Farmers would pay more for water from proposed California tunnel

Sacramento | Reuters –– California farmers would pay more to irrigate their crops under a proposal to build tunnels under the San Joaquin-Sacramento River Delta to funnel water to the state’s agricultural breadbasket, officials said Friday.

The analysis released by state Treasurer Bill Lockyer said regional water suppliers and the farmers who purchase water from them would be able to handle the increased costs, even though the price of water could more than double once the price of paying for the project is included.

“The cost of the Delta conveyance facility is within the range of urban and agricultural users’ capacity to pay,” said the report commissioned by the California Debt and Investment Advisory Commission.

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Environmentalists have strongly opposed the project, saying it would endanger fish and wildlife in the already fragile Delta, which supplies water to 25 million people along with farms in the San Joaquin Valley and other parts of the state.

The project, now expected to cost $19 billion, is backed by Democratic Governor Jerry Brown as well as Republicans who represent the agricultural region, which has suffered from the state’s ongoing drought (all figures US$).

But Democrats have tried to block the project, citing cost and environmental concerns.

Water agencies would sell bonds to pay for the tunnels and likely pass the cost of the debt on to customers. The state would fund an additional $7.8 billion, also through the sale of bonds, for environmental restoration in the Delta.

In Friday’s report, author Blue Sky Consulting Group said farmers and communities could handle the increased costs of servicing the debt, but some farmers would have to switch to more-profitable crops.

For example, the average cost of water in Kern County during the five years through 2012 was $100 per acre-foot. With debt service from the tunnels project, that could go up as high as $278, the report said.

The current crop mix overall in Kern County would allow farmers to pay as much as $277 per acre-foot, the report said, but farmers have planted some land in the area with crops that would only bring in enough profit to pay $13 per acre-foot.

– Sharon Bernstein is a Reuters correspondent covering California state politics and policy from Sacramento.

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