Chapter 11: California's Central Alley
Physical Description:California's Central Valley extends approximately 400 miles from Red Bluff in the north to the mountains below Bakersfield in the south, encompassing 16,000 square miles. (See Figure XI-1.) Seventeen drainages traverse the Valley ridged by the Sierra Nevadas on the east and the Coast Ranges on the West. The Valley is best envisioned as two lesser valleys, the northern Sacramento and the southern San Joaquin, each with a major river flowing through it. The Sacramento and San Joaquin Rivers converge in a 1000 square mile delta seeking an outlet to the Pacific Ocean at San Francisco Bay. Agriculture dominates land use in the Valley. Cotton is the crop generating the largest revenues in the State. In the Central Valley, it is grown mainly in the southern San Joaquin Valley. Rice grows mainly in the south and central Sacramento Valley. Sugar beets, fruits, nuts, and vegetables are found throughout the Valley, while grain and livestock are produced in peripheral regions in conjunction with other agricultural endeavors.
Characteristics and Functions: The Central Valley wetlands:
- Provide wintering habitat for 19 percent of the wintering waterfowl in the continental United States. Support some of the highest densities of wintering waterfowl in the country, and are the highest priority wetlands nationally for wintering habitat preservation;
- Support chinook salmon resources, which are important commercially and recreationally, and a striped bass sport fishery;
- Provide habitat for 5 federally-listed endangered species and three threatened species;
- Contain portions of 8 national wildlife refuges and 4 State wildlife management areas totalling 86,700 acres;
- Help to maintain ecosystem productivity by detaining and slowly releasing flood waters, recharging aquifers, stabilizing shorelines, and filtering many sediments and pollutants from agricultural activities.
Current Acreage: In the mid-1980s, about 379,000 acres of wetlands existed in the Central Valley, approximately nine percent of the original complement, and few of these remained in their natural state (Frayer et al. 1989). Of the remaining wetlands, 319,000 acres are freshwater. (See Figure XI-2.) About 59 percent of the remaining wetlands in the Central Valley are protected through either public ownership or perpetual conservation easements. The remaining 41 percent are in private ownership and are not protected.
Trends: Figure XI-2 graphically displays the trend in California's wetlands over the last century. The trend for the Central Valley parallels that for the State as a whole. Up through the mid-1800s, a small proportion of wetlands were affected by man's activities, e.g., burning by native peoples and grazing by the Spanish. Between 1850 and the 1910s, alteration began in earnest as a result of hydraulic mining, piecemeal flood control, and early irrigation efforts. More coordinated flood control efforts were initiated around 1910, and by the early 1920s, 70 percent of the original wetland complement had been converted. From 1922 through the present, an additional 21 percent of the original wetlands was lost due to the combination of large dams and downstream levee and channelization works. The levees transformed permanent wetlands into seasonal wetlands. The large dams provided the flood control needed to encourage settlement and make conversion of the wetlands to croplands technically feasible. And the water needed to irrigate crops came from the same dams which provided the flood control. A more detailed description of the changes effected in the Valley in the last 150 years follows.
The Transformation of the Central Valley
Much of the Central Valley's complement of wetlands at the time of settlement was swamp and overflowed lands flanking the Sacramento and San Joaquin Rivers. These rivers are fed by drainages that originate in the surrounding mountains, flowing through the valley from the north and south, respectively, to San Francisco Bay. Both rivers overflowed their banks annually, because their channels could not contain the enormous volumes of runoff generated by winter rains followed in the spring by snowmelt from the Sierra Nevada.
With passage of the Swamp Lands Act of 1850, Congress gave public lands that were swamp and overflowed to the States, with the
proviso that they be reclaimed for agriculture. The State of California responded by establishing local reclamation districts and by selling the lands at $1 per acre to individuals interested in converting them. The districts set about the task of constructing many miles of levees to confine the rivers to their channels, thereby allowing the conversion of wetlands to farmlands. Widespread conversion of seasonal wetlands occurred in the Sacramento Valley as farmers diked the floodplains for cultivation. These efforts were only partly successful, however. The land reflooded each winter and restricted the growing season. The process of reclaiming the lands ceded under the Swamp Lands Act was to take many years and require extensive Federal assistance.
That assistance came about initially in an indirect way when in 1893 Congress established the California Debris Commission. The practice of hydraulic mining had generated a tremendous amount of sediment, hence the term "Debris Commission." The sediment silted in the Yuba and Feather River channels so severely that navigation had become impaired and flooding exacerbated. The Commission constructed dams in the Yuba River watershed to trap the sediment. The Commission operated with funds appropriated equally by Congress and the State, and three of its five members were officers of the Corps of Engineers.
More direct involvement of the Federal Government in California's flood control planning (and continued wetland loss) came in 1905, when the Corps helped devise a flood control plan for the Valley. Twelve years later, as part of the nation's first Flood Control Act, Congress authorized the Corps to plan and construct the Sacramento Flood Control Project. This system of levees and ancillary facilities was cost shared with the State, and had the effect of facilitating the conversion of the swamp and overflowed lands of the valley floor that had not already been converted by the decades-long efforts of the State-authorized local reclamation districts. By the 1940s, an extensive Federal system of levees and overflow bypasses afforded Valley residents a high degree of protection from annual flooding events. By then, 85 percent of the wetlands in the Central Valley had disappeared.
While the Valley was being leveed and ditched, private and municipal interests constructed numerous dams and storage reservoirs on the rivers which drained the west slope of the Sierra Nevada.1 These reservoirs captured a portion of the Sierra snowmelt and reduced the flood flows that had sustained Valley wetlands.
Since 1939, the Bureau of Reclamation (Bureau) and the Corps have constructed much larger, multipurpose reservoirs in the Central Valley.2 Another 16 reservoirs were placed in operation by the State, municipalities, and irrigation districts. The loss of an additional 6-9 percent of the Valley's original complement of wetlands followed. Although this percentage may seem small in comparison to the magnitude of earlier losses, it represented approximately half of the wetlands remaining as of 1939.
Currently, there are about 6.9 million acres irrigated in the Central Valley. The total population in the Valley is about 4.5 million. Central Valley facilities supply water to 1.7 million of these. The Valley population is expected to total 7.5 million by the year 2010, with a large number of people who work in the Bay area electing to live in the Valley and commute long distances to work. The growing population and increased economic activity will actively compete with wetlands for a water supply.
