Water Marketing A Deal That Might Save A Sierra

By RICHARD CONNIFF

Get your hackles up, California. We are here to discuss that choke-thy- neighbor word, water. Here being a quintessentially innocuous looking and provocative setting, the Los Angeles water intercept on Lee Vining Creek in the eastern Sierras. On a brilliant winter afternoon, knee-deep snow covers the intake pond behind a small concrete dam, and a Steller's jay swoops among the evergreens. Mount Dana, lacking only an Ansel Adams moon, is lit up crisply against a cloudless sky. And in the background (the sticking point), there is the sound of rushing water.

By recent court order, some of the creek's water pours over a narrow spillway and meanders seven miles down its ancient route to Mono Lake. "There's probably 5 c.f.s. flowing in there," a water activist remarks in the technical shorthand (c.f.s. meaning cubic feet per second) that characterizes California water talk.

But since 1941, most of the Mono Basin's mountain water has been disappearing from here and from three other streams down a tube that leads about 225 miles south to Los Angeles. The result, as bumper stickers, outraged postcards to the Governor, and sober scientific studies have all amply declared, is that this country's oldest lake, and one of its most unusual, is being destroyed. Even the Los Angeles department of water and power concedes that the Mono Lake ecosystem could collapse. "We feel comfortable that we have 20 years before it's going to happen," says David Babb, a staff naturalist. There is time for more studies. But for now, he says, the ) department has no way to replace its Mono water, 100,000 acre-feet a year, 17% of the city's supply. The Mono Lake Committee, a courtroom adversary, says it sees an "incremental unraveling" happening at Mono right now. It wants the diversion reduced to 30,000 acre-feet to stabilize the lake at a safe level.

What to do? An acre-foot is the amount of water it would take to flood an acre one foot deep, and if you can find 70,000 of them lying around for the taking in Southern California, you can probably change your name to Yahweh and begin collecting burnt offerings. No obvious replacement source presented itself in the Mono Lake dispute until recently, when an economist named Zach Willey suggested that the city and the environmentalists get together to buy water from farmers on the western side of the Sierras in California's vast central valley.

Water marketing, first debated in the 1970s, was an appealing idea: farmers use about 85% of California's water, and because they get it from state and federal water projects at subsidized rates, they tend to squander it. An acre- foot that costs Southern California urbanites $230 may cost farmers as little as $10, so even adding in the heavy cost of transporting the water in the state's vast aqueduct system, there is room for both sides to benefit from resale of unneeded irrigation allotments. The idea had two minor drawbacks: many California farmers would sooner spread salt on their fields than surrender an acre-foot of the water they regard as their birthright, and second, Willey's employer, the Environmental Defense Fund, has a reputation for fighting the new water projects coveted by a lot of farmers. But Willey and E.D.F. offered to find farmers willing to sell, and the Mono Lake litigants agreed to pay for the search.

Thus at 5:30 on a recent morning, Willey and a partner, E.D.F. lawyer Tom Graff, headed from their Oakland office down Highway 5 to dicker with irrigation districts on the west side of the San Joaquin Valley. An odd pair: Willey, somewhere over 6 ft. 5 in. in his cowboy boots, lean, green-eyed and with an easy grin; Graff, short and with a squared-off boxer's nose, but unpugnacious. As environmentalists go, they speak softly and strangely: California water distribution suffers under misguided socialist precepts, they argue. What it needs is fewer bureaucrats and more capitalists. Turn water into a commodity people can buy or sell, and the market will soon straighten out inefficient ways of using the stuff.

"We've had 100 years of development, and the environment's been kicked around pretty bad," Willey says. "We're trying to figure out a philosophy to rehabilitate things over the next 100 years. You're not going to do it by wholesale taking away of resources from industry and farmers, or they're going to wind up litigating you for the next 100 years. You're going to do it through a system of incentives." His approach is to "go out and make some deals" with the people who control water rights -- the farmers.

Willey, himself a product of the central valley, has spent years scouting irrigation districts. "It's taken a decade of learning local customs to get where we can have this little discussion," he says of the morning's talks. "There are still some groups in the valley that wouldn't sit in the same room with us." E.D.F. hopes to entice two of the more progressive irrigation districts, Firebaugh and Broadview, to risk heresy and agree to a 10,000-acre- foot pilot project. "The party line is that nobody takes water from agriculture. That's what they're going against."

