Power Drain

Big Ag's $100 Million Energy Subsidy

May 30, 2007

Power Drain: The Water-Energy Connection

In November 2005 the California Energy Commission (CEC) released a 180-page report explaining how integrating energy use into water planning can save money, reduce waste, protect our environment, and strengthen our economy. The Commission noted that water-related energy use consumes 19 percent of the state's electricity, 30 percent of its natural gas, and 88 billion gallons of diesel fuel every year. The CEC stated: "Not nearly enough has been done to ensure that California's water supply strategies are synchronized, hand-in-hand, with its energy strategies" and emphasized the importance of eliminating this disconnect. [44]


"As California continues to struggle with its many critical energy supply and infrastructure challenges, the state must identify and address the points of highest stress. At the top of this list is California's water-energy relationship."


The issue of power subsidies in the CVP needs to be an important part of such policy discussions. Cheaper power for the transportation of water in the end means cheaper water, so power subsidies give agribusinesses even less incentive to conserve. Power subsidies also help prop-up the unsustainable practice of pumping water hundreds of miles to irrigate desert land, much of which should never have been farmed in the first place. [42]

Put another way, when you have a water delivery system that requires massive amounts of pumping, and you undervalue the power used for this pumping, this leads very directly to the undervaluing of the water itself. Undervaluing of any resource leads to overuse. And with almost a billion kilowatt-hours of electricity being used each year to store and move millions of acre-feet of water around the CVP, subtle incentives can yield large consequences.

Opportunities for reform

The Central Valley Project (CVP) has helped make California's arid heartland the top agricultural region in the nation. In the process, it also has given rise to the most subsidy-dependent farms in the nation: A relative handful of big agribusinesses who tap taxpayers for hundreds of millions of dollars a year in power, water and crop subsidies.

On top of the power subsidies detailed here, an earlier EWG investigation of state and federal data conservatively estimated the value of CVP water subsidies to be $416 in 2002. [22] And an examination of Department of Agriculture (USDA) data, compiled annually by EWG, showed that many of these same farms are also getting hefty crop subsidy payments - $122 million in 2002 alone, and $891 million from 1995 to 2004. [45]

Congress will be writing a new Farm Bill this year, something that it does only every 5 years. This may be the government's best opportunity to address the problem of giving agribusinesses in the CVP - and other federal water projects - multiple subsidies that are often at cross-purposes with each other. Eleven times since 1982, Congress has considered legislation to prohibit farms from receiving both water and crop subsidies. (None of these bills even considered the additional issue of power subsidies.) Each was blocked by the agricultural lobby. [45]

But with the change in Congressional leadership and the growing realization that the bloated farm subsidy program is actually hurting small farms while helping large agribusinesses, the time could finally be right to limit the number of government subsidies a single farm can receive on the taxpayer's dime.