regulations by creating separate farm operations.

"It had to be completely legal, so we had to buy separate equipment for each farm, manage it separately and supply it separately," says Anderson. Indeed, in the 1960s and 1970s, southern Arizona growers expanded their cultivated acreage with abandon. Cotton was king, and the path to the good life seemed as straight as an irrigation canal.

"We didn't think there was anything like too much water," says Anderson. Future metropolises like Phoenix and Tucson undoubtedly would need at least as much water as that promised by CAP. In the meantime, Arizona growers, through their local irrigation districts, agreed to buy the surplus water the cities couldn't use in addition to that which they needed for farming. The easy availability of river water would wean growers from their dependence on ground water, which was the original intention behind the project.