The Economic Consequences of the Endangered Species Act in the Central Valley

Who gets the water in the California Bay Delta has been a controversy spanning multiple decades primarily because of the estuary’s importance as a unique environmental habitat and as a valuable natural resource for Central Valley farmers. Near continuous litigation has spawned over the Delta’s designation as a “critical habitat” for a number of endangered species that live in the watershed like the Delta smelt and Chinook salmon. The Central Valley Project (“CVP”) is one of many Bureau of Reclamation water projects that divert northern California’s water from this watershed to Central Valley farmers. However, while these diversions provide necessary water to the agricultural industry, they simultaneously diminish the survival of endangered fish species.

Currently, environmentalists use the Endangered Species Act as the basis for lawsuits seeking to reduce the amount of diverted water. Reducing diversions helps fish species by inhibiting the spread of disease, lowering river temperatures to promote breeding, and increasing the optimal habitat range.

However, disputes arise when there is not enough water to satisfy user demands and protect endangered species at the same time. Drought has exacerbated this problem. For instance, the National Oceanic and Atmospheric Administration has found that recent weather patterns have caused the worst drought in America since 1956. Farmers have responded with increasing challenges to fish protection in order to receive their contractual water allocations from the state and federal water projects. For farmers, limitations on water supply create dire economic consequences, primarily felt by most Americans in the form of increased prices.  Additionally, farmers facing restrictive water allocations react by pumping water from wells, fallowing lands, and switching crops to less water-intensive plants. These usage restrictions negatively affect job creation, access to credit, air pollution, and consequently, the economic viability of central valley farming.

However, there are also economic consequences in satisfying cities’ and farmers’ demands for water.  For example, when salmon fisheries were closed due to lack of water during the early 2000s, California’s economy lost about $150 million.

This year, the drought has stretched beyond California affecting mid-west farmers. As grains become more expensive due to increases in water prices, farmers that rely on these grains to feed their livestock cannot afford to pay these skyrocketing prices, so they pass the expense along to consumers.

The constant polarization of this controversy has served only to make these water allocation disputes more adversarial than necessary. California has to recognize that choosing sides cannot be a viable solution going forward. Interests must be balanced to accommodate California’s growing water demand. If such a balanced solution is not reached, the consequences could be drastic going forward; especially considering California’s population is expected to exceed 40 Million by 2018.

California Governor Jerry Brown’s administration has proposed a plan to try to build a “peripheral canal” around the Delta to satisfy both water users and environmentalists. This next step in California’s water battle is an extensive environmental undertaking with the potential to restore many endangered species populations. However, the project also has a significant price tag ranging from 17 to 50 Billion dollars. The potential gains are plentiful, but critics argue that the price is too high and the positive effects are too uncertain.

Despite these concerns, it’s important that California moves forward in developing a solution that satisfies farming and environmental stakeholders rather than keeping the status quo. Policy makers must recognize that leaving controversial decisions such as this to the judicial system, as has been the tendency in the past, only undermines the state’s long term interests by creating long litigation and leaving important policy decisions to a judiciary ill-suited for the task.

  • Environmentalists (what a name) are not the ones who restrict water, it is the government that does so, and the people who care about the planets’ life sometimes use lawsuits to get the government to follow its own stated policies.

  • Richard,

    I wanted to address your concerns in appreciation of you taking the time to read my article. When using the dictionary term “Environmentalists” I was of course generalizing a wide range of individuals concerned with the environmental impact of human activities. Although I would have enjoyed elaborating on the wide array of the specific groups bringing actions against the different governmental agencies, I felt using this term was necessary in order to keep this short article succinct and to the point.

    When I was referencing “environmentalists who seek to reduce water allocations,” I in no way meant to imply that they are the only entities who do so. For example, government agencies like NMFS (National Marine Fishery Service) or FWS (Fish and Wildlife Service) do reduce water flows to Central Valley farmers based on their delegated power as executive agencies to effectuate endangered species protection. However, when “Environmentalists” feel these reductions are not sufficiently protective of endangered species they sue for injunctive relief in order to restrict water flow to a level they feel adequate.

    The biggest problem in this conflict is determining what the government’s “stated policies” actually mean, especially when there is a conflict between the language in statutes protecting species under the ESA (Endangered Species Act) and protecting human populations under NEPA (National Environmental Policy Act). If they conflict, what federal statute should take precedence? The Supreme Court in TVA v. Hill said the ESA does, however recent judicial decisions in California, The Consolidated Salmonid Cases, have held otherwise.

    Also, there is more dispute over the evidence that supports agency decisions to protect an “endangered” species. Great arguments to make in court are structured to make these “clear policies” effectively unclear. For example, how can an agency definitively know if a species is endangered? Will water restrictions help salmon/smelt populations actually recover? What if they don’t? What if the government agency is being environmentally biased? What if these water restrictions are unnecessarily harsh? What if the scientific studies are wrong? These are all questions argued in litigation, and there is no easy answer.

    A specific example of this is when FWS conducts ecosystem studies in its environmental impact analysis that cannot be 100% accurate due the scale of an ecosystem (versus in a confined laboratory) combined with the limitation of funds the agency can use to make the results as certain as possible. There is inherent “uncertainty” that is involved in these studies, and courts differ on what standard of deference they should show to the Executive agency’s expert opinions. Under the APA (Administrative Procedures Act) a decision by a court to overturn an agency decision (as in a water restriction by FWS) has to be based on the fact that the agency’s decision was “arbitrary and capricious.” Encompassed in this arbitrary and capricious standard is that if an agency does not use “the best science available” then a court is allowed to overturn their decision.

    Although this may seem like a very clear government “stated policy” there is significant uncertainty in how to interpret it. What is the best science? Who should determine it? The courts? The expert agency? What if there are conflicting scientific studies? What if the conflicting studies are done by an interested party? What if FWS conducts a study, makes a decision, then another “new” study is published. Is this new study the “best science”? Is FWS’s decision wrong?

    My point now, and in the article, was mainly to reveal this important conflict that is happening and create a discussion about the future of California’s policy choices. These controversial questions have been answered by the judicial system which, I personally believe, should not determine this policy choice because of their lack of accountability to the people of California. Whatever people’s personal beliefs, discussion on how we should move forward is productive. I myself am from the Central Valley and this issue affects me as much as the farmers and endangered wildlife that I both deeply care about.

    Thank you for your contribution. If you have any questions I would be happy to respond. Also, if you want to read the recent Consolidated Salmon/Smelt Case decisions, they are an excellent way to see how this controversy plays out in real life. The pleadings and court decisions should be available online for free.

    Sincerely,

    Chase Morello