In 1992, Congress enacted the Central Valley Project Improvement Act. The main purposes of the Act are to reform the pricing and management of CVP water and to attempt to mitigate for the fish, wildlife, and associated habitat impacts of the project. The protection and restoration of the Valley's wetlands are among the Act's principal concerns.
Factors Currently Affecting Wetlands
Central Valley wetlands and the functions which they serve compete directly for water and space with agriculture and, to a lesser extent, with municipal and industrial uses. Half of California's and five percent of the nation's agricultural output comes from the Valley. Central Valley agriculture depends on managed water, and the distribution system has radically changed the face of the entire valley.
California has more large dams (over 1240), with greater total storage capacity than any other State. In the water-rich northern Central Valley, flood control was the driving force for construction of the dams, while the desire to irrigate and cultivate the San Joaquin Valley was the motivation in the south. Massive water development and manipulation has been required, including reversing the direction of river flows and trans-basin diversions. The Central Valley Project, planned by the State, and built and operated by the Bureau of Reclamation, is the largest of the water management systems in California. The Valley also has an extensive levee system, built and maintained by the Corps, which confines the rivers and streams, allowing trees and vegetation to be cleared for crops and urban development. Water development and the agricultural activity promoted by it account for the loss of 91 percent of the original Central Valley wetlands, and have altered the remaining wetlands so that they, like agriculture, depend on managed water regimes. Water development has also contributed to significant urban development. These agricultural and urban developments are protected by the dams and levee system, and provided with water by the projects.3
Managed water can take the form of surface water, pumped groundwater, drainwater, and conserved water. Each type has been available to wetlands in limited quantities, varying with the available supply. Although the Bureau currently provides CVP water for purposes of fish and wildlife conservation, the amounts provided have been quite limited and largely determined annually (as opposed to dedicated, contractual volumes).4 The Bureau has had statutory authority to issue long-term contracts for fish and wildlife purposes for some time, and has done so on occasion.5 But the Bureau has always considered fish and wildlife conservation as a secondary purpose of the CVP. Further, the issue of who would bear the cost of providing such water supplies has always been a contentious one.
With passage of the Central Valley Project Improvement Act of 1992 (CVPIA),6 Congress took an important step toward restoring the environment in the Valley and effecting a more efficient use of project water. The CVPIA asserts that the protection and restoration of fish and wildlife and associated habitat is a purpose of the project, assigning it a priority equivalent to that for irrigation. The Act specifies activities to be undertaken by the Secretary within designated time periods, to accomplish this objective. Section 3406(d) of the Act directs the Secretary to provide firm water supplies of suitable quality to maintain and improve wetland habitat on Federal refuges, State wildlife management areas, and the Grassland Resource Conservation District in the Central Valley. Initially, the firm supplies to be delivered to these wetland areas are to equal their current average annual supplies (comprised of some firm, but mostly non-firm, supplies). By 2002, however, firm water supplies to these areas are to be sufficient to enable "full habitat development."7 The cost of the restoration projects are to be shared by the Federal Government, the State, and the project beneficiaries, but a significant amount of the cost ($30 million annually) is to be borne by the water and power users through a series of water-use charges. In addition, the CVPIA requires reforms in water pricing and marketing, increasing the water rates and reducing the length of contracts. (For a full discussion of the provisions of the Act, see chapter 4.)
The CVPIA will not solve all the wetland problems in the Central Valley. The Act primarily addresses the water needs of publicly-owned wetlands. These account for less than one-fourth of the wetlands in the Central Valley. The Act does direct the Secretary to investigate and report to Congress on alternative means of improving the reliability and quality of water supplies for privately-owned wetlands.8
Historically, wetland managers have used groundwater on occasion to sustain wetlands, but during the recent, extended drought (1986-1993) they relied on it more heavily. Groundwater is increasingly more expensive to pump, and supplies are being depleted largely due to agricultural use. (Agriculture is depleting groundwater reserves in the San Joaquin Valley at an average overdraft of 1.5 million acre-feet per year.) Even in the absence of rising energy costs, groundwater could not serve as a complete solution for wetland water supplies: pumping capacities are just too small. Further, groundwater supplies are showing more and more frequent signs of contamination.
Historically, irrigation drainwater has been viewed as a resource to be reused to support wetlands, and, in many areas, wetland managers have come to rely on irrigation drainwater to support wetland resources. It has become increasingly recognized, however, that drainwater contains contaminants from agricultural runoff including pesticides, leached salts, and trace elements. Indiscriminant use of drainwater for wetlands has resulted in adverse effects on the flora and fauna found in or associated with wetlands. Potentially powerful provisions in the CVPIA address the water quality issue. The Act requires that when CVP contracts are amended or renewed, provisions be added requiring contractors to comply with State and Federal water quality standards for agricultural drainwater. (The issues of irrigation drainwater and agricultural practices and their environmental consequences are addressed in more detail below.)
Water conservation by the agricultural sector has not resulted in more water for wetlands. Conserved water has almost always been allocated for purposes other than wetlands. Indeed, some water conservation practices have proved detrimental to wetlands. For example, the lining of canals to prevent water seepage affects wetlands because the seepage served as a source of moisture to adjacent wetlands. The CVPIA addresses this problem, authorizing the Secretary to undertake water conservation measures in conjunction with CVP contractors. Any conserved water is to be shared in the same ratio as the costs are shared, with the Secretary's share to be used for restoration of wildlife habitat and populations.
The upstream diversion of water (for agricultural, municipal, and industrial uses), the dredging of Delta channels (for navigation), and the extensive levee system have had a significant impact on the hydrology and plant community of the Sacramento-San Joaquin Delta. Under predevelopment conditions, the Delta was characterized by high winter and spring flows and extremely low summer and fall flows, with salt water intrusion frequently occurring well into the upstream channels of the Sacramento and San Joaquin Rivers during periods of low flow. After the major flood control and water supply projects were completed, summer and fall flows into the Delta increased significantly and winter and spring flows decreased, resulting in a much different Delta than had occurred naturally. The Delta's water quality and vegetation characteristics changed markedly.
