Cleaning Up Kesterson

It was in 1982 that the U.S. Fish and Wildlife Service first noticed that something had gone terribly wrong at the Kesterson Reservoir in central California's San Joaquin Valley: largemouth and striped bass, catfish, and carp all had disappeared. Later, in the spring of 1983, some of Kesterson's newly hatched waterbirds began to display crippling deformities. Beaks were grotesquely shaped, wings were missing, legs twisted, and skulls unformed; many birds died soon after hatching. The reservoir—ironically, part of the Kesterson National Wildlife Refuge—had become hostile to its inhabitants, and the name "Kesterson" was soon to become synonymous with environmental disaster.

The cause of this ruin is selenium, a naturally occurring nonmetallic trace element. Leached from the soil by agricultural irrigation water, the selenium was carried to the reservoir through drainage systems. Once in Kesterson, the mineral became concentrated in vegetation and small animal life, and concentrations became dramatically higher as selenium moved up the food chain. Selenium in very small amounts is regarded as beneficial to humans—it is contained in some multimineral tablets—but at higher levels it almost certainly is dangerous. For bird life, the verdict is clear: high concentrations of selenium are fatal.

What can and should be done about Kesterson? For the short term, several stop-gap measures have been taken. The state of California advised people not to eat ducks that might have spent time at the refuge. And the Fish and Wildlife Service began a "hazing" program—fire-works, blank-shell shotgun blasts, and scarecrows—to discourage waterfowl from using the area. The best methods to clean up the contamination for the long term are not clear, nor are their price tags. Estimates of clean-up costs range from $7 million to $635 million; a preliminary study of the problem alone is likely to run into the millions of dollars.

The Kesterson disaster has revived long-standing questions regarding the need for agricultural drainage in the San Joaquin Valley and has raised some new ones. Who will pay for cleaning up Kesterson and for handling selenium and other trace elements in future drainage water? Should more federal funds support already heavily subsidized agricultural production in the valley? What are the best approaches for determining the appropriate long-term uses of the agricultural lands that require drainage and the federally subsidized water supplies provided to these lands? Regardless of the outcome of these long-term issues, the secretary of the interior has ordered that the flow of polluted water to the reservoir must end. One of the measures that might facilitate this—allowing those farmers with severe drainage problems the opportunity to sell their water at market value—seems particularly attractive. Most of the rest of this article is devoted to exploring it.

The drainage problem

The Kesterson Reservoir in effect is a large evaporation pond, a collector of agricultural drainage water that comes from the Westlands Water District. Westlands, which makes up the principal part of the San Luis Unit of the federal Central Valley Project (CVP), is one of many irrigation districts throughout the western United States that receive and distribute federally subsidized irrigation water (figure 1). As it happens, an impermeable layer of clay underlies much of the Westlands soil. Without subsurface drainage, repeated applications of irrigation water eventually would raise the water table into the root zones of the crops grown, reducing productivity and eventually drowning them. Also, because water leaches salts and other minerals from the soil and concentrates them through the cycle of application and evaporation, irrigation water must be drained off and, occasionally, soils flushed.

Between 1956 and 1962, the San Luis Unit expanded to a total of 555,000 acres, more than 270,000 of which eventually would need to be drained. Accordingly, the Interior Department's Bureau of Reclamation began construction of the San Luis Drain, but controversy over its potential effects on water quality in the Sacramento-San Joaquin Delta and a lack of federal appropriations combined to slow and then stop the project; by 1975, only the first eighty-five miles had been completed. The northern terminus of the San Luis Drain now is the 1,280-acre Kesterson Reservoir, which in 1970 was made part of the 5,900-acre Kesterson National Wildlife Refuge.

Irrigation development under the Bureau of Reclamation program in California and elsewhere has been made possible through federally subsidized water—most importantly, interest-free repayment. Also, the use of "rolling repayment" in the CVP has meant that any time a new facility unit is added, the repayment period for the entire project is extended to fifty years from the date on which the most recent completed facility went into service. The practical effect is that the interest-free repayment period for the San Luis Unit of the CVP extends over seventy-two years, providing a subsidy of about $1,422 per acre out of an actual cost of $1,679 acre (in 1978 dollars). In other words, project users pay only about 15 percent of actual project costs.

