Dubbed the "Airbnb for water," one startup is trying to make it easier for farmers to sell excess water to municipal, industrial, conservation or other agricultural users.
(TNS) -- Tech startups have made millions turning spare bedrooms into hotel rooms, parked cars into rentals, and pocket change into loans.
So why can’t technology help California’s farmers sell their extra water to other people who need it?
That’s the business model behind Denver’s SWIIM, a startup that tries to make it easier for farmers to sell excess water to municipal, industrial, conservation or other agricultural users.
It’s something like an Airbnb for water, and it’s coming to some drought-stricken California counties this year.
Under the state’s century-old water laws, certain farmers who don’t use up their yearly allotment of water risk getting less water from the state in the future.
Some farmers lease their unused water, but many say an overcomplicated transfer system makes it difficult.
Conserving the water won’t degrade water rights, as long as farmers show they’re truly cutting back — though proving it to authorities can be a burden.
Critics say this gives some farmers a perverse motive to overwater, as it’s the easiest way to avoid losing water rights.
“If anything, there’s a disincentive for conservation,” said Kevin France, SWIIM’s chief executive officer.
SWIIM, which stands for Sustainable Water and Innovative Irrigation Management, seeks to streamline the water transfer process, selling its service to farmers and water districts. Already operating in Colorado, the startup is working with Western Growers, a trade group, to start pilot programs in Kern County, the Sacramento Valley, the Imperial Valley and Coachella Valley this year.
Water transfers are generally done on an ad-hoc basis, and when it comes to leasing water that’s conserved, measurement is a problem for authorities, said Newsha Ajami, the director of urban water policy at Stanford’s Water in the West program.
“We barely have data on how much water everybody is using. It’s very hard to see to create a baseline to say this is how much everyone is using or this is how much this farm is using,” she said.
SWIIM’s process begins with software. Farmers enter detailed information about past use of their land and water rights, then indicate what they’re willing to do to use less water.
Using that information, an algorithm developed jointly with the U.S. Department of Agriculture tells farmers how they can conserve water. That could mean switching from water-intensive alfalfa, largely used to feed animals, to corn, a less thirsty choice, or moving from inefficient sprinklers to more targeted drip irrigation.
“Most farmers will tinker with it until they get it exactly as they want,” France said.
Farmers pay between $30 and $80 an acre, depending on the services they opt into. According to the Agricultural Council of America, the average U.S. farm is 441 acres, which would put SWIIM’s cost between $13,000 and $35,000.
The software helps farmers conserve water and easily prove it to regulators, allowing them to lease their excess to municipalities, industrial users or other farmers.
In Colorado, France said the average farmer using SWIIM has made an extra $200 to $500 per acre by leasing water they’ve conserved. Instead of having one revenue stream from farming, farmers have two: one from farming and one from leasing water.
“It’s been an educational tool that allows us to better plan and better understand results,” said Mark Goldstein, who manages a portfolio of companies in Colorado that includes agriculture. Being able to budget water to sell can also help create a buffer when commodity prices swing, he said.
Water managers benefit from SWIIM’s sensors and satellite imagery, allowing them to plug in to the system and see how much water is available — and whether any farmers are gaming the system. For authorities, SWIIM would normally cost $15,000 per year, though France said he has given it to most districts for free.
In a heavily regulated field, one of SWIIM’s advantages is that it works within existing laws, France said. As such, it’s unlikely to face legal battles of other sharing economy companies like Airbnb and Uber have when it arrives in California.
Water transfers as a way to preserve water rights are already happening in the state, said Andy Sawyer, assistant chief counsel at the California State Water Resources Control Board, the organization that allocates water rights.
“California law encourages water transfers as a means of providing for more efficient use of water,” Sawyer said. “The theory is if you have a willing buyer and a willing seller and they’re willing to transfer, it’s probably because the buyer is getting greater economic use out of it than the seller.”
Also important, France says, is keeping acres under cultivation. As of last summer, 428,000 acres of irrigated cropland went out of production in the Central Valley, Central Coast and Southern California, because of the drought, according to a UC Davis study.
That was caused, in part, by farmers letting their fields go fallow and leasing their water for greater profit. By conserving water for lease, France says his company can keep more farmland under cultivation.
“It’s not dry up the farm, move the water. It’s grow more, conserve, and free up a portion of the water,” he said.
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