Since the major State and Federal water storage facilities were constructed in the 1940s, 1950s and early 1960s, diversion for consumptive use has greatly increased, reducing the streamflow into the Delta and the outflow from the Delta into the Bay.9 Deepening of navigation channels have further allowed seawater intrusion. The resulting change in water quality and flow regimes has adversely affected wetlands in the Bay and Delta, particularly in Suisun Marsh, which is being converted from a brackish to a salt marsh.
To correct for problems created by the water management operations, the California Departments of Fish and Game and Water Resources, the Bureau of Reclamation, and the Suisun Resource Conservation District are proceeding with the development and construction of facilities to protect the managed portions of the marsh from increased salinity and vegetative changes that result from continued export of water.10 These facilities are designed to comply with water quality standards for the Delta and Suisun Marsh prescribed by the California State Water Resources Control Board (Board) in its 1978 Delta Water Quality Plan (1978 Plan). However, the adequacy of the standards are in doubt. In 1987, EPA rejected the 1978 Plan on water quality grounds, and again in 1991, EPA rejected the Board's revised (1991) water quality standards.
While the Board was struggling to develop a long-term plan for the Delta, Governor Wilson called for adoption of an interim plan of protection by the end of 1992. On December 9, 1992, the Board released draft Decision 1630, which imposes terms and conditions on the operation of the Central Valley Project (Bureau of Reclamation), State Water Project (Department of Water Resources), and the facilities of many of the largest water rights holders. The terms and conditions are designed to provide improved interim protection (5 years) for public trust resources in the estuary. Decision 1630 would increase the instream flows in the Sacramento-San Joaquin River system,11 and would benefit wetlands of the estuary that are situated "instream" or tidally and the managed (non-tidal) units of Suisun Marsh (due to improved water quality), but would not benefit the freshwater, inland wetlands of the Central Valley.12 In January, 1993, EPA informed the Board that Decision 1630 would not be sufficient to correct the water quality deficiencies in the Delta and that it would promulgate a rule to satisfy the water quality requirements of the Clean Water Act. EPA expects that only minor revisions of Decision 1630 will be necessary to bring it into compliance with the new rule.
Virtually the entire duck population of the Pacific Flyway winters in California. Based on mid-winter indices of the Fish and Wildlife Service, about 3.0 million ducks wintered annually in California during the period 1981-89. This is a significant decrease from 1971-80, when the average annual wintering population was 5.3 million ducks. During each of these periods, between 40 and 50 percent of the wintering population was in the Central Valley.
In May 1986, the United States and Canada became signatories to the North American Waterfowl Management Plan (NAWMP). The NAWMP established a national goal for each country to rebuild waterfowl populations to levels that existed during the 1970s. Although much of the recent waterfowl population decreases are attributable to the persistent drought (1986-1993) in the northern breeding areas of Canada and the United States, adequate wintering habitat is essential to meeting the goals of the NAWMP. As programs to improve conditions in major breeding areas increase fall flights, it is essential that adequate wintering habitats be available to prevent overcrowding and stress that make birds more susceptible to disease and contaminants. Biologists believe that because many native and perennial wetlands have been replaced with domestic crops and seasonal wetlands, they provide lower quality food and few, if any, invertebrates. As a result, birds may not be getting the nutrition necessary to carry them through the winter and prepare them for spring migrations to northern breeding areas. The populations appear to be suffering from increased mortality.
High levels of pesticides, salts, and trace elements degrade water quality and may adversely affect species dependent on the water. The national average of pesticide use in 1981 was 2.3 pounds per acre; California growers applied over 11 pounds per acre. The Suisun Marsh, the Grasslands, San Joaquin River, Tulare Basin, South Delta, and the Sacramento River have all been particularly hard hit by the application of chemicals. The actual magnitude of the pesticide problem is not known. However, lawsuits have been filed, and at some locations pesticides found in fish tissues are substantially above public health standards for human consumption.
Where impervious clay layers underlie an agricultural field,13 tile drains or drainage ditches are placed to remove water from the root zone. In the absence of the drainage, applied irrigation water builds up, and saturated soils and salt accumulation reduce crop yields, ultimately rendering the soil unsuitable for crops. The problem of salt buildup is costly to Valley agriculture, causing a 10 percent annual crop loss valued at $31.2 million and, where possible, a shift to more salt-tolerant crops.
When irrigation water percolates through the soils, it mobilizes salts and trace elements such as selenium, arsenic, and boron that may be present. Where the levels of salts and trace elements are high, the drainage water becomes not only unsuitable for use on wetlands, but creates problems of disposal. This situation became apparent at Kesterson Reservoir in the early 1980s. When the San Luis Drain was not completed as authorized, Kesterson Reservoir became an evaporation facility for agricultural drainwater. Waterfowl deaths and deformities were discovered at the reservoir, which were associated with high selenium levels found in the concentrated drainwater.14 Problems associated with drainwater have subsequently been found at other Valley wetlands and elsewhere in the arid West. Evaporation ponds on private lands attract water-associated birds and, in some ponds, frequencies of death and deformity greater than those found at Kesterson have been documented, particularly in the Tulare Basin in the San Joaquin Valley.
Private duck clubs control about 347,000 acres in the Central Valley. Half are wetlands; the other half are rice, corn, and pasture lands flooded after harvest to attract ducks and hunters. Most of these lands do not produce the moist-soil plants and abundant invertebrates that waterfowl need; they are designed as hunting not feeding areas, although some do provide waste grain and weed seeds. The development value of the land for both agricultural and urban purposes is rising, as are the property taxes and water costs. Few duck clubs want to pay for the year-round water management needed to sustain natural vegetation. Between 1970 and 1986, the number of hunters in the Valley dropped precipitously. This is not surprising given the increased costs of operating the duck clubs, the shortened seasons, the reduced bag limits, deterioration in the quality and quantity of the birds,15 and reduced numbers of birds due to drought conditions in the northern breeding areas. Reduced duck club revenues result in fewer duck clubs and reduced political and economic support for protecting waterfowl habitat. As the revenues generated from hunting fees go down, while the costs of maintaining wetlands go up, wetlands are drained earlier in the season, further diminishing their habitat value for waterfowl. More acreage is being converted to crops which have little or no food or cover value for waterfowl, and industrial parks and other urban developments are replacing some former wetlands. The CVPIA makes a start at addressing these problems, directing the Secretary to develop incentive programs to encourage farmers to keep fields flooded for waterfowl during appropriate times of the year.
