The California drought is pushing water prices to record highs and is stressing the state’s farmers and the informal, market-driven water trading system. Generally, the market helps the state’s water use be more economically efficient and helps move the needed water from low-value to higher-value uses, but it also favors those with the most money to spend, those with the oldest water rights, and those holding underground water. Over the past 30 years water trading in the state has grown from 100,000 acre feet in the early 1980’s to 1.3 million acre feet in 2011. (One acre foot is equal to 326,000 gallons). The current conditions and the supply and demand dynamic is causing trends such as pumping groundwater for profit and volatile price swings. Farmers in Stanislaus County have offered to pay Merced farmers Steven Sloan and Stephen Smith between $11.5 and $14 million, or $1,000 per acre foot for pumped groundwater. In a normal year, prices would average $60 per acre foot. In an auction by the Buena Vista Water Storage District , the Harris Ranch Beef Co., one of the largest family-owned agribusinesses in the U.S., offered $1,350 per acre foot, and Paramount Farming bought $11 million worth of water. To read more about water trading and its implications for California farmers and agribusinesses:
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