The Looming Water Wars: FARMS vs. CITIES.

• Author: POSTEL, SANDRA

With not enough supplies to satisfy the demands of both agriculture and urban life, allocation of this vital resource is becoming more contentious and problematic.

WHY WOULD the billionaire Bass brothers of Texas, enriched by real estate and oil deals, make a play for a parcel of farmland in the hot, dry American Southwest? The reason has little to do with the lettuce, tomatoes, and melons grown in California's sun-drenched Imperial Valley, but everything to do with what allows crops to grow there--water. In purchasing more than 16.000 hectares of valley farmland (a hectare equals 2.47 acres), the Bass brothers were simply acting on a tip from an old, but timely adage: water flows uphill toward money.

About one-fifth of the Colorado River's annual flow goes to the Imperial Irrigation District (IID), which irrigates nearly 200,000 hectares of cropland. Thanks to a century-old deal with the Federal government, IID gets this water free. Farmers within the district pay just for the cost of delivering the water, about one cent per cubic meter. A few hundred miles to the west in Los Angeles, the Metropolitan Water District (MWD), the water wholesaler for about 16,000,000 southern Californians, pays up to 16 cents per cubic meter for water that it sells to its customers for about 28 cents a cubic meter--28 times as much as the IID farmers pay.

To astute investors, the math is compelling enough, but politics is weighing in as well. California has been using about 14% more Colorado River water than a 1922 interstate agreement entitles it to, and the U.S. government has put the state on notice that it must find a way to live within its allotted share. Any cutbacks would come out of urban supplies, since the Imperial Valley farmers have more senior water rights, and thus higher priority.

Not long after buying their IID farmland in 1994, the Bass brothers began pushing the irrigation district which actually owns the water rights, to strike a deal with San Diego, MWD's biggest customer. Three years later, the Basses hedged their bets and traded their $60,000,000 investment in Imperial Valley farmland for $250,000,000 worth of stock in the United States Filter corporation, the world's largest water treatment company. Meanwhile, IID did manage to strike a deal with San Diego. In 1998, the irrigation district agreed to transfer up to 246,800,000 cubic meters of water a year to the city at an initial price of 20-27 cents per cubic meter. San Diego residents will benefit from lower costs and greater reliability of future supplies; IID will reap substantial profits; and, if most of the water transferred results from increased efficiency and shifts to less-thirsty crops, farmers will not necessarily need to take land out of production.

Water grabs and power plays are legendary in the western U.S. In the award-winning film "Chinatown," Hollywood capitalized on the drama of Los Angeles sucking farms dry in the Owens Valley. American writer and humorist Mark Twain captured the West's tension over water with his famous quip that "whiskey's for drinking, water's for fighting about." Nevertheless, as water becomes more scarce, the stakes are rising--not just in the western U.S., but in many other parts of the world.

For rapidly growing cities and industries, agriculture holds the last big pool of available water. Globally, irrigation accounts for about two-thirds of all the water removed from rivers, lakes, and aquifers, and in many important agricultural regions, it claims 80% or more. As opportunities to expand water supplies dwindle, competition over existing supplies is mounting. How this competition plays out is about much more than whether rich investors get richer. It is about food security, social stability, the health of rural communities, the plight of the world's poor, and the ability of the aquatic environment to continue supporting a diversity of life.

On an average day in the developing world, about 150,000 people join the ranks of urban dwellers. Some are babies born to couples already living there. Others migrate in from the countryside, hoping for a better life. Most need shelter and a job. All need food and water.

By 2025, nearly...