The Water Market: A Limited Drought Tool
March 20, 2015
By General Manager Jeffrey Kightlinger
This extraordinary dry year has generated considerable public interest in a water management tool that Metropolitan periodically employs in our overall water portfolio--the purchase of additional supplies from willing sellers on the open market. Recently our Board of Directors approved the purchase of up to 100,000 acre-feet of supplies from a consortium of sellers in the Feather River region of the Sacramento Valley. It’s important to put this proposed transfer into a broader perspective.
Metropolitan only looks to the water market in dry years as a way to modestly supplement supplies. Our primary drought survival strategy is to take advantage of wet years and store those supplies in our network of reservoirs and groundwater banks – along with local supplies and significant increases in conservation activities by homeowners and businesses. This year, for example, market transfers will represent less than 5 percent of Metropolitan’s overall deliveries. Compared to overall water use in Southern California of about 4 million acre-feet, these transfers at the very most will meet less than 2 percent of overall demand. While modest, they are important. Any available supplies from Northern California via the State Water Project do help Metropolitan meet needs in parts of our service area that are configured to rely heavily, if not entirely, on State Water Project supplies.
Metropolitan negotiated this potential transfer from the Sacramento Valley as part of a broader buyer’s group. Fellow buyers include water agencies in Napa County, Silicon Valley and Kern County. This buyers’ consortium is a reflection of how water agencies throughout California are trying to manage through this drought in a spirit of partnership.
This potential transaction is largely dependent on the Sacramento Valley sellers receiving their full supply this year so that some water is available for transfer. However, a historically dry start to this month is now decreasing prospects that much of the proposed transfer will even take place due to a lack of water. Our staff is closely looking at the state’s changing water conditions and availability of water transfer supplies so that our Board is prepared to decide at its April meeting whether to restrict available supplies to our 26 member agencies via our Water Supply Allocation Plan, and if so, the size of that restriction.
We have appreciated the hard work and spirit of collaboration among both our fellow buyers and Sacramento Valley water agencies throughout this dry winter. This year’s water market for Metropolitan started out comparatively small and appears to be getting smaller.
Feb. 4, 2015 - Colorado River Cooperation: Maintaining Lake Mead
Nov. 10, 2014 - A Water Tunnel on Time and Under Budget
Oct. 8, 2014 - Latest on BDCP: Some “Hard-Earned Progress”
Aug. 21, 2014 - Water Supply Conditions: Into the “Yellow”
June 18, 2014 - On Several Fronts, Promising Signs of Water Progress
May 22, 2014 - Conservation: Lowering Use is Key in Warm Weather
Mar. 13, 2014 - Ops: Surviving the 1977 Drought
Feb. 24, 2014 - Surviving a Zero Allocation – Leave it to the “Ops” team
Jan. 16, 2014 - What MET's Looking for
Dec. 17, 2013 - Water Progress in Northern California
Nov. 1, 2013 - A State Water Action Plan That Fits the Times
Oct. 23, 2013 - It’s dry out there, so watch your water use