Agriculture and Water in the West: What does the Future Hold?

Thank you, Bill (Hume), and thanks to the Western States Water Council and the Western Governors’ Association for sponsoring this important meeting. It is an honor to represent the U.S. Department of Agriculture on this panel.

Good afternoon, everyone. It is a pleasure to be here today to talk about water. Water is one of the most important issues facing agriculture -- and society – today.

As a South Dakota rancher and farmer, I can talk first hand about water, and the lack thereof. The fact is, water availability is the defining characteristic of crop production, livestock production, and economic viability in the American West.

We must invest enough of our water resources in irrigation if we are to have good nutrition and food security for the American people. That is why it is so important to help farmers and ranchers irrigate in ways that conserve water and protect other natural resources.


Food and Agricultural Policy

It is significant that under this Administration, the Department of Agriculture has published a document on food and agriculture policy that makes, for the first time that I know of, a direct statement about the importance of water to agriculture policy.

This document lists several principles for conservation that are important for addressing water issues. I want to mention three of these principles this afternoon. First, the document lists conflicts over scarce water supplies as one of the major emerging issues to be addressed in the coming years. Second, it stresses the need to use a variety of technical assistance, incentive, compensation, and even set-aside programs as tools in a portfolio approach to agricultural policy. And third, it stresses the need for market-oriented solutions that stretch the Federal dollar, encourage private sector investment in conservation, and establish markets for the environmental goods and services produced by America’s farmers and ranchers.


Water Scarcity

So, how important is water to agriculture in the West, and how scarce is it? Let’s look at the numbers. Irrigated agriculture uses the most freshwater (90 percent) of any economic sector in the West. That means agriculture must be part of the solution to shortage problems.

In the West, three quarters of the cropland is irrigated. Nearly 80 percent of orchard sales come from irrigated land, as do two thirds of the sales of vegetables and potatoes. High-valued orchards, berries, vegetables, and nursery crops account for almost 60 percent of the West’s total value of sales from irrigated crops on just 15 percent of the land irrigated. Field and forage crops account for the remaining 40 percent of sales, but occupy 71 percent of the irrigated area.

The Department of Agriculture is looking at increased incentives and technical support for improved on-farm water management. Conservation programs will also play an important role in helping to solve water management issues.

But, agriculture isn’t the only reason we need lots of water in the West. We have more people in the West every day, and they have needs and desires that require more water: greater household use, more golf courses, more water-based recreation, more interest in wildlife. In addition, more groups are asserting water rights. For example, until recently, Tribal governments have not always claimed the maximum amount of water to which they are entitled by law and treaty. Increasingly, Tribes claim all the water they are entitled to.

In short, the winds of change are blowing with regard to water use. A changing world demands flexibility. Flexibility in water management, nutrient and pest management, and new products – agricultural and nonagricultural.


The Portfolio Approach

Fortunately, we have a portfolio of tools at USDA, with a myriad of programs to help farmers and ranchers conserve water and cope with drought -- and modify their operations so the repercussions are less when drought occurs.

Thanks to the 2002 farm bill and the administration’s support for funding farm bill programs, we have the tools to help farmers and ranchers reduce their dependency on water and to minimize the losses they sustain when water is scarce.
The Environmental Quality Incentives Program (EQIP) gives farmers and ranchers financial and technical assistance to install or implement conservation practices. Conservation of ground and surface water resources is a national program priority for EQIP. Since its authorization in 1996, more than a quarter of EQIP funds -- $350 million -- has gone to help producers install practices on water-conservation-related activities.

The Ground and Surface Water Conservation provision of the 2002 Farm Bill provides cost-share and incentive payments to producers to install practices which result in a net savings in surface or groundwater resources. Because of chronic water supply problems and persistent drought that has plagued the West, Federal financial and technical resources are being concentrated in key western watersheds, including the Klamath Basin in California and Oregon. We estimate that we are saving 20-30 percent through this investment.