There are major efforts underway to offset some of the wetland losses in the Central Valley. (These efforts are in addition to those mandated by the CVPIA.) The State has contributed substantial funds to acquire wetlands in recent years. As of mid-1990, the Fish and Wildlife Service had purchased easements on 41,000 acres of duck habitat. Under the North American Waterfowl Management Plan, the State, the Federal Government, and several private, non-profit conservation organizations are engaged in a joint venture to protect Central Valley wetlands.16 The objective is to acquire and put easements on a total of 147,000 wetland acres in the Central Valley, including existing wetlands and agricultural lands to be restored to wetland status.17
The Bureau of Reclamation is actively pursuing two environmental initiatives that could have a major, beneficial impact on wetlands in the Central Valley. The first is the San Joaquin Basin Action Plan, a cooperative project among the California Department of Fish and Game, the U.S. Fish and Wildlife Service, and the Bureau of Reclamation. This plan is a major habitat acquisition and wetland enhancement program. It is designed to meet the long-term mitigation requirements for Kesterson Reservoir and to contribute significantly to the North American Waterfowl Management Plan for the Central Valley Habitat Joint Venture. The plan calls for the creation of 4,464 acres of new wetlands and provides protection for an additional 6,239 acres of existing wetlands. Taken together, these actions would mitigate for losses associated with closure of Kesterson, while satisfying 12 percent of the Central Valley Habitat Joint Venture's San Joaquin Basin objective for wetland preservation (53,000 acres) and 22 percent of the objective for wetland creation (20,000 acres). The Bureau will also execute long-term agreements to supply 52,000 acre-feet of Central Valley Project water annually to sustain these wetlands.
The second major initiative, the San Joaquin River Basin Resource Management Initiative, is designed to improve the water and related environs of the San Joaquin River Basin, with particular emphasis on fisheries, wetlands, and water quality. The Secretary of the Interior announced this undertaking on November 29, 1989; it will be carried out in cooperation with the State. The scope of the initiative and related environmental studies will be determined through the NEPA scoping process, and will address operational aspects of projects in the San Joaquin Basin, including, but not limited to price, conservation, time, manner, and efficiency of delivery.
The CVPIA addresses these logistical items. Section 3406(d)(5) authorizes the Secretary of the Interior to construct (or acquire from non-Federal entities) the facilities needed to convey water to Federal refuges and State wildlife management areas in the Central Valley. Construction of such facilities will be necessary, because refuges generally do not have their own delivery system, and rely on the irrigation canals to convey water to them. Irrigation districts often close their canals in the winter for maintenance, however. Thus, delivery of water can be and often is reduced or cut off when wintering birds are in residence.
Federal Programs and Projects
Federally subsidized water development, technical assistance, and research, along with farm price and income support programs have been major factors causing wetland loss and degradation in the Central Valley.
The Bureau of Reclamation, the Army Corps of Engineers, and the Soil Conservation Service are all active in water projects in the Valley, but the Bureau is the principal Federal water agency there.
Bureau of Reclamation: The Central Valley Project consists of 20 dams and reservoirs, 8 hydroelectric plants, 2 pumping/generating plants, and 54 pumping plants along with 1437 miles of canals, 51 miles of pipelines, tunnels, conduits, and aqueducts, and 192 miles of drains. The CVP is the largest undertaking in the Bureau's history. The Bureau has 13 million acre-feet of storage in the CVP, and received about 20 million acre-feet of water rights from the State for the CVP. It also has been granted about 2.3 million acre-feet of water rights at completed projects in the Valley other than the CVP, and claims rights to all return flows from the water it delivers.18 Water from the CVP fully irrigates 115,000 acres, partially irrigates 2.5 million acres, supplies about 320,000 acre-feet for municipal and industrial use, and generates about 6.8 million megawatt hours of hydroelectric power.
All project beneficiaries are subsidized. Consumers of hydropower and municipal and industrial water users pay below market interest rates. Recreational and fish and wildlife uses receive capital subsidies. Irrigation, which is the principal use of water from the project, enjoys financial assistance primarily from two sources: 1) the interest-free repayment of capital costs (a subsidy from taxpayers) and 2) the use of revenues from the sale of hydropower to repay irrigation capital costs in excess of the Bureau's estimate of the irrigators' "ability-to-pay."19
The interest subsidy was authorized by the Reclamation Act of 1902 and 1939. The Act authorized the repayment of irrigation costs without interest for the portion of the investment cost of the project which is allocated to irrigation.20 These costs are amortized without interest over repayment periods of up to 50 years. However, four practices (some no longer extant) extended the repayment period even further (and thus further increased the interest subsidy):
- First, Bureau policy delays the start of the 50-year clock by requiring that a project or a part of a project be in service (i.e., delivering water) before the repayment period commences. (This policy benefits all users, not just irrigators.)
- Until recently the Bureau engaged in a practice called "rolling repayment." This practice extended the repayment period for capital investment to 50 years after the completion of the most recent unit, effectively rewinding the repayment clock when each new unit was added to the system. Water users began paying for service when their original contracts went into effect, but as new facilities were added, they could reduce annual payments by spreading out the repayment period.21 Because the CVP is the largest project and was constructed over such a long period of time, the rolling repayment policy provided a particularly large subsidy to CVP users.
- The Bureau now requires that all construction costs for the CVP have to be repaid by the year 2030. This is 50 years after completion of the newest facility (New Melones Dam), but some 80 years after the first features were built. Rolling repayment has been discontinued. Any major, new facilities added to the CVP will be under a separate repayment schedule.
- Third, long-term, fixed-rate contracts also increased repayment periods. The Bureau executed contracts in the early 1950s to 1960s which contained fixed water rates. These water rates were intended to be sufficient to recover the construction costs over the 50-year period and repay annual operation and maintenance (O&M) costs, provided costs remained stable. However, because of inflation, particularly the high inflation rates of the 1970s, O&M costs rose sharply. By 1986, O&M costs exceeded the annual contract repayments, leaving deficits, not the surpluses needed to repay capital.22
- Contracts executed since the 1970s contain water rates which are adjustable at certain intervals; those executed after 1982 contain annual adjustable water rates. The majority of the Central Valley Project contracts will be renewed between the period 1995-2007, and the renewal contracts will contain annual adjustable water rates that are sufficient to recover the costs of O&M, capital, pumping costs, and water marketing. In addition, any deficit not repaid by the water users will be included in their water rate and will bear interest as of October 1, 1985. This latter requirement is imposed by Public Law 99-546 (discussed below). The CVPIA also requires reforms in water pricing and marketing, increasing the water rates and reducing the length of contracts.
