Originally Posted by
DJSapp
That works for one season when farmers are already locked in prior to knowing that the cost of water is going up.
...and then what happens when nobody will sign the contracts in the central valley for the next season because they'd all be operating at a loss? The commodity market explodes and the price shoots through the roof due to no supply (i.e. inelastic market, people gotta eat). Yes, the produce contracts are set annually, but my point was that if we were to shove the full price of water onto the farmers, they would push the price back into the market. It would lag as contracts expire, but they can't indefinitely operate at a loss without pushing back on the contracts. The commodity crops that can be grown elsewhere will diminish (corn, soy), but the CA specific performers (citrus, strawberries, avocados, etc) will see big price hikes.