Where Will San Francisco Get its Water Now? Analyzing a Failed Water Transfer Deal
Cities have a massive thirst for water, but their needs must be balanced against those of agriculture and the natural environment in
determining how fresh water will be allocated. In California, an emerging market for water transfers allows various water districts to negotiate for additional supplies. In theory, areas with unmet water needs will contract with areas that have surpluses.
As Keith Tanner (MCP ’13) notes, however, this market-based system of allocating water resources does not always operate efficiently. Keith analyzes a failed negotiation between the San Francisco Public Utilities Commission and the Modesto Irrigation District to transfer water supplies from agricultural to urban use. Though initially promising, the deal fell apart. The press blamed the intervention of a stakeholder coalition opposed to transferring long-term ownership of water outside their agricultural region.
Keith attributes the failure of the deal to the interaction of three overlapping spheres of conflict that combined to make the deal politically infeasible. First was internal conflict within the Modest Irrigation District. Newly elected board members staunchly opposed the deal. Second, several of the district’s contractual partners—including the City of Modesto, which threatened to sue to block the deal—imposed barriers of various kinds. Compared to these concerns, the opposition of the stakeholder coalition—though present—was a relatively minor factor in scuttling the MID boards’ willingness to pursue the deal.
The case of the failed San Francisco deal raises concerns about the ability of the water transfer system to operate efficiently in California. Keith reports that the city has moved on to pursue a similar deal with another regional irrigation district, while MID has turned its attention in-house to better defining its strategy and preferences in the water market. Read more about California water transfers and the failed deal to add to San Francisco’s water supply in Keith’s thesis.