- Fourth, average cost pricing stretches out the repayment period and distorts the demand for constructing additional facilities. By averaging together costs for the entire facility before any user is assigned a share (the higher costs of new additions are added in with the lower costs of older facilities), those benefitting from a new facility do not have to pay its true additional cost of delivering water to them. Conversely, those being serviced by older facilities do not have to pay the new higher average price until their long-term, fixed-rate contracts expire, thus further delaying repayment.
The above subsidies for capital and interest do not account for all the subsidies to irrigators. These are only the subsidies for private resources -- the resources which irrigators have to purchase in order to conduct their activities. These are not the full social costs resulting from the CVP; omitted are the costs of preventing or mitigating losses or damages to fish and wildlife and the environment. These environmental costs are legitimate costs of providing the project output, and both efficiency and equity require that they be borne by the project beneficiaries. The CVP has not been financed in this way. Indeed, only a small portion of the public and private resource costs of the project have been allocated to the CVP, and a smaller portion still billed to the beneficiaries.23 These subsidies have resulted in economically inefficient use of water and land in the Central Valley. The CVPIA partially corrects these inequities and inefficiencies by raising water rates and imposing charges for correcting environmental damage.
No precise estimate exists for the cost of mitigating the environmental damage associated with the CVP. The cost of studying and dealing with the contamination caused by drainwater alone is proving substantial. The Federal Government has spent over $23 million to study the problem at Kesterson and cleanup the site. The Bureau estimated that another $3 million would be spent in 1990, and has agreed to pay $22 million to mitigate environmental problems at Kesterson. Another $23-25 million of Federal funds and an equal amount of State monies have been spent for a study of the overall drainage problems resulting from the San Joaquin Valley Drainage Program. Problems were identified at Federal, State, and private wildlife areas throughout the San Joaquin Valley. In addition, the FWS has identified problems at the San Luis Refuge and the Grasslands Wildlife Management Area, and suspects that there are problems at Butte Sink, Colusa, Delevan, Sacramento and Sutter Refuges (essentially the entire length of the Central Valley). The Soil Conservation Service is searching for ways to solve the severe salinity problems created on private lands by irrigation. The State along with the irrigation water users is likely to contribute, but the Federal costs are likely to be significant.
Federal policymakers have taken several steps in an attempt to reduce the level of subsidy to CVP irrigation water users:
- First, Congress passed the Reclamation Reform Act of 1982 recognizing and legitimizing land holdings beyond the 160 acre homestead limit.24 In return for increasing the acreage limitation from 160 to 960 acres, the Act imposed higher water prices on leased lands in excess of 960 acres.25 To be legally entitled to subsidized water on the 960 acres, however, users must amend their contracts, agreeing to pay the full O&M costs. Districts seeking to increase their water supply must similarly amend their contracts, and pay construction costs (excluding interest) as well as full O&M costs. Second, as noted above, the Bureau has adopted a new rate setting policy that fixes a payout date. When current contracts expire, the Bureau will set annually adjustable water rates to eliminate the problems stemming from fixed-rate contracts.
- P.L. 99-546 (which adopted the Coordinated Operation Agreement between the Federal Government and the State for managing the water system in the Central Valley) stipulates that for new and amended contracts, rates are to be set to recover the appropriate share of existing Federal investments by 2030 and that O&M deficits (including those since October 1, 1985) are to be financed and repaid at market interest rates. These stipulations are in addition to those requiring State and Federal water projects to be managed to protect Delta water quality.
- In 1984, the Reagan Administration issued a policy statement that allows the cost-sharing arrangements for old Bureau projects to remain, but requires that all proposed projects receive commitments for "up front" financing from non-Federal interests. No specific rate was set, and cost sharing is negotiated on a project by project basis.
- Finally, in 1992, Congress enacted the CVPIA which reforms water pricing (raising rates and shortening the length of contracts) and imposes user charges to fund environmental restoration.
Two major Bureau projects in the planning stage would exacerbate losses of Central Valley wetlands:
- The first, the Auburn-Folsom South Unit, was authorized in 1965 to provide increased water supply, power, and flood protection to the Sacramento area. Construction was halted after the Oroville earthquake in 1975. About 27 miles of the Folsom South Canal has been constructed. In December, 1980, the Secretary of the Interior determined that a redesigned dam could meet safety requirements, but that non-Federal cost sharing and Congressional reauthorization would be necessary for the project to move forward.
- In July, 1987, the Bureau completed analysis of 5 alternative sizes for an Auburn Dam to assist local non-Federal cost-sharing entities. The present estimated cost of the project is $1.4 billion of which $0.3 billion has already been spent. The project designed by the Bureau is estimated to provide as much as 300,000 acre-feet of additional water for the Central Valley project, supplemental flood control for urban areas downstream of the dam, and an estimated 600 GWh of electrical power at a cost roughly comparable to developing new power sources (Bureau of Reclamation 1987). In 1988 and 1989 several water entities put forth proposals to cost share in the project (or a smaller, multipurpose Auburn Dam). However, as of November, 1992, none of these proposals had been found adequate. The Department is currently studying the matter.
- Critics of the Bureau's design contend that for such a large project it would supply a relatively small amount of water, provide little flood control, and be an expensive source of power. The reservoir would inundate about 10,000 acres of the American River Canyon, and potentially reduce stream flows in the lower American River. About 1,000 acres of wetlands in and downstream of the reservoir would be lost to direct and secondary impacts. The FWS argues that the project would have significant adverse impacts on fish and wildlife behind the dam, in the service area, on the lower American River, and in the Sacramento-San Joaquin Delta.
- In the absence of any cost-sharing agreement for a multipurpose project and in light of Sacramento's desire for increased flood control on American River, the Army Corps of Engineers has developed designs for a flood-control-only project or for a "stageable" dam (one that would initially provide flood control, but that could be expanded to include additional purposes at some later date).