When irrigators pay only a small percentage of costs, one can expect overinvestment in water storage and delivery and the use of otherwise marginally productive lands. Similarly, with the prospect of federally subsidized collector drains in the district and a federally subsidized master drain for the entire San Joaquin Valley, the incentive to local farmers has been to bring land with potential drainage problems into production and to defer local or state implementation of drainage disposal.

The need to manage high levels of selenium and other trace elements was foreseen in the original federal water delivery contracts with Westlands, and high costs involved undoubtedly will affect future federal actions. The interior secretary's agreement with the district places the incentives within the district to find the most economical solution to the present drainage problems—a realignment of incentives that already is generating a new set of proposed solutions.

In some areas that are not connected to the San Luis Drain, up to one-third of the drainage water is mixed with new water and used again for irrigation. How long it is possible to rely on this recycling method without developing harmful concentrations of minerals or other deposits is not known.

Local evaporation ponds could be used in conjunction with recycling. The salt and other deposits that accumulate in such ponds eventually would need to be disposed of, but perhaps as infrequently as very thirty years. This would require drying out the ponds and removing the deposits by trucking them to a specially constructed land disposal site, by transporting them to the ocean for disposal, or by some other means. A variation on this idea involves irrigating salt-tolerant grasses with the drainage water and then harvesting and disposing of the "crop."

It may make more economic sense to centralize evaporation ponds on land that has poor agricultural productivity, depending on whether the savings in land costs are greater than the expenses of operating a collector system. Regardless of whether ponds are on farms or are centralized, planners will have to keep in mind that the water is hazardous. Perhaps ponds can be designed so that they will not produce vegetation and other conditions attractive to wildlife.

The Environmental Defense Fund, in Cooperation with Westlands, has proposed a study of the application of desalting technologies to drainage water, but these technologies are expensive. One possible means of financing is to substitute the treated water for some portion of current irrigation supplies, which then could be sold to municipal and industrial customers. Biological and chemical means of treating contaminated drainage water also are under consideration.

Another option could be made available to farmers who do not find it economic to bear the expense of some combination of recycling, local evaporation ponds, or centralized facilities: rather than irrigate land with severe drainage problems, they could sell at market value the associated water supplies. This possibility is explored below in some detail because of its potential for solving the drainage problem and because it involves cooperation on the part of a number of government agencies.

Voluntary sale of water

The demand for water within California is large. In addition to the U.S. Bureau of Reclamation, the state is a major supplier of water in California. The annual entitlements for water from the State Water Project for 1985 and 2000 are 3.1 million and 4.2 million acre-feet, respectively, but the current firm yield from the project is only 1.2 million to 1.5 million acre-feet. The Metropolitan Water District of Southern California, which is entitled to about 50 percent of project supplies, is the state contractor with the greatest expected growth in demand for additional water. Furthermore, under the set of priorities for use of Colorado River water, the district will lose about 400,000 acre-feet per year from the river as the Central Arizona Project initiates deliveries to Arizona.

One indication of the highest price that the State Water Project would be willing to pay for water made available from Westlands relates to the costs saved by forgoing construction of the state's Cottonwood Creek Project—approximately $212 per acre-foot, in 1982 dollars. The State Water Project also would need to compensate Westlands for a share of unpaid capital costs for conveyance, conveyance pumping, and direct pumping, and for that share of the federally constructed distribution system that lies on the lands that no longer would receive water. As shown in table 1, the net annual value of the water to the purchaser after these and other adjustments is $182 per acre-foot.

Taking the present worth of an annual water right yields the value of a permanent water right. A 10 percent discount rate and a fifty-year amortization period produce a value of $1,804 per acre-foot for a permanent right to water that could substitute for Cottonwood Creek supplies. Water supply in the Westlands area averages around 2.5 acre-feet per acre, which means that the State Water Project should be willing to pay up to $4,511 per acre (again, in 1982 dollars) to obtain the associated water supplies.

The minimum value for which Westlands farmers might be willing to sell their water is estimated at $1,360 per acre—the difference between the value of irrigated land producing field crops ($2,240 per acre) and the value of land used for grazing ($880 per acre). Therefore, the highest amount that the State Water Project might be willing to pay for water is $3,151 per acre greater than the estimated minimum selling price in its current use. The three-fold increase in value indicates the potential income gain from the transfer.

