A pilot program for a system in which farmers buy and sell groundwater will launch this month in Ventura County. If the trial is successful, the region could make history as the first county in California to implement a “water market” on a significant scale.  “We’re going to learn the process of trading and where all the pitfalls are,” Edgar Terry, president of Terry Farms Inc., said. The farmer and part-time finance professor at California Lutheran University in Thousand Oaks has worked with Matthew Fienup, executive director of the school’s Center for Economic Research and Forecasting, for two years to bring the project to fruition. “Why shouldn’t water be on the left side of the balance sheet?” Terry said. “It’s an asset.” Market-based allocation of groundwater was officially legalized under the state’s 2014 Sustainable Groundwater Management Act, which also commissioned local groups such as Ventura County’s Fox Canyon Groundwater Management Agency to regulate individual basins. Up to 30 participants will take part in the six-month pilot program. Fienup will oversee the transactions with the help of graduate students in Cal Lutheran’s quantitative economics program. The market price of the water will be determined by an algorithm and will include a small trading fee, said Terry. To participate, growers will be required to install advanced metering infrastructure systems on their properties. The Fox Canyon agency has agreed to grant each grower $2,000 toward the purchase price. “We hope trading is very thin at first, which is why we’ve limited the population of folks that will be involved,” Terry said. To move to more robust trading, the pilot must show that the short-term advantages of a water market do not detract from the long-term health of the agricultural community, said Ventura County Board of Supervisors representative Steve Bennett. “Growers need to be able to make these exchanges, but if it’s set up in a way that enables permanent transfers away from growers, that would be a problem,” he said. “We want to see that this really is a fair market.” – Helen Floersh
