How Imperial Valley Spends San Diego’s Cash for Water

I traveled to Imperial County last month to see what this desert farming community built with the cash San Diegans pay for some of its water.   

The latest thing is a small lake, eight times the length of an Olympic lap pool, built into the harsh, flat landscape. The hot wind whipped at the new reservoir’s surface so hard, waves of it almost breached the bare dirt rims of its chamber.  

Dozens of spectators squeezed beneath a nearby tent, the only respite from the glaring sun, to dedicate that pool in memory of Lloyd Allen. Allen was a controversial figure who, 20 years ago, spearheaded the sale of a large amount of Imperial Valley’s precious irrigation water to feed San Diego’s urban demand – known as the quantification settlement agreement, the biggest transfer of water from agriculture to urban use in California’s history. 

“He believed that because [Imperial Irrigation District] is the largest diverter of Colorado River we would always be looked at with envy and suspicion, and be under the microscope for water use,” said Jesse Silva, the former general manager of the district. “He felt the best way for the district to minimize that… was to negotiate a water conservation agreement under the best terms we could get. I think we accomplished that.” 

That deal didn’t leave Imperial Valley dry. Instead, San Diego’s infusion of cash pays for reservoirs like the Lloyd Allen that park more water near farm fields. The effect is efficiency. It takes about four days for Imperial Valley’s Colorado River water order to travel down from Hoover Dam. Sometimes farmers order more than they need. Or it rains in the watershed along the way. These reservoirs provide a place to hold any extra so it doesn’t flow to Mexico.  

Last year, San Diegans paid almost $148 million to the Imperial Irrigation District for what amounts to just over 40 percent of San Diego’s water supply. That funds about half of the Imperial Irrigation District’s budget on the water side, an agency that operates almost debt free. (It also operates a public energy utility with an over $775 million budget.) And it was the San Diego deal that paid $5.7 million for this reservoir.  

Actually, it was San Diego water ratepayers. They got unprecedented water reliability, but it cost them. Now the 3.3 million residents the San Diego County Water Authority serves are staring down more than $2 billion in debt and some huge water rate increases.  

The water San Diego buys from Imperial Valley is some of its most expensive supply. A few San Diego political leaders have suggested the Water Authority sell off that water, arguing that the region doesn’t need all of it as rates continue to rise despite San Diegans using less. 

“The top priority for the Water Authority needs to be looking at options to mitigate rates as (water districts) roll off,” said Jack Bebee, general manager of the Fallbrook Public Utility District, whose customers will vote Nov. 7 on whether to leave Water Authority in search of cheaper water from Riverside County. If water demand doesn’t increase, Bebee is concerned the region will be required to buy water it doesn’t need. That includes the Water Authority’s most expensive source, desalinated ocean water from a plant in Carlsbad.  

The city of San Diego, the Water Authority’s biggest customer, also suggested reassessing the need for some of these water supply contracts in a 2021 letter. The almost 10 percent rate increase the Water Authority was predicting back then for 2023 indeed came to pass.

San Diego residents and businesses are buying about 40 percent less water than they did in 2010. They learned to conserve. And the Water Authority will sell even less once water districts start recycling and drinking their own wastewater. For example, the city of San Diego expects to generate half of its water demand this way by 2035. And Oceanside and a bloc of eastern San Diego County water agencies began building their own, too.   

The Water Authority’s new leader isn’t interested in getting rid of the Imperial Valley water contract which will be up for renewal in 2047. It’s cheaper than recycled sources being built now, general manager Dan Denham has said. He’s interested in dealing some of its supplies across the West or attracting outside investors to help curb the costs of desal water. But a lot of rules would have to change to allow San Diego to step into the water trading space – a distant reality at present.  

So, for now, San Diego will trade cash for water supplies at a high price. It’s a very lucrative arbitrage for Imperial County. Imperial Valley farmers pay some of the cheapest prices for Colorado River water around, $20 an acre foot (enough to cover one acre of land one foot deep). San Diego pays the Imperial Irrigation District $730.10 for that same acre foot of water.  

They pay such low prices because they don’t need a lot of infrastructure to move Colorado River water into Imperial Valley farms. It works pretty much the same way as it did in the early 1900s when the valley’s first farmers dug canals and ditches that flood fields by gravity. But as the Colorado River’s biggest single user, the Imperial Irrigation District will inevitably be under the microscope when drought strikes the West again. 

And so, Imperial Valley is gearing up to add more water storage – and attract new investments beyond San Diego.  

The Lloyd Allen isn’t very big as reservoirs go. It holds only about 40 acre-feet of water. That’s peanuts compared to the 3.1 million acre feet those farmers are entitled to from the Colorado River each year which fuels its $2.6 billion agricultural industry. 

The region’s first reservoir, built in 1976, was smaller than the Lloyd Allen reservoir. The Imperial Irrigation District built another 10 through the 1990s, no larger than 476 acre feet. Come 2009, as part of the deal with San Diego, Imperial Valley built a 1,200 acre-foot reservoir off the All-American Canal (the Colorado River lifeline built between Imperial Valley and Yuma, Arizona where the river naturally runs).  

A year later, the federal government built the massive, 8,000-acre-foot Warren H. Brock reservoir. Urban water users like Las Vegas, Los Angeles and Arizona invested millions of dollars into that storage lake because they benefit from it too. If the parties don’t use all their water, it flows down to the Brock Reservoir for storage. In return, they can pull extra out of Hoover Dam for storage.  

This year the federal government is chipping in for yet another Imperial Valley reservoir – a 2,100 acre-foot pool on barren desert land near the All-American Canal.  

What at first looked to me like an out-of-place dusty pond in the middle of the desert, reservoirs like the one dedicated in Allen’s memory are representative of a changing Imperial Valley. Farmers are no longer all throwing open gates to their irrigation ditches and flood-watering plants 24 hours a day.  

Farmers are using San Diego cash to precision-irrigate, leading to more exact water orders from the shrinking Colorado River and shorter watering time. Shields said the Allen reservoir will help farmers use 400 fewer acre feet of Colorado River water per year. 

Even Ronnie Leimgruber, an outspoken Imperial Valley farmer who opposed giving water away to San Diego, admitted it while standing over the bare rows of his dehydrated onion plot. 

“The San Diego transfer has made my farm way more efficient than it was 20 years ago,” he said. “It hasn’t made me more money. It’s caused me more headaches and a lot more management. But my farm is a lot more productive than it used to be.”