Facing drought, Calif. orders creation of 'water bank'

SACRAMENTO -- Anticipating another bone-dry winter, California is preparing to act as a water go-between next year, buying from water-rich districts in the north and selling to cities and farmers hit hard by drought.

The initiative, known as the 2009 Drought Water Bank, harkens back to measures taken during the long dry spell of the late 1980s and early 1990s and underscores the state's efforts to squeeze every drop out of a system strained by climate change, a booming population and environmental rulings that have slashed pumping out of the linchpin Sacramento-San Joaquin Delta.

On Thursday, the state Department of Water Resources announced the formation of the water bank during a "drought summit" in Sacramento attended by urban, agricultural and other groups that represent a total of about 25 million people, or a majority of California's water users.

Faced with forecasts showing a period that could resemble either the short, deep drought in the late 1970s or longer drought of the late 1980s, officials said they must plan for the worst. Already, many of California's reservoirs stand at record-low levels -- some as low as 13 percent of capacity -- after two critically dry years.

"There are a number of scenarios where we don't regain snowpack and because the reservoirs are low, we're in a lot of trouble -- and that's what we're down to," said Department of Water Resources Director Lester Snow.

Because of the uncertainty surrounding the winter rainfall, many of the details surrounding how the water bank will work -- including when the transfers would take place, how much buyers may pay for water and which districts are willing to sell -- remain unclear. However, most observers agree that water prices are rising quickly.

At Thursday's announcement, one official said a rice farmer may be able to sell his water for as much as $200 per acre-foot -- up from $50 per acre foot not long ago (1 acre-foot of water is about 326,000 gallons and enough to cover 1 acre of land in 1 foot of water).

While water officials said they would not be able to control water prices across the state, deputy director Gerald Johns hopes the bank will help keep prices rational.

Despite its name, the water bank is not a giant storage tank or reservoir. Rather, the system works more like a large-scale water reallocation program. The Department of Water Resources would purchase water from those with full reservoirs, those who can draw on wells, or farmers who may leave their grounds fallow or who switch to less thirsty crops. Generally, those supplies would come from Northern California, where water is more plentiful.

Without those users' demand, the state would then sell the "extra" water to those areas with the largest need. Beyond uses for health and safety, there are also rules for environmental and economic interests.

(E-mail Kelly Zito at kzito(at)sfchronicle.com.)

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)