California Water Wars Escalate: Government Orders Massive Supply Cuts To Most Senior Rights Holders



Just two weeks after California's farmers - with the most senior water rights - offered to cut their own water use by 25% (in an attempt to front-run more draconian government-imposed measures), AP reports that the California government has - just as we predicted - ignored any efforts at self-preservation and ordered the largest cuts on record to farmers holding some of the state's strongest water rights. While frackers and big energy remain exempt from the restrictions, Caren Trgovcich, chief deputy director of the water board, explains, "we are now at the point where demand in our system is outstripping supply for even the most senior water rights holders."

With "the whole damn state out of water," AP reports State water officials told more than a hundred senior rights holders in California's Sacramento, San Joaquin and delta watersheds to stop pumping from those waterways.



The move by the State Water Resources Control Board marked the first time that the state has forced large numbers of holders of senior-water rights to curtail use. Those rights holders include water districts that serve thousands of farmers and others.

The move shows California is sparing fewer and fewer users in the push to cut back on water using during the state's four-year drought.

"We are now at the point where demand in our system is outstripping supply for even the most senior water rights holders," Caren Trgovcich, chief deputy director of the water board.

The order applies to farmers and others whose rights to water were staked more than a century ago. Many farmers holding those senior-water rights contend the state has no authority to order cuts.

The reductions are enforced largely on an honor system because there are few meters and sensors in place to monitor consumption.

California already has ordered cuts in water use by cities and towns and by many other farmers..

The move Friday marked the first significant mandatory cuts because of drought for senior water rights holders since the last major drought in the late 1970s. One group of farmers with prized claims have made a deal with the state to voluntarily cut water use by 25 percent to be spared deep mandatory cuts in the future.

The San Joaquin River watershed runs from the Sierra Nevada to San Francisco Bay and is a key water source for farms and communities.

Thousands of farmers with more recent, less secure claims to water have already been told to stop all pumping from the San Joaquin and Sacramento watersheds. They are turning to other sources of water, including wells, reservoirs and the expensive open market.

Some farmers have built their businesses around that nearly guaranteed access to water.

Jeanne Zolezzi, an attorney for two small irrigation districts serving farmers in the San Joaquin area, says she plans to go to court next week to stop the board's action. She said her clients include small family farms that grow permanent crops such as apricots and walnuts without backup supplies in underground wells or local reservoirs they can turn to when they can't pump from rivers and streams.

"A lot of trees would die, and a lot of people would go out of business," said Zolezzi. "We are not talking about a 25 percent cut like imposed on urban. This is a 100 percent cut, no water supplies."

California water law is built around preserving the rights of such senior-rights holders. The state last ordered drought-mandated curtailments by senior-water rights holders in 1976-77, but that order affected only a few dozen rights holders.

As NASA concluded previously, as difficult as it may be to face, the simple fact is that California is running out of water — and the problem started before our current drought. NASA data reveal that total water storage in California has been in steady decline since at least 2002, when satellite-based monitoring began, although groundwater depletion has been going on since the early 20th century.



Right now the state has only about one year of water supply left in its reservoirs, and our strategic backup supply, groundwater, is rapidly disappearing. California has no contingency plan for a persistent drought like this one (let alone a 20-plus-year mega-drought), except, apparently, staying in emergency mode and praying for rain.
In short, we have no paddle to navigate this crisis.

First, immediate mandatory water rationing should be authorized across all of the state's water sectors, from domestic and municipal through agricultural and industrial. The Metropolitan Water District of Southern California is already considering water rationing by the summer unless conditions improve. There is no need for the rest of the state to hesitate. The public is ready. A recent Field Poll showed that 94% of Californians surveyed believe that the drought is serious, and that one-third support mandatory rationing.

Second, the implementation of the Sustainable Groundwater Management Act of 2014 should be accelerated. The law requires the formation of numerous, regional groundwater sustainability agencies by 2017. Then each agency must adopt a plan by 2022 and “achieve sustainability” 20 years after that. At that pace, it will be nearly 30 years before we even know what is working. By then, there may be no groundwater left to sustain.

Third, the state needs a task force of thought leaders that starts, right now, brainstorming to lay the groundwork for long-term water management strategies.Although several state task forces have been formed in response to the drought, none is focused on solving the long-term needs of a drought-prone, perennially water-stressed California.






