Dry Southern California Offers Northern Farmers Top Dollar for Water

Irrigation water runs along a dried-up ditch between the rice farms to provide water for the rice fields in Richvale, Calif.
Jae C. Hong | AP
Irrigation water runs along a dried-up ditch between the rice farms to provide water for the rice fields in Richvale, Calif.

As California continues to endure its historic drought, a huge water district in the southern part of the state is offering to pay what is thought to be its highest price ever for water from farmers in the north—more than double what it paid just five years ago.

"We're going to make a lot more selling the water than planting the rice," Lance Tennis, whose family owns about 900 acres of farmland in southern Butte County, about 80 miles north of Sacramento, said Tuesday. "This is a huge deal."

The offer from the Metropolitan Water District of Southern California and others to buy water from the Sacramento Valley for $700 per acre-foot reflects how dire the situation is as the state suffers through its fourth year of drought. In 2010 — also a drought year — it bought water but only paid between $244 and $300 for the same amount. The district stretches from Los Angeles to San Diego County.

Read more from NBC News:
Landscaper: Ditching Green Lawns Will Help Save Water
NASA: California Down to One Year Supply of Water
El Nino Finally Arrives But Too Late for Drought-Stricken California

'We're not water sellers, we're farmers'

"That's where the water is available," said Bob Muir, spokesman for the Metropolitan Water District. The 100,000 acre-feet of water being sought is a relatively small amount, and makes up about 2 percent of typical water demand in the region, he said. It still won't stave off possible mandatory restrictions this summer, he said.

"Believe me, every drop of water counts in this year or any drought year," said Muir. He said he believes the Metropolitan Water District has never paid a higher price in a sale like this one.

Read MoreWorst droughts in 1,000 years may hit United States

The water district earlier this month approved spending up to $71 million to buy water from nine districts in the Sacramento Valley. An acre-foot of water is almost 326,000 gallons of water, enough for two Southern California households for a year.

The offer is a hard one to turn down for farmers like Tennis, who also sits on the Western Canal Water District Board. Farmers can make around $900 an acre, after costs, growing rice, Tennis said. But because each acre of rice takes a little more than 3 acre-feet of water, they could make around $2,100 by selling the water that would be used.

Read MoreCalifornia not ready for big quakes, and they're coming

'We're going to make a lot more selling the water than planting the rice.'

The Western Canal Water District has set a cap that no more than 20 percent of farm acres can be fallowed in order to sell the water to the southern parts of the state, because it doesn't want to wreck the local economy — which depends on rice farming — or give up its spot in foreign markets.

"If you go the short-term option, what's going to happen going forward?" said Ted Trimble, general manager for the Western Canal Water District. "It's going to be pretty tricky getting that industry back. If you lose those markets, they'll go get their rice from somewhere."

This week a NASA scientist estimated that California may only have a year of water left, and this year some parts of the state recorded the driest January since records have been kept. Snow in the Sierras, upon which the state depends to refill reservoirs, ranged from between 16 and 22 percent of normal levels, and snow statewide is just 19 percent of normal levels, the state Department of Water Resources said this month.

Read More2014 California drought was bad. 2015 will be worse

The State Water Resources Control Board on Tuesday extended water restrictions, limiting the number of days people can water lawns and forcing restaurants to only give water to those who ask for it, among other measures.

The water purchase may be cancelled in some areas if the selling districts end up with shortages of their own. If the Western Canal Water District doesn't get a full allotment of water from the state, the deal is off, Trimble said.

So far the runoff from Feather River into Lake Oroville, which is used by the state to see how much water the region should receive, is "right at that threshold" for a full amount, he said. But the decision won't be made for another three weeks, and the forecast doesn't look good. "This thing may very well go away," he said.

If the deal is made, Tennis said farmers like himself will treat it as a windfall rather than a long-term enterprise.

"We're not water sellers, we're farmers," he said.