The farmers who've come out to meet Willey are neither heretics nor hayseeds but businessmen in a carpeted irrigation-district boardroom. They hem and haw in their own argot. They are worried, for instance, about load-flow relationships: if the government sets stringent new standards on selenium in their runoff, they may need to dilute it with the very water Willey is proposing to buy. Life is terribly uncertain. The regulatory agencies, they observe, "just agreed that water runs downhill about two months ago." The farmers also have this uneasy feeling that the environmentalists want them to save water by shutting down farmland.

Willey reads the unspoken cue; they are imagining Owens Valley: The Sequel, in which Los Angeles, having glommed up water and put farmers out of business in the now infamous valley south of Mono Basin, casts a thirsty eye their way. He tries to reassure them. The idea is to spread the water-marketing deals around to avoid a concentrated effect on any single farming area. No one is telling farmers to take land out of production or move to the city. A textbook negotiator, Willey subtly points up benefits that the farmers would rather temporarily overlook: Wouldn't the income from water marketing help pay for new irrigation methods that save water? Could be. Isn't that the sort of thing farmers are looking at anyway, because it can also boost production? Maybe so.

Both irrigation districts are firm on one point. The bid of $60 an acre-foot that Willey has presented on behalf of the Mono Lake litigants will cut no deals. One farmer states the proposition from Willey's point of view: "You get the price up, and if farm prices aren't so good, you're going to get other districts saying, 'Look what those fellows are doing over there.' " A price upwards of $125 might begin to stir their interest. Then they grimace and stare at their thumbs as if to say they honestly wished they could do better.

All this is about as expected, Willey says on the drive home. If he can get all sides to settle on a price, his next job may be more difficult. In its last days, the Reagan Administration stated it had no objections to water marketing (in a memo written by an Assistant Secretary now handling water- project bonds at Drexel Burnham Lambert). But other voices may object to the idea that farmers who receive subsidized water for crops, and further subsidies not to grow those crops, should profit handsomely on the sale of the subsidized water. Willey argues that the profits will be going to produce new public benefits: irrigation systems that use less water and produce less pollution. A Mono County businessman suggests that the sale of water rights ought to be regulated to prevent profiteering. But here Willey hews to the free-market line: even if the price per acre-foot starts out high, he says, competition will drive it down to a fair level as other irrigation districts try to get in on the action. Beyond that, someone has to pick up the bill for the replacement water. Los Angeles has agreed to pay part of the cost of the pilot project. E.D.F. has committed itself to raising the remainder, partly by lobbying the state and the U.S. Forest Service, which has declared Mono Lake a National Forest Scenic Area. If tax dollars are unavailable, says Graff from the backseat, E.D.F. may propose turning the lake over to a private trust and setting up a tollbooth.

He is only half kidding. "The idea that the postcard-writing public should pay as well as write cards is not an easy one for preservationists to swallow," Graff concedes. But "if there was more of a willingness to pay for maintaining the environment, we wouldn't have to rely on bureaucratic whim." It is evident that Willey and Graff believe in their neo-capitalist approach. The bottom line then naturally presents itself: Gentlemen, what do we get for our money?

^ Pursue that question downstream from the Los Angeles intercept a day or two after the bargaining session, and find Mono Lake looking a little depleted, like an old man who has got too small for the collar of his best shirt. It has shrunk from more than 80 sq. mi. in area to about 60. But in the warm months, 40,000 California gulls still nest on the volcanic islands, and migratory grebe and phalaropes turn the lake into an ornithological stew. The tufa towers produced by geological turmoil under the surface still stand, gnarled spires made of a material that Mark Twain likened to "inferior mortar dried hard": here a Giacometti sculpture, there a bust of Richard Milhous Nixon. Nature's freakish pranks. To the west, snow billows off the high ridge of the Sierras as the sun drops behind. The light catches on jagged volcanic peaks along the south shore of the lake. It turns the clusters of tufa white against the leaden water. Everything is silent, and there is a sickle moon overhead (not quite Ansel Adams, but getting there). The light changes from red to wine dark to a milky bruised blue, and the mountains fade into the sky. In a visitor's register nearby, someone has scribbled a note: "Es ist wunderbar hier. Danke, Amerika."