- The second major project consists of a distribution and wastewater drainage system for the San Luis Unit. The San Luis Unit of the CVP provides supplemental irrigation water to 583,000 acres, 26,000 acre-feet for municipal and industrial use, and some flood control and recreational benefits. Construction of the drain to the Sacramento-San Joaquin Delta was halted due to cost and environmental and political concerns. Without drainage facilities San Luis Unit agricultural lands become unproductive. The "interim" impounding and evaporation of the agricultural drainage water at the Kesterson Reservoir led to selenium accumulation and the poisoning of wildlife. Kesterson was subsequently closed as a site for receiving agricultural drainage water. Federal and State agencies are still trying to find ways to manage the drainwater and deal with drainwater contamination problems from San Luis Unit agricultural lands. Under the CVPIA the Secretary can use restoration funds to retire agricultural lands which are producing contaminated drainwater. This is one of the options the Department has under consideration.
Today the Corps operates 26 dams (12 of these in partnership) for flood control on the Sacramento and San Joaquin Rivers and their tributaries. Dredging, excessive clearing, snag removal, and various levee projects continue. For example, the Corps is to deepen the Sacramento Deep Water Ship Channel ($107 million) and the Stockton Ship Channel ($36 million), and continues to work on the Sacramento River Bank Protection Project. These activities often destroy near-shore aquatic habitats, riparian vegetation, and benthic organisms. Life up the food chain is affected. Depositing of fill material often smothers wetlands. A number of related flood control projects are either being planned or are under construction which would involve wetland losses by reducing the chances for flooding in overflow basins and allowing riparian areas to be converted to other uses. Cumulatively, these projects affect virtually all of the riverine and floodplain lands and associated wetland habitats in the Central Valley.
As mentioned above under the section on the Bureau of Reclamation, the Corps is also considering a flood control alternative for Sacramento, a modified Auburn Dam to be constructed at the site of the original Bureau of Reclamation project, but with flood control as the principal purpose. Agricultural Programs In the Central Valley, about 1.15 million acres receiving federally subsidized water are planted in surplus crops like rice and cotton.27 In return for complying with supply controls,28 growers of surplus crops can receive income supports (including deficiency payments, disaster payments, and subsidized crop insurance) and price supports (including non-recourse loans and Government purchases).29 Federal export programs, including subsidized export sales and export production incentives, are also important for rice and cotton.30 In 1984, direct Federal subsidy payments to growers in 19 Central Valley counties totalled $253.5 million.31 Total net income for Valley growers was only $66.5 million, however. With Federal agricultural subsidy payments to these growers almost four times greater than their net farm income, the Government was not only covering these growers' net incomes, but making a significant contribution towards operating and maintenance expenses, as well.
Normally, in an area where participation rates in agricultural programs are high, one would expect Swampbuster to significantly reduce the attractiveness of converting wetlands to agriculture. This is not so in the Central Valley. Swampbuster is likely to be almost completely ineffective in the Central Valley, because Sec. 1222(a) of the Food Security Act of 1985 provides an exemption for "artificial wetlands." The implementing regulations define artificial wetland to include wetland which was converted prior to passage of the Act, "but now meets wetland criteria due to the actions of man" (7 CFR Part 12.31[c]). Most of the remaining wetlands in the Central Valley fall into this category because: the Valley was once largely wetland associated with riverine overflow areas; over the years, with the intensive damming and flood control programs, most of these wetlands were converted to cropland; now, where managed water is available, some land has been reconverted to wetland. In most areas other than the Central Valley, the proportion of artificial wetlands is small, and the statutory exemption for artificial wetlands is of no real consequence. In the Central Valley, the exemption renders Swampbuster completely ineffectual.32
This does not mean, however, that all the wetlands in the Central Valley are unprotected and vulnerable to conversion. It simply means that they are not protected by Swampbuster. In many instances, Central Valley wetlands are subject to the Corps' permitting program under section 404 of the Clean Water Act. Furthermore, legislative reforms in the 1985 and 1990 Farm Bills made it much more difficult for new acreage to qualify for price and income supports, and hence, significantly diminished the incentives in Federal agricultural law to convert wetlands to cropland. (See Chapter 3.)
Historically, the economic incentives embodied in agricultural statutes magnified the gains to be derived from converting wetlands to croplands and led to increased degradation of wetlands by chemical and sediment loadings from agricultural runoff. The legislative reforms in 1985 and 1990 significantly diminished the statutory incentives encouraging conversion. These reforms do not mean the end of market incentives to convert wetlands to agriculture. They simply mean that the Federal Government is no longer exacerbating these incentives through two of the most important agricultural programs: the commodity loan program and the deficiency payment program.
Historically, the great variety of agricultural subsidies offered significant incentives to convert wetlands. Among agricultural programs, the income and price support programs probably had the greatest impact, but with the legislative reforms of 1985 and 1990 the influence of these programs was diminished. The distorting effects from a number of other agricultural programs (e.g., crop insurance, low interest loans, marketing orders) remain. In the absence of water subsidies there would have been far less agricultural development in the Valley. The combination of agricultural and water subsidies has been the single most important factor leading to wetland decline, groundwater depletion, and degradation of the water quality in the Central Valley.
Status and Prospects
Until recently, loss and degradation posed a largely unabated and severe threat to the wetlands remaining in the Central Valley (nine percent of the original complement). There was no provision for a reliable supply of water to sustain these wetlands; water for publicly-owned wetlands was supplied almost exclusively through annual agreements. Agricultural demand for water remained strong, while the rapidly growing State population continued to seek a greater share of the water. This situation changed dramatically with passage of the Central Valley Project Improvement Act of 1992.
With passage of the CVPIA, Congress took an important step toward restoring the environment in the Central Valley and effecting a more efficient use of project water. The CVPIA institutes a number of water pricing reforms, establishing an increasing block rate structure and imposing user fees to pay for protection and restoration of the environment. The Act provides reliable, clean water supplies to publicly-owned wetlands and refuges, with water deliveries growing over time to meet specified wetland restoration and enhancement goals. The Act also addresses the issue of drainwater contamination by requiring that amended or renewed CVP contracts contain provisions requiring contractors to comply with State and Federal water quality standards for agricultural drainwater. The CVPIA will not solve all the wetland problems in the Central Valley. The Act primarily addresses the water needs of publicly-owned wetlands, which account for less than one-fourth of the Valley's wetlands.
