California Farmers Cashing In On Water Rights

There's a new player in the water marketplace: California farmers who are selling water to the state.

"Weirdly, [the drought] is opening a new avenue of revenue for California farmers. In the Sacramento Valley, northeast of San Francisco, farmers are actually selling water to the state, for exorbitant fees," Modern Farmer recently reported. 

Rice farmers are among the businesses cashing in. "The rice industry in the Sacramento Valley is taking a hard hit with the drought. Some farmers are skipping out on their fields this year, because they are cashing in on their water rights," CBS San Francisco reported. 

Farmers are thinking strategically about their water, according to Charlie Mathews, a rice farmer with Yuba River rights. 

“In the long term, if we don’t make it available we’re afraid they’ll just take it,” he said, per CBS. 

Farmers are provided water rights based on their size and output, according to Modern Farmer. That water is not counted when the state considers its available water supply. 

"That means instead of growing crops, the farmers in the region have decided to actually sell about 20 percent their water to the state, at the price of $700 per acre-foot of water. An acre-foot is a unit of volume; imagine a swimming pool that’s the size of an acre and a foot deep. It’s equal to about 325,000 gallons of water," the report said. 

The price is sometimes higher than that, since the value of water rights goes up as the drought worsens.

In 2013, "Michael Perez, a farmer in the state’s Central Valley, paid $250 an acre-foot for water to irrigate his almonds, cherries, tomatoes, and cotton," Bloomberg reported. 

In 2014, "with the drought hitting crisis levels, Perez was in for a shock: Water is now going for as much as $2,200 an acre-foot, an increase of more than 800 percent." 

For more on water scarcity, visit Water Online's Water Scarcity Solution Center.