Secretary Veneman has repeatedly authorized emergency haying of Conservation Reserve Program acreage in drought-effected States to provide forage for livestock.

President Bush recently announced a number of initiatives under the Conservation Reserve Program.

He directed the Secretary Veneman to enroll an additional 800,000 acres into the CRP to increase our protection of environmentally sensitive land, improve wildlife habitat, and improve and restore wetlands. The sign-up period ended last week. President Bush also directed Secretary Veneman to start a national dialog on how best to maintain and expand the benefits of the Conservation Reserve Program in the future. President Bush wants us to look for new ways to combine Federal, State, Tribal, and private efforts into an even more effective conservation movement in this country.

At the same time, President Bush announced an initiative to improve wildlife habitat on America’s agricultural lands. We will provide $125 million in financial assistance this year to help farmers make this happen. Sign-up will be from October 1 through December 31, 2004. This initiative will be really good for the northern bobwhite quail.

President Bush also announced an initiative that will help farmers and ranchers restore wetlands outside of the flood plain, and wetlands that are part of temporary, shallow lakes.

President Bush is the first President to achieve a net gain in agricultural wetlands. And, he has pledged to achieve a 3 million-acre gain in wetlands. It is going to take a lot of work in every State and the active participation of State agencies to reach that goal. But, working together, I am sure we can do it.

The President’s announcement in August included $200 million this year to help farmers and ranchers create an additional 250,000 acres of wetlands. Signup will run from October 1 until December 31, 2004.

Another program that provides help here in the West is the Emergency Conservation Program. This program provides emergency funding for farmers and ranchers to carry out emergency water conservation measures. In addition, as drought assistance, USDA can also provide supplemental feed, as well as emergency farm loans to cover losses. And, of course, there are Federal crop insurance and noninsured crop disaster assistance.

Rural Community Assistance

Other USDA Programs provide assistance to rural communities with their water needs. For example, the Rural Utilities Service provides Water and Waste Disposal Loans and Grants to municipalities, counties, special-purpose districts, Tribes, and not-for- profit corporations. USDA also offers Emergency Community Water Assistance Grants designed for rural communities with a significant decline in quantity or quality of drinking water.


Managing Water

An important part of the NRCS mission is to help farmers and ranchers and rural communities manage their water. NRCS helps farmers and ranchers manage and use water effectively, so they can stay in the agriculture business. We help them manage water on-farm to increase production, increase irrigation efficiency, maintain water quality, and avoid falling water tables.

USDA helps producers – and many people in this room -- make wise decisions by providing water supply forecasts based on our SNOTEL snowpack monitoring system in the mountain West and through our SCAN system for monitoring drought conditions.

These efforts will not be enough to solve the water shortage in the long run, because the forces of change in our nation are strong and long lasting. So we need a larger portfolio of tools -- one equipped to help solve the long-term issues of water scarcity and water quality as well as help mitigate the effects of drought. We also need more partners who are willing to help out.

The more tools we have and the more partners, the more NRCS will come to be a catalyst for conservation.


Water in the West

The West is ahead of the rest of the nation in developing tools and partnerships to address water shortages. In the West, we have been involved in a partnership called “Bridging the Headgate.” The partners include NRCS, the Bureau of Reclamation, the Western States Water Council, the National Water Resources Association, the National Association of State Conservation Agencies, and the National Association of Conservation Districts. Together, we are making great progress on the water issues in the West. Bridging the Headgate is an example of how various interests can work together to help end the turf wars of water.

Just last year, my boss, Mark Rey, USDA’s Under Secretary for Natural Resources and Environment and Lynn Scarlett, USDI’s Assistant Secretary for Policy, Management, and Budget signed a memorandum of understanding outlining several areas of collaboration between our departments related to land and water stewardship.

We also have an interagency Memorandum of Understanding with the Department of Interior covering Interagency Drought Response Teams that can respond quickly to emerging water supply shortages and to coordinate existing programs and services in order to maximize available resources in communities in need.

