The cost of water and water markets in Southern California, USA

Abstract

It is surprising to learn what people pay for water in Southern California. Of course, it depends on what you need the water for, when you need it, and where it comes from. Rates for the least expensive water, for agricultural use, are 15 (12) or more per acre-foot (1,230 m). The highest-cost wholesale water is desalinated seawater at a cost of 800 to 900 per acre-foot (AF). The base treated and untreated water rates for the largest wholesale water purveyor in California, Metropolitan Water District of Southern California, are 371 and 478 per AF (232 and 300 per 1000 m). Actual rates paid by water districts for Metropolitan water vary depending on the type of service and the costs to deliver the water to the service location. Residential water rates in California, which include delivery and service charges, averaged 905 per AF in 2005 (567/1000 m). The average residential user in 2005 required 0.4 AF (490 m) of water for the year. Residential water rates have increased over the last 15 years, from approximately 20 (15) per month in 1991 to approximately 35 (27) per month in 2005, representing an average annual increase of 3.8. As the need for reliable water supplies increases so does the cost. Informal and formal water markets are increasing. Markets for permanent water rights and annual water rights have been incorporated into recent legal judgments for groundwater basins in Southern California. Water markets are helping to reduce over pumping of groundwater basins. They promote better planning for droughts, water conservation, and increased water system reliability.