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In California, farmers get access to cheap water that they have to use for farming or else they lose all rights to it. There appear to be two political reasons for this:

  1. to encourage agriculture, and
  2. to maintain water rights status quo

The problem is that use-it-or-lose-it encourages water waste. Surely farmers would have greater incentive to conserve water if they paid the same water price as everyone else. For example, suppose that I am a farmer. 10 of my sprinkler heads are broken and are expected to waste 1AF over their remaining life. Replacing these heads will save 1AF but will cost $2K of labor and materials. If I pay $1K/AF for water, I will not fix the heads because the net cost to me of doing so is $1K (I spent $2K on labor to save $1K on water). But if I pay $8K/AF for water, I will fix the heads because the net savings to me is $6K.

In light of this, has any research organization or government entity studied moving California from water subsidies to direct agricultural subsidies? In other words, address political concern #1 by paying farmers for actual output produced, rather than for water consumed. ("actual output produced" is however the voters want to define it. Just so long as it's based on actual farming output rather than the water used. Heck, pay almond growers $5/pound if that's what we want. We can put the last Italian almond farmer out of business and give California farmers the full incentive to save water. Win-win!)

And political concern #2 could be addressed by transitioning to the new system in a way that immediately compensates everyone involved according to what is changing for them. For example:

  1. The state buys up farmers' restricted discount rights at the current market price (which reflects both the fact that the water is restricted to agriculture only, and the value of the discount) on the existing agricultural water access markets.
  2. The state removes the restrictions and discounts on the water rights, resells the unrestricted water to farmers and urban districts -- at great profit -- and applies the proceeds towards part 3.
  3. The state pays all farmers for actual farming output that is not based on the legacy, restricted, discounted water, according to the desired subsidy effect.

Due to current rights structures, "the state" here may mean some combination of California, US Bureau of Reclamation, CVP, CWP, etc.

Recently there has been renewed interest in reducing water waste. So has the state considered any kind of plan to move from use-it-or-lose-it water subsidies to an unrestricted water market combined with direct agricultural subsidies? If not, what are the political facts working against such proposals?

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While this isn't a direct answer to your question I think it will get at the problems. Removing the restrictions on who has first access to water and what they purchase it for is unlikely to reduce the waste and will likely increase it. The problem is that water is used for a lot of other things that cause the water to leave the water cycle and not be returned to the area unlike what happens in the farmers case.

The biggest source of water waste in the form of leaving the area is all the various companies who bottle water and ship it around the country/world. While it might not make up a major source of the usage right now that would only increase if they had the ability to buy more water.

Overall I think any change to allow for more access to water based on ability to pay will just cause more to be sold to companies that don't care about conservation at all.

We can already see examples of companies trying to use more water then they are entitled to.

https://www.theguardian.com/us-news/2021/apr/27/california-nestle-water-san-bernardino-forest-drought

Nestlé, accused of taking millions more gallons than it is entitled to, receives draft cease-and-desist order from state officials

Bottled water is a massive industry and they have no reason to not bottle up as much as they can.

https://www.cnbc.com/2014/08/07/drought-cant-stop-production-of-bottled-water.html

Bottled water is a $22 billion annual business in the U.S.

According to the latest statistics, total bottled water sales in the U.S. reached 9.1 billion gallons in 2011. That’s 29.2 gallons of bottled water per person, according to the Beverage Marketing Corporation.

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  • First, you're saying that transferring water prevents it from flowing back to its local source. While groundwater partially works that way, most commodity water isn't groundwater. Water generally evaporates off the ocean, is blown to a high lake, and flows down to the point of consumption, wherefrom it finally flows back to the ocean. (Of course, desal shortens the cycle a bit, and obviously doesn't harm any natural cycles. But it has energy, brine dilution, and capital costs that conspire to bring the cost up to about $1500/AF and it can't compete in wet years because it's "always on"). 20 hours ago
  • Second, you're saying that bottling water is wasteful. I really don't follow that -- water bottled for human consumption is just about the highest value use of water I can think of. 20 hours ago
  • Third, you're saying that providing access based on ability to pay will lead to more waste. How does increasing the price of something lead to more waste? Gas is up these days... so are people wasting more gas? 19 hours ago
  • @personal_cloud If you bottle water and ship it to the other side of the country how is it going to be reclaimed for use in California? California is currently experiencing a drought and moving water from California to other parts of the country/world is not helping. At least with farming it stays in the local area. As for how it increases the waste, it will increase the amount of water the the people who are bottling it can buy and ship to other parts of the country/world.
    – Joe W
    19 hours ago
  • If you bottle water and ship it to the other side of the country how is it going to be reclaimed for use in California? See my first comment. Commodity water generally flows through the ocean, which is a large body of water, so it doesn't really matter where the water is consumed. 19 hours ago

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