​​For decades, Palo Alto has been enjoying the right to buy far more water than it uses.

As one of 26 members of the Bay Area Water Supply and Conservation Agency (BAWSCA), an alliance of communities that get their water from the San Francisco Public Utility Commission, the city is entitled to buy 16.57 million gallons per day from the utility. That's more than any other city in the alliance and second among all customers only to the California Water Service, which supplies several San Mateo County communities.

This is despite the fact that the city's water usage has remained relatively steady in recent years at about 10 million gallons. Council member Alison Cormack, who represents the city on the BAWSCA board of directors, observed Monday that the gap between how much water a BAWSCA agency has a right to buy and how much it actually buys is higher for Palo Alto than for any other customer.

Given the discrepancy, Cormack and Mayor Pat Burt offered an idea Monday that would shake up the status quo in water rights: selling off some of Palo Alto's "individual supply guarantee" to another BAWSCA agency and then using the funding to invest in a recycled-water plant and other infrastructure to boost drought resiliency.

"If we sell this and use the money to invest in recycled water, we're essentially getting ahead of the game and preparing ourselves for the next drought and the drought after that," Cormack said.

To prepare for the discussion, Cormack and Burt pitched the idea in a memo to their colleagues. While Palo Alto has the right to buy far more water than it needs, other agencies in BAWSCA require additional water supplies to support their plans to build housing and mixed-use developments, according to the memo.

"Given that Palo Alto is highly unlikely to need its full allocation in the future, this is an appropriate time to contemplate selling a small portion of our unused ISG (individual supply guarantee) to one or more BAWSCA members," the memo states.

Burt suggested that the city could potentially get "tens of millions of dollars in income" from the sale.

The exact amount of revenue that the city can receive is currently difficult to gauge. Senior resource planner Karla Dailey noted that when it comes to water rights, there is no "liquid market." While BAWSCA members are allowed to shift water rights among each other, they are not allowed to transfer to outsiders, which keeps the pool of eligible recipients fairly small. And if they choose to transfer water rights, the move has to be permanent, according to a provision in the agency's agreement with the San Francisco Public Utilities Commission, which sells a total of 184 million gallons of water per day to BAWSCA.

"There's not many players that can negotiate for this," Dailey said.

While very rare, shifting of water rights among BAWSCA agencies is not entirely unprecedented. In 2018, Palo Alto agreed to transfer half a million of gallons from its allocation to East Palo Alto, which was delaying construction on approved developments because of inadequate water supply. Even after East Palo Alto obtained this increase, as well as another 1 million gallons from Mountain View through a separate agreement, its individual supply guarantee from BAWSCA currently stands at 3.46 million gallons per day.

Both Burt and Cormack drew a sharp distinction between the 2018 move to help East Palo Alto and the current proposal, which would be more akin to a traditional business deal. Burt noted that East Palo Alto had not yet been incorporated when BAWSCA was formed and, as such, was deprived of a proper allocation. The city's move, as such, was "redressing a past injustice." This time, it would be generating money.

That idea, however, failed to gain steam with their colleague. While the council didn't take any votes, most members proved reluctant to even explore reducing the city's water rights, citing the ongoing drought and the state's long-term uncertainty around water supplies. They were not swayed by projections from city staff that indicated that Palo Alto's water usage would be at about 11 million gallons per day in 2045, an estimate based on growth projections in the city's Comprehensive Plan.

Council member Tom DuBois suggested that if the city accelerates its growth plans and the state's drought conditions worsen, the discrepancy between how much water the city can buy and how much it needs will shrink.

"I know we'll continue to try to conserve more, but as we build homes, my concern is that the gap can get narrow. … I just feel like having this insurance in the case of severe drought is important," DuBois said.

Council member Greer Stone also said that he would be hesitant to give up a valuable asset in perpetuity, given the many uncertainties about long-term water sources and the prospect of California entering a megadrought — a dry period that could last decades.

"It's no secret that California and the West Coast are heading toward a megadrought," Stone said. "With the population on the rise and a megadrought likely in our near future, I question if this is the correct time to be selling our water."

The most vociferous opponent of the idea was Greg Tanaka, the only council member who voted against transferring water rights to East Palo Alto in 2018. He marveled at the fact that the city gave away an asset in 2018 — water rights — that is now estimated to be worth a small fortune. He suggested that exploring the idea would threaten Palo Alto's water supply and endanger its canopy.

"I don't think it would be prudent for us to do a one-time sale, unless we can get guarantees of getting it back," Tanaka said.

The council's opposition all but kills any further exploration of the idea in the near future. While Cormack suggested that the council direct staff to further explore the potential market in water rights, Burt conceded at the end of the discussion that the council is not ready to make that move.

"I don't know when or if in the future we'll be at a point where we'd be at a position where we can reconsider this proposal, but I don't think we are at this time," Burt said.