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Los Angeles Department of Water and Power
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As the morning haze peeled off the northern corner of the San Fernando Valley, Fred Barker walked along remnants of an engineering marvel that transformed a dusty railhead into a metropolis — rusting pipes, wooden walkways and a concrete spout that wound serpent-like down a hillside.

One hundred years ago — Nov. 5, 1913 — 40,000 people gathered on this spot in Sylmar to watch the water arrive for the first time from the Owens Valley.

Barker, an engineer with the Los Angeles Department of Water and Power, trudged a few yards up the hill.

“This is the exact spot,” he said.

At 1:15 p.m. that day, William Mulholland, the city’s chief water engineer, gave a signal, and crews turned two steel wheels, opening gates that sent the first sparkling water into the waiting San Fernando Reservoir.

“There it is — take it,” Mulholland said to the cheering crowd.

It took 5,000 workers five years to complete the $23-million project, which was excavated with dynamite, hand shovels and mule power in rocky canyons and searing desert expanses.

The job — completed on time and under budget — required 215 miles of road, 280 miles of pipeline, 142 tunnels, more than 1 million barrels of cement and 6 million pounds of dynamite.

Mulholland’s prophecy that “whoever brings the water will bring the people” was soon fulfilled.

The Los Angeles Aqueduct — powered by gravity alone as it tapped the snows of the Sierra Nevada more than 200 miles to the north — ensured reliable irrigation for farms and ranches and nurtured a galaxy of prosperous Southern California suburbs and industrial centers.

Like a magnet, it pulled in millions of people from around the country, offering them new jobs, communities and lifestyles.

In 1913, the city covered 107 square miles. Seven years later, it had expanded to 364 square miles with a population of nearly 800,000. Today, Los Angeles covers 465 square miles with a population of nearly 4 million.

Mulholland’s “Big Ditch” also sparked the long conflict between Los Angeles and the Owens Valley.

The stealth and deception used to obtain the region’s land and water rights became grist for books and movies that portrayed the dark underbelly of Los Angeles’ formative years, and inspired deep-seated suspicions about the city’s motives that linger to this day.

The aqueduct left no more water for the 62-mile-long Lower Owens River. It also denied water to the river’s massive catch basin, Owens Lake, which evaporated into salt flats prone to choking dust storms.

“The Los Angeles Aqueduct is as much a product of will and innovation as of sneakiness and greed,” said Jay Lund, a professor of civil and environmental engineering and director of UC Davis’ Center for Watershed Sciences.

A map showing key locations along the aqueduct's path.Buying or selling water faces serious hurdles. An infamous episode in California can help us understand what they are so that entrepreneurs can begin to overcome them.

Unfortunately, The Salton Sea: Death and Politics in the Great America Water Wars proves otherwise.

Gary D. Libecap with the Hoover Institution and economic historian at the University of Arizona, studied the Los Angeles Water Board purchases of land and water in Owens Valley, California, between 1905 and 1935. Los Angeles transported the water across the state through the Los Angeles Aqueduct.

Owans ValleyToday, these purchases are viewed as theft. In the words of the Economist magazine (July 19, 2003, p. 15), they are the “most notorious water grab by any city anywhere” and their legacy has “poisoned subsequent attempts to persuade farmers to trade their water to thirsty cities”.

In “Rescuing Water Markets: Lessons from Owens Valley,” Libecap reveals that the emotion surrounding the trades has distorted the facts. Yes, property values in Los Angeles grew enormously as a result of the purchases—Los Angeles County land and buildings increased in value by nearly 600 percent between 1900 and 1930. But so did the values in Owens Valley! Although the property values were much smaller in total, they, too, rose by about 600 percent. That increase far exceeded the increase in property values in nearby agricultural counties that kept their water.

Owens Valley farming changed from crops to livestock, but the value of agricultural production did not fall much between 1910 and 1930. The Owens Valley landowners “did better by selling to Los Angeles than remaining in irrigated agriculture,” says Libecap.

Initially, both Los Angeles officials and the farmers wanted to make deals. The fast-growing city needed water and the Owens Valley farmers saw financial opportunity in selling their land. But the negotiations proved contentious, bitter, and occasionally violent. Libecap says that the sordid image surrounding the trades began to develop after negotiations stalled and Owens Valley farm- used negative publicity to pressure the city to pay higher prices.

At the same time, there were genuine problems in reaching deals. These were practical hurdles that any water trades must face. In economists’ lingo, they are: valuation disputes, bilateral monopoly, and third party effects.

Owens Valley2

Valuation Disputes

Looking back on the Los Angeles/Owens Valley trades, we should not be surprised at the difficulty the two parties had in agreeing on the value of the lands and the water they contained. Farmers knew that their water would help make Los Angeles enormously rich, so they wanted to sell their land at prices reflective of that wealth. But Los Angeles officials thought themselves generous because they were offering more than the going price for land in Owens Valley.

Bilateral Monopoly

Each group held something of a monopoly. Only a single buyer—the Los Angeles Board—was going after Owens Valley land. And Owens Valley farmers formed sellers’ pools that attempted to hold a united front on prices. Negotiations under these circumstances “apt to drag on because there are few options for either the buyer or the seller,” says Libecap.

Owans Valley

Third-Party Effects

When farm prices fell during the agricultural depression of the 1920s, people in the valley blamed the drop on the sale of farmland—even though few of the sales had been concluded by that time.

Similar difficulties are likely to crop up in water trading today. Now that the problems are identified, says Libecap, “the challenge is for entrepreneurs to come up with ways to overcome them.”



RESULTS: Groundwater Quality in the Owens Study Area

Inorganic Constituents with Human-Health Benchmarks

Trace elements are naturally present in the minerals in rocks and soils, and in the water that comes into contact with those materials. In the Owens study area, trace elements with human-health benchmarks were present at high concentrations in 15% of the primary aquifers, on an areal basis, and at moderate concentrations in 13%. Of the 17 trace elements with human-health benchmarks analyzed in this study, 4 were detected at high concentrations: arsenic, boron, fluoride, and molybdenum.

Radioactivity is the release of energy or energetic particles during structural changes in the nucleus of an atom. Most of the radioactivity in groundwater comes from decay of naturally occurring isotopes of uranium and thorium that are present in minerals in the aquifer. In the Owens study area, radioactive constituents were found at concentrations above benchmarks in 10% of the primary aquifers, and at moderate concentrations in 15%. Six radioactive constituents were analyzed; of these, gross alpha radioactivity and uranium were detected above human-health benchmarks. Radon was detected at values within one-half of the proposed upper benchmark.

Nutrients, such as nitrate and nitrite, are naturally present at low concentrations in groundwater. High and moderate concentrations generally occur as a result of human activities, such as fertilizer application, livestock waste, or septic-system seepage. Of the three nutrients with health-based benchmarks analyzed, none were detected at concentrations above benchmarks.


Gary Libecap | PERC – The Property and Environment Research

The L.A. Aqueduct at 100 – Los Angeles Times – Graphics

The Owens ValleyWater Grab‘ | PERC – The Property and…

The Salton Sea: Death and Politics in the Great America Water Wars

The Salton Sea Fades Away, And A Town With It | lisaleaks

Groundwater Quality in the Owens Valley, California – USGS

Owens Valley – Wikipedia, the free encyclopedia

California Water Wars