It is widely believed that water is badly misallocated in California because it is mispriced, resulting
in too much agricultural use. At the same time, however, California’s groundwater “problems”—declining
water tables, compactification, polluted farmland, and subsidence—seem to
arise from the fact that farmers often find it cheaper to pump water than buy it even at subsidized
rates. Seems puzzling. Economists and journalists have been saying these things since
I was a graduate student. To a political scientist, it is even more puzzling that a small bunch of
farmers and ranchers could cause so much trouble…. And for so long. In this paper, I show that
the arid parts of the state—especially in the Southern Central Valley—have generated a small
number of distinctively large and vertically integrated organizations, dependent on control
of groundwater, which have often played pivotal roles in shaping political deals. These critical
deals include the formation of the state’s peculiar water law in the late 19th century, the
building of the federal and then the state water projects, and the responses to environmental
demands for water.
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