This income would be divided among the parties involved in the transaction. For example, the state might receive water for less than the cost of its next planned facility. Reciprocally, the Westlands landowners affected by drainage problems might demand an amount for water that exceeded their previous agricultural net income before they would be willing to put their land to another use or to relocate. The Westlands Water District also might demand that certain district assessments be prepaid before the water could be sold for uses outside the district. The federal government would receive about three times as much annual revenue for all water shifting from irrigation in Westlands to municipal and industrial use, since municipal and industrial use bears interest charges. The federal government also could accelerate revenue recovery by demanding prepayment of capital costs.

An additional possibility is for the federal government to demand some portion of the market value of water to help finance the cleanup of Kesterson Reservoir. Of course, if the option for voluntary sales of water at market value were made available, it is difficult to know how many landowners would find the opportunity attractive. It would be important for the federal government and the district not to set the charges so high that they eliminate the financial incentive for water sales to take place.

Cooperation required

A number of agencies would have to cooperate for an exchange possibility of this type to be made available to Westlands farmers. The Bureau of Reclamation would have to agree to allow those farmers affected with severe drainage problems to sell water at market value to the State Water Project or to other potential purchasers. There appear to be no legal restrictions on the prices that private parties may charge for water they buy and sell among themselves, provided that federal project costs are paid, but the Westlands Water District would have to agree to act as a broker in the transaction, assigning farmers an amount of water for sale equivalent to their customary deliveries for irrigation.

Congress would have to authorize delivery of water outside the current service area of the Central Valley Project, since the primary demands on the State Water Project are located in southern California. The rationale for legislation would be the unusual and unforeseen circumstances caused by selenium in the agricultural drainage water, as well as the desire to promote beneficial long-term use of the water resource. Alternatively, the State Water Project could purchase the water and deliver it to its own contractors in the San Joaquin Valley, freeing up an equivalent amount of project water to be transported to the Los Angeles area. The State Water Resources Control Board would have to approve a change in the location of water use.

The political differences generated by geography in California should not be underestimated. The state stretches more than 800 miles from north to south. The annual rainfall in the North is considerably higher than in the South, but most of the population—and most of the demand for water—is south of the delta where the Sacramento and San Joaquin rivers join. The State Water Project basically moves northern water south, but in a statewide referendum in 1982 the voters defeated construction of the Peripheral Canal, which would have moved additional water from northern to southern California. Against this background, it is worth noting that water sold from the San Luis service area would be water that already is being transported south of the Sacramento-San Joaquin Delta and for which there are virtually no return flows to the San Joaquin River.

There is some precedent for political acceptance in that the voluntary sale of water at market value from the Westlands area would resemble another water transfer that has required much cooperation. The Metropolitan Water District of Southern California has offered to pay for conservation investments (like canal lining) in the Imperial Irrigation District in southern California in exchange for 100,000 acre-feet of Colorado River water conserved. This exchange proposal has received the endorsement of the state, the Department of the Interior, and major environmental interests. In both cases agricultural runoff is causing damage; in the Imperial case, it threatens injunction of property by raising the level of the Salton Sea.

Some very difficult decisions face federal, state, and local governments in California regarding the long-term disposition of fresh water supplies, agricultural lands with problem drainage in Westlands and elsewhere, and the drainage water itself. Reliance on the economic values of the resources and on transactions between current users of the resources within the state can help ease these decisions, consistent with efficient long-term use of both land and water.

Moreover, in February 1986 the Fish and Wildlife Service identified nine national wildlife refuges, in addition to Kesterson, with contamination problems serious enough to require corrective action, and another seventy-four refuges that need additional study of potential contamination. The types of actual or potential contamination range from pesticides to PCBs and asbestos. Thirty-three of the refuges have potential problems associated with agricultural drain water, and selenium contamination is under review at eight of these. The nature of the problems and the measures that need to be taken at these additional sites have yet to be determined, but some of the alternatives discussed in this article to slow or halt the flow of pollution may prove useful avoiding future Kestersons.