MELISSA BLOCK, HOST:
Imagine if a gallon of milk went for $3 where you live, but an hour's drive away it would cost you $100. Well, something similar is happening right now in California with water used for irrigation. Because of the drought, some farmers are paying 100 times more for water than others. It's provoking debate about whether water in California should move more freely and be sold to the highest bidder.
NPR's Dan Charles has the story.
DAN CHARLES, BYLINE: The Bible says rain falls on the just and unjust alike, but in California's vineyards, orchards and vegetable fields, rain really doesn't fall much at all. Most of the water comes from far away - from melting snow in the mountains. Dams capture it, pumps and canals distribute it, and courts decide who gets to use it. In the end, there are water haves and have-nots.
Let's start with one of the haves - Allen Peterson, who grows almonds near the city of Turlock, California. A concrete-lined canal full of water runs right past his orchards.
ALLEN PETERSON: This water's coming from Lake Don Pedro, out of the Tuolumne River.
CHARLES: The Turlock Irrigation District started building dams on the Tuolumne more than a century ago. Now every farm in the district gets a share of the lake's water. This year, it's less than usual but still enough to grow a crop of almonds. That secure source of water is as much a part of Peterson's farm as the land. It's a family legacy.
PETERSON: My grandfather - people before him, even, you know, built this irrigation system. We came here 100 years ago and he worked on scraping canals, building this thing up. They sacrificed a lot to have this irrigation system here, and our land prices have reflected that ever since.
CHARLES: The land is expensive, but he gets his water pretty cheaply. Peterson is paying the district just under $30 this year for each acre-foot of water. That's enough water to cover an acre of land with a foot of water. But there are farmers on the other side of California's Central Valley this year who are paying much, much more.
Sarah Woolf, a farmer and water consultant here, helped arrange some of those deals.
SARAH WOOLF: We've had water that has sold upwards of $2,000 an acre-foot.
CHARLES: More than $2,000?
WOOLF: Yes. It was - I mean, it was horrible.
CHARLES: Woolf and I are standing in an almond orchard that's alive thanks to that expensive water. It's southwest of Fresno, part of the Westlands Water District. Westlands came late to California water party. It tapped into the state-wide water system just 50 years ago. And when there's not enough water for everybody, like this year, farmers here are the first to get cut off. Just to save his orchard, this farmer went looking for farmers outside Westlands who were willing to sell some of their water.
WOOLF: His first demand had to be - get enough water to keep the trees alive. And to some degree, I'll pay any price to do it.
CHARLES: Once they agreed on a price, the actual transfer of water was just a matter of aquatic bookkeeping. The seller gave up the right to draw some water from the state's aqueducts, and instead, this farmer was able to. But this kind of exchange does not happen very often. In some places, it's banned. The Turlock Irrigation District, for instance, does not allow farmers to sell any of their $30 water outside the district. So that's why farmers are paying such wildly different prices. The water's not allowed to move freely from one place to another.
Economist Richard Howitt, at the University of California, Davis, says that's really unfortunate. Irrigation water should be allowed to flow to the places where it's needed most, he says.
RICHARD HOWITT: It should be good for both producers and consumers to have more efficient use of our basic natural resource.
CHARLES: There are some physical barriers to moving the water around. Very few aqueducts and rivers run between water-rich areas like Turlock and thirsty areas to the west. But Howitt says that problem could be solved.
HOWITT: With small engineering changes, we could move the water from the east to the west, and move it from the $20 region to the $2,000 region.
CHARLES: But it's harder to overcome the emotional and political barriers, he says. For example, Allen Peterson, the farmer in Turlock says people just don't want to sell something that's so central to the life of farming communities.
PETERSON: If we sold our water off, the jobs would go away here too. There would be less commerce going on in our county.
CHARLES: Also, farmers don't want to raise any questions about their legal rights to water. Here's Richard Howitt, economist.
HOWITT: They are worried that if they sell water, they would be admitting that, quote-unquote, "they didn't need it."
CHARLES: And others might try to claim it. Environmentalists, for instance, would like to keep more water in California's rivers and wetlands. Sarah Woolf, the farmer and water consultant, says that's why farmers who do sell water sometimes won't admit it.
WOOLF: People are afraid, yeah. I think there's definitely a hush-hush, I don't want to talk about it, they may take my water away. And I don't blame them for that.
CHARLES: She says if California's water-rich farmers weren't worrying that somebody might take their water, they might actually be more willing to sell it, and everybody would benefit. Dan Charles, NPR News.