What Is Water Worth?

Thanks to Peggy, who sent me this one.

Farmland is parched. Companies are worried. The global demand for water will soon outstrip supply. What’s the solution? Simple, say some business leaders and economists: Make people pay more for the most precious commodity on earth.

FORTUNE — Sarah Woolf’s 1,200-acre farm in Cantua Creek, Calif., sits in the Central Valley, which runs in a narrow stretch more than 400 miles through the middle of the state, covering an area about the size of West Virginia. Hemmed in by the Cascade Range to the north, the Tehachapi to the south, and the Sierra Nevada to the east, the valley has long been one of the most bountiful farming regions in the country. Though it has less than 1% of America’s farmland, according to the U.S. Geological Survey, it supplies a quarter of the nation’s food.

And for the past three years it has suffered the worst drought in almost anyone’s memory. In January, with California’s river and reservoir levels at record (or near record) lows, Gov. Jerry Brown declared a state of emergency. By March the drought was so severe that the state and federal governments, which both run systems that transport water from the Sierras to the valley, cut off supplies to farmers. That left many of them with two unpleasant options: Buy water on the spot market for up to four times the normal price or cut back sharply on planting.

Woolf, a third-generation farmer, grows tomatoes, onions, and garlic that typically end up as ketchup, salsa, and other products made by Heinz, P&G, and other big names in the food industry. Her choice was to farm only half of her land. “Customers are asking for our produce,” she says, “but we can’t deliver because we don’t have the water.” Officials say that more than 500,000 acres of otherwise rich, arable land in Central Valley will likely be left fallow this year. Acres of fruit and nut trees will die from lack of water. And in keeping with the laws of supply and demand, food prices have already risen.

Continue reading here:  http://fortune.com/2014/05/01/what-is-water-worth/