If you look at the track record of the interventionists you might think they would pause before taking on more projects. Each of their past projects has ended in disaster yet still they press on. Last week the website Zero Hedge posted a report about hacked emails between billionaire George Soros and Ukrainian President Poroshenko.
Soros is very close to the Ukrainian president, who was put in power after a US-backed coup deposed the elected leader of Ukraine last year. In the email correspondence, Soros tells the Ukrainian leadership that the US should provide Ukraine "with same level of sophistication in defense weapons to match the level of opposing force." In other words, despite the February ceasefire, Soros is pushing behind the scenes to make sure Ukraine receives top-of-the-line lethal weapons from the United States. Of course it will be up to us to pay the bill because Ukraine is broke.
But Soros seems to have the money part covered as well. In an email to Ukrainian leaders, he wrote that Ukraine's "first priority must be to regain control of financial markets." Soros told Poroshenko that the IMF would need to come through with a $15 billion package, which was confident would lead the Fed to also come through with more money. He wrote: "the Federal Reserve could be asked to extend a $15 billion three months swap arrangement with the National Bank of Ukraine. That would reassure the markets and avoid a panic."
How would the Fed be convinced to do that? Soros assured Poroshenko: "I am ready to call Jack Lew of the US Treasury to sound him out about the swap agreement."
So George Soros will use his influence in the US government to put the American people on the hook for a bankrupt Ukraine -- forcing us to pay for weapons, more military training, and Ukraine's crippling debt.
Who is thrilled with Soros' drawing the US government into more intervention in the region? The military-industrial complex for one is happy at the prospect of big weapons "sales" to Ukraine. The bankers are thrilled. Washington power-brokers are thrilled. There is something in this for everyone who is politically well-connected. The only losers are the people who will be forced to pay for it, the American taxpayers.
No one seems to ask why we are involved in Ukraine at all. Is it really any of our business if the east wants to break away from the west? Is it a vital US interest which flag the people wish to hang in Donetsk?
One thing we should be sure of is that Ukraine's debt will not be paid. As in other bailouts, much of it will be transferred to the US taxpayer through the IMF and the Federal Reserve. All of this is only possible because of the perception that the dollar is still the world's reserve currency. But this too is coming to an end. US military and financial interventionism worldwide are only speeding up the process.








You've probably read that there is a war on cash being waged on various fronts around the world. What exactly does a war on cash mean?
 
It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.
 
These limits are broadly called capital controls.


Why are governments suddenly declaring war on physical cash, the oldest officially issued form of money?
 
The first reason: physical cash has the potential to evade both taxes as well as officially sanctioned theft via bail-ins and negative interest rates. In short, physical cash is extremely difficult for governments to steal.
 
Some of you may find the word theft harsh or even offensive. But we must differentiate between taxes—which are levied to pay for the state’s programs that in principle benefit all citizens—and bail-ins, i.e. the taking of depositors’ cash to bail out banks that became insolvent through the actions of the banks’ management, not the actions of depositors.
 
Bail-ins are theft, pure and simple.  Since the government enforces the taking, it is officially sanctioned theft, but theft nonetheless.
 
Negative interest rates are another form of officially sanctioned theft.  In a world without the financial repression of zero-interest rates (ZIRP—central banks’ most beloved policy), lenders would charge borrowers enough interest to pay depositors for the use of their cash and earn the lender a profit.
 
If borrowers are paying interest, negative interest rates are theft, pure and simple.
 
Why are governments suddenly so keen to ban physical cash? The answer appears to be that the banks and government authorities are anticipating bail-ins, steeply negative interest rates and hefty fees on cash, and they want to close any opening regular depositors might have to escape these forms of officially sanctioned theft.  The escape from bail-ins and fees on cash deposits is physical cash, and hence the sudden flurry of calls to eliminate cash as a relic of a bygone age—that is, an age when commoners had some way to safeguard their money from bail-ins and bankers’ control.
 


Benefits To Banks And The Government Of Eliminating Physical Cash

 
The benefits to banks and governments by eliminating cash are self-evident:
  1. Every financial transaction can be taxed
  2. Every financial transaction can be charged a fee
  3. Bank runs are eliminated
In fractional reserve systems such as ours, banks are only required to hold a fraction of their assets in cash.  Thus a bank might only have 1% of its assets in cash. If customers fear the bank might be insolvent, they crowd the bank and demand their deposits in physical cash. The bank quickly runs out of physical cash and closes its doors, further fueling a panic.
 
The federal government began insuring deposits after the Great Depression triggered the collapse of hundreds of banks, and that guarantee limited bank runs, as depositors no longer needed to fear a bank closing would mean their money on deposit was lost.
 
But since people could conceivably sense a disturbance in the Financial Force and decide to turn digital cash into physical cash as a precaution, eliminating physical cash also eliminates the possibility of bank runs, as there will be no form of cash that isn’t controlled by banks.
 
While the benefits to banks and governments of banning physical cash are self-evident, there are downsides to the real economy and to household resilience.