USDA is also supporting the Department of Interior’s Water 2025 Initiative in its efforts to raise public awareness of future water issues facing the western United States. Secretary Veneman has endorsed this effort to develop locally driven, practical solutions.

As a Federal agency, we can’t do much about the availability of water, population growth, or other factors beyond our control. But we can help improve the management of our water resources. Future success will depend on adapting to change, blending conservation, new technology, and production, and working together.


Market Approaches

One way of adapting is to make market approaches such as mitigation banking and conservation trading a part of our portfolio approach to helping resolve the problems of water scarcity, water quality, and other environmental concerns.

A world mindset is emerging that sees value in environmental goods and services. But seeing value in something is not the same thing as placing a value on it. And, until we can do a better job of calculating the value of environmental goods and services, we will see society demanding that industries, including agriculture, produce these goods and services at their own expense. So to keep agriculture strong, we must find ways for landowners to recoup the costs of their conservation efforts.

One way of rewarding farmers and ranchers for their conservation efforts and of motivating them to do more is the new Conservation Security Program. The program started last month in 18 watersheds across the country. We awarded 2,200 CSP contracts to the some of the best conservation farmers and ranchers in these watersheds. As Secretary Veneman says, CSP “rewards the best and motivates the rest.”

The program had $41 million for this year, and the President has proposed a budget of $209 million for 2005. We will gradually spread this approach to every watershed in America. But we need to do more – in the form of market-based solutions.

And that is what I see as the future environmental agenda for agriculture: creating a marketplace for trading environmental goods and services that will enable producers to do more for the environment, including conserving water and improving water quality.

Whatever we do to encourage our farmers and ranchers to address environmental issues, we must do it in ways that strengthen our agricultural economy. That means that the technologies and systems we use to reach environmental goals must be compatible with production systems.

Cost-share programs have traditionally helped landowners recover some of their costs for conservation practices. I believe that trading in environmental credits will provide the next generation of incentives for conservation.

Trading credits can only happen when we find ways to place a value on the environmental benefits our farmers and ranchers produce and create a market for those benefits. We are not there yet, but we are beginning to see forces building that will take us in that direction. However, providing the information for trading markets to work is a substantial challenge for those interested in conservation.

One step toward eventual creation of markets is a five-year study NRCS and the Agricultural Research Service and many others have started to determine the conservation benefits of government conservation programs on agricultural lands. The study, called the Conservation Effects Assessment Project (CEAP), involves nationwide assessment of conservation benefits plus in-depth studies in 20 selected watersheds around the nation.

Starting next year, CEAP will give us annual information on the effects of many conservation practices, including several involving water: surface and subsurface drainage, irrigation management, riparian restoration, and reservoir water quality.

The data from these studies will be of great value to Federal and State agencies when it comes time to justify our program investments. Beyond being a budget tool, the data will also help place an economic value on both the costs and the benefits of conservation. And that is a crucial part of creating markets for trading conservation credits.

All of us, from farmers and ranchers to conservation agencies, to mitigation bankers and conservation traders need to be flexible and open to innovation if we are to receive the benefits of credit trading. The market for credits will be in a new marketplace, with new partners. There also will be opportunities to partner with the scientists who will be doing the research that needs to be done to develop the marketplace for water conservation and other environmental goods and services.

We simply have to move out quickly on these issues and create an environmental agenda based on voluntary conservation.


Conclusion

At the end of the day -- and I know we are almost there – the fundamental problem remains: water is scarce in the arid West. We need to all work together to conserve this precious resource.
We need accurate prediction and measurement of water supplies. We need efficient storage and delivery systems. We need more water-efficient crops. We need to conserve and re-use water as much as possible, both on the farm and off. And we need all the negotiation and conflict resolution skills we can muster.

The issue of scarce water will not go away, but we must continue to work together to deal with it the best we can. Failure and stalemate is not an option. NRCS stands ready to act as a catalyst in solving problems of water scarcity and water quality to provide sound agriculture in the future.

Thank you.