Market part of your water, as a lease or sale, or divert it all and don’t risk losing your water right? That’s the question for thousands of Sacramento Basin smaller districts and individual diverters of even large water rights. The market for water can bring the water right holder $25 – $1,000 per acre-foot, depending on whether the buyer is a nearby neighbor or a San Joaquin Valley water district in a dry year.
When I was a DWR bureaucrat, my supervisor was experienced and wise. When he would talk to people at public meetings, or to neighbors who knew he was in the water world, sooner or later the subject of “sending all our water to Southern California” came up. His reply was, “You’re right, Feather River water is going to L.A., Sacramento River water is going to the San Joaquin Valley, and the excess of both goes through the Delta out to the Pacific Ocean. And you know what? Gravity does the job, not the government. If you want to keep water in Northern California, there have to be more dams.” Some folks understood and changed their minds, others kept on complaining.
There are more reservoirs in the Sacramento Basin. They aren’t made of concrete, they don’t do flood control, and they’re not run by the state or federal governments. These reservoirs are the water evaporated, infiltrated, leaked, returned unused to the stream, or wasted at the diversions of many individuals, and some water and irrigation districts. Some of the excess water makes it back to streams, and some of it goes to the next diverter down the stream, but much is lost in the short term and unavailable for use by humans or the environment.
Yes, many surface water flood systems were designed this way, so runoff from one irrigator goes into the canal to the next. However, more flooded pastures are being leveled or converted to pivots to grow hay. Many other pastures are becoming orchards, with tight controls on incoming e coli from cattle or unwanted pesticides or herbicides. There is a huge opportunity to increase efficiency (pipe, sprinklers, etc), maintain better water quality.
How can anyone get a yield, or excess water out of those reservoirs? Lining ditches, converting to sprinkler instead of flood irrigation, changing the land use to a crop that has both higher value to the owner, and lower water use. 
I’m not saying that’s a bad thing that this excess water exists. In fact, it has the potential to do a lot of good, both for the upstream district, and for fisheries, and for other environmental needs, and for water users downstream or south of the Delta who don’t have enough water.
What is the good for the district or individual who is selling or leasing the water? Well, there is water not being directly used by stock, or being applied to crops, or directly needed for groundwater recharge. If some of that water can be saved, it can remain in the stream and used for all the other needs. Agricultural, urban, and environmental water users will pay for the saved water. That water can also bring in a lot of cash, that can be used for further farm or ranch efficiency, general improvements, or cash to keep in the bank.
Why don’t more irrigators with excess water market it? The number one reason is fear that somehow, California or the Feds will eventually take away the water right. That is a concern, but there are a bunch of people selling water right now who will tell you that their water right is still rock solid. The second reason is that we have always irrigated this way, so why should we change? Both the fear of loss and the unwillingness to change can be overcome with just a little bit of self-education. Plenty of folks have overcome their lack of knowledge to put together some valuable water deals.
Lately, the Sustainable Groundwater Management Act, SGMA, is throwing in a lot of uncertainty. It’s true that radically changing diversion practices might change groundwater recharge, so that pumped water is not fully replenished. So, put together a small deal and see how that goes. Call it a trial for one or a few years. That will provide data on what the groundwater changes were due to the water deal.
What about those folks in the San Joaquin Valley who really need the water, badly? There is an element of taking care of our neighbor, and it ought to be part of the consideration. Who is our neighbor? Anyone that we can or do benefit.
There is a lot of opportunity out there, folks.