Despite the CVPIA and a number of other administrative and statutory reforms in the pricing of CVP water in the past few years, the basic interest subsidies to water users remain intact. Unless potential users are confronted with the full cost of providing them with water, the demand for new water projects will continue to be artificially high. Without the proper incentives, subsidized water will continue to be used to grow surplus, heavily subsidized crops. Water is currently going to less productive cropland, requiring greater fertilization and the application of water to support surplus crops. This allocation will produce more land-use and water-quality problems, and result in significant economic inefficiencies.
Swampbuster is likely to be ineffective in discouraging wetland conversion in the Central Valley, because the statute exempts "artificial wetlands" from any sanctions. The majority of the remaining Central Valley wetlands rely on modified water regimes, and thus are classified as artificial. Consequently, conversions can occur with no loss of farm program eligibility. However, the incentives to convert wetlands to agriculture inherent in Federal price and income support programs were significantly reduced by the legislative reforms in the 1985 and 1990 Farm Bills. These reforms made it much more difficult for new acreage to qualify for price and income supports. The reforms did not, however, eliminate all market incentives to convert wetlands or all agricultural subsidies inducing conversion.
Privately-owned wetlands, some held by duck clubs, are increasingly expensive to own and maintain. Simultaneously, declines in migratory birds prompting restricted bag limits and season lengths have reduced duck club memberships and revenues. Like the public refuges, these private wetlands have depended heavily on drainwater as a water supply, and contamination is reducing the supplies from that source. Although the CVPIA only provides for water for publicly-held wetlands, the Act does direct the Secretary to investigate alternative means of improving the quality, quantity, and reliability of water for privately-owned wetlands in the Central Valley.
- Water Management:
- a. On future construction, eliminate the interest subsidy for irrigation in Reclamation law, as well as the use of hydropower revenues to repay a portion of irrigation capital costs.
- The subsidies were designed to encourage settlement of the arid west by small family farmers. Today the goal of populating the west with small family farms is obsolete. The law should be amended to reflect changed social, economic, and environmental conditions. The CVPIA makes major strides in this direction, but the basic interest subsidies and cross-subsidization of irrigators by other project users remain.
- The Department recognizes that major institutional changes can be very disruptive and that transitions are important in order to minimize this disruption. People make major investments based on the market distortions introduced by subsidies. Eliminating subsidies on existing projects is disruptive, and equity requires that beneficiaries be given an opportunity to adjust to the correction of these distortions. However, not eliminating subsidies on new construction imposes an unfair burden on the rest of society. Agriculture is a business, and should be competitive with other activities. If agriculture cannot pay for the full cost of the resources which it uses, including water resources, it is inefficient to allocate the resources to it by subsidization and inequitable to ask taxpayers and users of hydropower to finance the costs.33
- b. Consider charging persons who alter Central Valley wetlands the full cost for water from the CVP.
- Wetlands in the Central Valley have been reduced to approximately nine percent of the original complement, and many of the remaining wetlands are severely degraded. The remaining wetlands in this region serve critical functions; their continued loss and degradation will produce major ecological changes. Amending water contracts to charge full cost to persons altering wetlands is not an action to be taken lightly. However, Congress has already taken an analogous step with the Swampbuster provision of the Food Security Act of 1985. Given the dimensions of the problem in the Central Valley, a similar provision for water subsidies may be warranted.
Creighton, J. 1986. If There Were a New Bureau of Reclamation, What Role Would Social and Institutional Factors Play? Address to the Federal Interagency Symposium on Social Analysis and Natural Resource Agencies, Salt Lake City, Utah, August 27.
Frayer, W. E., D. D. Peters, and H. R. Pywell. 1989. Wetlands of the California Central Valley: Status and Trends - 1939 to mid-1980s. U.S. Fish and Wildlife Service, Region 1, Portland, Oregon, 28 pp.
Hartmann, R. and D. Pierce with assistance by F. Smith. 1987. The Impact of Federal Programs on Wetlands of the California Central Valley. Background Report. U.S. Department of the Interior, Office of Policy Analysis, Washington, DC, 38 pp.
LaVeen, E. P. and L. King. 1985. Turning Off the Tap on Federal Water Subsidies: the Central Valley Projects. Natural Resources Defense Council and California Rural Legal Assistance, San Francisco, CA.
Steinhart, P. 1987. Empty the Skies. Audubon, November, pp. 70-95.
U.S. Congressional Budget Office. 1989. Reducing the Federal Deficit: Spending and Revenue Options, A Report to the Senate and House Committees on the Budget--Part II, as required by P.L. 93-344, 1989 Annual Rept., Government Printing Office, Washington, DC, February.
U.S. Department of the Interior, Bureau of Reclamation. 1987. Auburn Dam Report, Auburn Dam Alternative Study, Sacramento, California.
U.S. Department of the Interior, Bureau of Reclamation, Mid-Pacific Region. 1989a. Report on Refuge Water Supply Investigation: Central Valley Hydrologic Basin, California. Sacramento, California, March.
U.S. Department of the Interior, Fish and Wildlife Service. 1989b. Wetlands of the California Central Valley: Status and Trends - 1939 to Mid-1980's. Portland, Oregon, June.
Wahl, R. W. 1989. Markets for Federal Water: Subsidies, Property Rights, and the Bureau of Reclamation. Resources for the Future, Washington, DC, 326 pp.
Worster, D. 1985. Rivers of Empire: Water, Aridity, and the Growth of the American West. Pantheon Books, New York, 402 pp.
1 Among the larger ones built during the 1920s were Hetch Hetchy (built by the City of San Francisco with authorization from Congress); Don Pedro, Exchequer, and Almanor (all built by irrigation districts); and Pardee (a municipal facility serving Oakland).
2 Fifteen reservoirs, each with capacity greater than 75,000 acre-feet.
3 The FWS estimates that a minor percentage (.8 percent) of the wetland loss in the Central Valley since 1939 is due to urban growth (U.S. Department of the Interior 1989b).
4 For example, in the San Joaquin Valley less than one percent of project water is devoted to wildlife areas, and much of that is agricultural drainage water. The CVPIA mandates a substantial change in the allocation of project water, and requires agricultural drainwater to meet water quality standards.
