Interview with Grady Gammage - Central Arizona Project

it’s a bank. You don’t know when you do a withdrawal that it’s the money you put
in the bank. In fact I guarantee you it’s not. It’s the same mechanism. It’s a
fungible commodity and so you can transact it this way.
The other thing that is another brilliant scheme—it was actually cooked up, I think
mostly by CAP and SRP before the Water Bank—is indirect recharge or in lieu
recharge. This goes back to my story about how we thought the farmers were
going to buy all this water but there was no way to make that work. Well, we
needed to come up with, and this was happening right at the time I was first
coming on to the Board and then becoming President, we needed to come up
with a way to use that water that the farmers could no longer afford to pay for.
So we essentially went to them and said look you’ve got to give us that back and
they didn’t want to and then we had a bunch of lawsuits about that. Some of
them read the “take or pay” obligation differently and so on. Ultimately it was all
going to get resolved. But one of the things we wanted to do then was to try to
get that water away from California. The farmers were not going to be able to
buy it. We didn’t want it to go to California and we frankly needed the income
from selling that to the farmers, but they didn’t have enough money to pay for it
because the cost was so much higher. They had to pay their allocable share of
building the canal without interest and the CAP needed that income. So what
happened was, we did a target pricing scheme, where we sold that water to
farmers below the cost of getting here. I’ve used the analogy, I remember as a
kid watching George Burns and Gracie Allen. Gracie came home and said “Oh
Interview with Grady Gammage
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