The study by the nonprofit Pacific Institute urges regulatory agencies and lawmakers to focus on farm investments rather than large infrastructure projects such as the Temperance Flat Reservoir. Doing so could ensure more reliable water supplies as a warming planet increases the length and frequency of droughts, the report suggested.
"We need to start thinking of investing in these efficiency improvements," said lead author Heather Cooley. "That's what will give the biggest bang for the buck."
As California suffers its third year of drought and critical fish species decline in the Sacramento-San Joaquin Delta estuary, reductions in pumping to farmers and municipal users have some clamoring for new reservoirs and canal systems to protect the state's $39 billion agriculture industry.
"This is one of the pieces that needs to be dealt with as we look at our water future, but it's not the piece that's going to save us," said Doug Mosebar, president of the California Farm Bureau. "We need water storage, conservation and desalination."
The report said water-intensive flood irrigation has certainly declined since 2001, when 60 percent of farmers used it, but the method still is widely used in some areas.
From 2003 to 2005, San Joaquin Valley farmers spent $1.5 billion on water-saving technology, Mosebar said.
Many farmers with historic water rights have no incentive to conserve, the report said, because they get their full allocation of canal water every year no matter the weather conditions, while others get none.
The report said water contracts should be renegotiated to reflect the new reality of a dwindling supply.
"This sounds like the Mother Teresa approach," said Shawn Coburn, a farmer who helped found the Latino Water Coalition. "These guys are living in a fantasy world. When you're talking about reappropriating water rights, you're messing with the value of property and it's enormous. It's Socialism 101."
The new report suggests farmers who conserve should be rewarded with lower water rates, while large users should pay more, like the two-tiered systems that exist in many municipal water districts. The money raised could pay for conversion to drip and other water-saving systems.
The report said the government could encourage switching to expensive water conservation systems by offering reduced property taxes or a waiver of sales taxes for equipment purchases.
Some changes, the report said, will be more difficult to make — such as devising a system that allows farmers to receive water deliveries from canals when their crops need it, not simply when the district schedules them to take it.
"We need to move beyond the status quo, because it's clearly not working for farmers," Cooley said.