5 The Bureau has long-term contracts with the California Department of Fish and Game to provide water to two waterfowl management areas as well as a long-term contract for 50,000 acre-feet with the Grasslands Water District. The latter was required as part of the settlement of a lawsuit against the San Luis Unit.
6 The CVPIA is Title 34 of the Reclamation Projects Authorization and Adjustment Act of 1992 (PL 102-575).
7 Roughly, the biological carrying capacity of the area in the absence of water scarcity.
8 Section 3406(d)(6)(A).
9 Water exports from the Delta from State and Federal pumps in the South Delta presently average over 6 million acre-feet annually.
10 The principal component of this project, the Montezuma Slough Control Structure, is presently in place and operating.
11 In particular, Decision 1630 would require bypassing diversion to storage, releasing "pulse" flows, reductions in the amount of deep percolation occurring on lands prone to drainage problems (i.e., a reduction in the amount of irrigation water applied), curtailment of exports, curtailments of upstream diversions during "pulse" flows, and various other measures.
12 Indeed, the increased instream flows mandated by Decision 1630 will make it more difficult to satisfy the demands for water by agriculture, municipalities and industries, and inland wetlands.
13 Primarily in the San Joaquin Valley Drainage.
14 Because of the extent of the contamination, Kesterson Reservoir was closed, filled in, and returned to the Bureau of Reclamation. The Bureau agreed to mitigate for the lost wetlands, and is now attempting to do so. The reservoir had been part of the Kesterson National Wildlife Refuge.
15 Some have been poisoned and are unfit for human consumption.
16 The North American Waterfowl Management Plan is designed to assure the continued survival of abundant waterfowl populations in Canada and the United States. It was signed in 1986, and implementation is through joint, private-sector/public-sector ventures. The Central Valley Joint Venture establishes habitat needs and strategies to accomplish the objectives. The agreement specifies the conservation activities to be conducted (easements, acquisition, cooperative agreements with landowners allowing restoration on private land), the responsibilities of each party, and target dates for accomplishing the objectives. In addition to the State and Federal Governments, Ducks Unlimited, The National Audubon Society, and the California Waterfowl Association have contributed significantly to the restoration and enhancement of wetlands for water-oriented birds.
17 State and Federal refuges total 37,406 and 54,645 acres respectively. Most of the acreage is maintained as seasonal wetlands, with 10-20 percent as permanent marsh.
18 The Bureau's rights to this water may not be secure. The State maintains that it has authority to amend the rights.
19 See chapter 4 for more details.
20 The financial assistance to irrigation extends to the cost of providing project power for pumping irrigation. By law, no interest accrues on the portion of a project's investment allocated to irrigation pumping. This subsidy can be calculated in two ways: what it costs the Government to generate power or what the Government could get for this power on the open market. If water users had to purchase power from private sources, they would have to pay more than double the full cost Government prices.
21 Of course, because the cost of the new facilities had to be repaid, water users were subsequently responsible for paying a larger amount of principal.
22 This practice occurred even though Reclamation law states that O&M costs are to be paid annually in advance. It might seem from this that the contracts should have been voided for not being in compliance with the law. The situation is not nearly that simple. The law calls for the Secretary to set rates to recover the construction costs and all O&M costs. The Secretary complied with the law, but the rates were established under the assumption that O&M costs would remain stable over time.
23 Of the total $931 million spent on farm irrigation facilities in the Central Valley Project over the last 40 years, only $50 million (less than 5 percent) has been repaid. By one estimate, since the Project's inception it has received a $2 billion subsidy authorized by Congress and another $1.5 billion subsidy proffered by administrative decisions (LaVeen and King 1985). Irrigation water users pay an average of $6.15 per acre foot; the cost to the Federal Government is $72.99, resulting in a 91 percent subsidy.
24 The CVP was initially put forth as an operation to benefit small farmers suffering in the Great Depression. Thus, the acreage provisions of the Reclamation Act were to apply: the landowner had to live in the neighborhood of the irrigated land and no individual landowner was eligible for water on more than 160 acres. These restrictions have been thoroughly circumvented. As early as 1945, one study found that three percent of the Project beneficiaries in the southern San Joaquin controlled 41 percent of the cropland and 52 percent of all land (Worster 1985). A policy of "technical compliance" to evade the acreage limitation developed, allowing corporate farmers to deed land to relatives and employees, and then lease it back to qualify for subsidized water.
25 Although current law contains this requirement, it is vague concerning the definition of a "farm," and therefore, the intent of Congress is often circumvented.
26 Historically, there were no cash cost-sharing contributions by non-Federal sponsors of flood control and navigation projects constructed by the Corps. The cost sharing that occurred was almost exclusively in the form of contributions of lands, easements, and rights-of-way. See Volume I, chapter 2.
27 California's agricultural production is distributed as follows: Field crops, 20 percent (cotton, hay, corn, sugar beets, wheat); fruit and nuts, 20 percent (grapes, oranges, almonds and strawberries); vegetables, 20 percent (tomatoes, lettuce, potatoes); dairy and beef products, 30 percent; greenhouse plants, 10 percent. Together these crops amount to only 2.8 percent of the gross State income.
28 Such as acreage set-asides, marketing quotas, croplands diversion, payments-in-kind, and farmer-owned grain reserves.
29 Crop insurance and disaster payments do not appear to be significant factors in the Central Valley due to the relatively controlled agricultural irrigation environment.
30 A sizeable amount of acreage in California is devoted to producing crops for export. Without subsidies, few California growers could compete internationally. In 1986, for example, the world price for cotton was about 31 cents per pound, while it cost 60 to 65 cents per pound to produce in California. These costs for growing cotton in California are the private costs of the grower only, and do not reflect irrigation or other cost subsidies. Deficiency payments are supposed to be limited to $50,000 per farm, but this limit is waived if the commodity is exported.
31 Portions of these counties lie outside of the Central Valley.
32 Refuges and other wetlands which were created as mitigation for project effects are not cnsidered artificial under the Swampbuster regulations. Such mitigation lands are a small proportion of the wetlands in the Central Valley, because very little of the CVP's effects have been mitigated.
33 The Congressional Budget Office estimated that nationwide implementing two modest reforms would save $85 million between 1990 and 1994: (1) enforcing statutory requirements that farms of more than 960 acres be charged the full cost for Federal irrigation water and (2) charging full costs to those using Federal water to grow surplus crops (CBO 1989).
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