For generations, Florida's farmers and ranchers have used their land to grow oranges, sugar, tomatoes and beef cattle, among other things. But now they've added a highly profitable new crop:

Water.

A state agency is paying large agricultural operators millions in taxpayer dollars to hold water on their property, treating it as if it were a crop. The agency sees it as a way to create a series of "reservoirs" without the expense of building anything permanent.

The state's most powerful business lobby thinks this is a great idea. The sugar industry loves it. So do legislative leaders and Agriculture Commissioner Adam Putman, the most influential voice in Tallahassee on state water policy.

"Investing in this program is a win on multiple fronts," said Gary Ritter of the Florida Farm Bureau.

While water farming has some powerful fans, it's also stirring controversy:

• An audit found that the program costs taxpayers far more than it should — tens of millions of dollars more.

• Scientists say it stores just a fraction of the water that's needed to be effective. The largest contract, worth more than $120 million over 11 years, makes a difference of about 1 inch in the depth of Lake Okeechobee.

• That contract went to agricultural giant Alico, which pulled political strings to get it. The company dispatched its lobbyists to Tallahassee again this spring to make sure those taxpayer dollars keep flowing. An Alico spokeswoman says the company is lobbying for the whole program, not just its own contract.

Critics say Florida's water farming program is akin to corporate welfare.

"They get a big chunk of money for doing nothing," said Tom Swihart, former boss of the Department of Environmental Protection's office of water policy and the author of the book Florida's Water: A Valuable Resource in a Vulnerable State.

The controversy is part of the ongoing debate over what Florida should do about cleaning up polluted Lake Okeechobee and restoring the Everglades.

It's a debate that centers on plans by U.S. Sugar to develop thousands of acres south of the lake, even though the state holds an option to buy that land. The state obtained that option with an eye toward using the land to send the lake's excess water south, the way it used to flow back when the Everglades functioned naturally.

Although the South Florida Water Management District holds the option on the sugar land, so far no one in Gov. Rick Scott's administration, nor in the legislative leadership, wants to buy.

And U.S. Sugar definitely wants to hang onto its property.

"We like our land, and the district doesn't need or want it and couldn't afford to build anything on it if they bought it," said J.M. "Mac" Stipanovich, chief of staff for Gov. Bob Martinez, campaign adviser to Gov. Jeb Bush and a longtime lobbyist for U.S. Sugar.

More than 200 Everglades scientists signed a petition urging the governor and legislators to buy the U.S. Sugar land to start sending the lake's overflow southward — to no avail.

Meanwhile a University of Florida science team released a report that said the state should at least consider exercising its sugar land option because current efforts to hold the water north of the lake would not be sufficient.

That includes water farming, which the report said "will fall short of providing the additional storage and treatment needed."

"We don't have much data about what good (water farming) does," said Tom Van Lent, chief scientist of the Everglades Foundation, which supports buying the sugar land. "It's very new. But it's clear that it will never be anywhere close to holding the amount of storage that we'd need."

• • •

For decades, polluted water has been pouring into the lake, turning it into what one federal official called "a chocolate mess" when foul weather stirs it up.

When the lake gets too full, the federal agency in charge, the U.S. Army Corps of Engineers, dumps some of its contents rather than risk having it flood surrounding communities.

Those Army dumps carry the lake's polluted freshwater into the brackish estuaries of the St. Lucie River on the east coast and the Caloosahatchee River on the west. Algae blooms, fish kills and other woes ensue, hurting the environment and the economy in Port St. Lucie and Fort Myers.

Solving the problem will require either sending water in a different direction or holding it back before it gets into the lake — or both.

Environmental advocates and civic activists from the two estuaries have been lobbying hard for the state to pursue the first option. They want to start sending more water flowing south the way it did naturally when the River of Grass remained pristine.

But that's difficult. In the 1930s the Corps built a dike around the lake to stop it from overflowing and in subsequent decades replumbed the Everglades, creating an elaborate system of pipes, pumps, levees, and canals in the name of controlling floods. The land south of the lake became small towns and farms — growing, among other things, sugar cane.

In 2008, facing a costly legal judgment for polluting the lake with its runoff, U.S. Sugar approached then-Gov. Charlie Crist for help. Crist proposed the state buy all the company's 187,000 acres and various assets for $1.75 billion and use it for Everglades restoration projects, a move hailed as bold and forward-thinking at the time.

But in 2010, amid the economic meltdown and with a new governor in charge, the state bought just 26,800 acres for $197 million, with an option to buy the rest later.

The South Florida Water Management District holds an option to acquire 100 percent of U.S. Sugar's land through October 2020. The water district, a state agency, also has an option to acquire only 47,000 acres that expires in October 2015.

In the meantime, though, U.S. Sugar now has plans to develop its property. Partnering with a smaller sugar company, U.S. Sugar wants to plop 18,000 homes and 25 million square feet of stores, offices, warehouses, and other commercial buildings amid the rural landscape.

Rather than see those development plans destroyed, U.S. Sugar and its allies from Associated Industries are instead pushing the second alternative solution — holding back more water.

That's where the water farming pilot project comes in.

• • •

In 2005, the water agency selected eight South Florida ranches and groves that had volunteered to take public money in exchange for holding back water. The agency would build earthen berms to keep the water penned up. The agency would also pay inspectors to visit every year to make sure everything was working.

The water agency liked how this turned out, so in 2011 and 2012 it lined up eight more projects, with another 19 proposed for the third round. But then the district ran out of money from South Florida taxpayers. Some contracts were left hanging, their water retention areas still dry.

One landowner whose contract wound up in limbo: Alico, the largest citrus producer in the United States. The company, run for years by prominent University of Florida backer Ben Hill Griffin Jr., also has big interests in sugar and cattle.

One source for money to revive the water-farming contracts was money from the taxpayers from the rest of the state, via the Legislature. But the water district's governing board, under state law, is not allowed to hire its own lobbyists to pursue funding.

Instead, Alico did it for them.

The company employed 16 lobbyists last year, and it turned them loose on the Legislature to get $13 million to pump new life into the project. Alico spokeswoman Sarah Bascom said the company was just helping out a state agency in need, and its lobbyists did not specifically ask for money for Alico's own contract.

Sen. Joe Negron, who chaired the Appropriations Committee last year, was convinced.

"I have supported dispersed water storage projects because I believe they are an important part of a comprehensive strategy to improve water quality and create options to the harmful discharges from Lake Okeechobee," Negron said this year.

Among those 16 Alico lobbyists was one named Craig Varn. Last month, Varn was named head of the DEP's office of water policy.

• • •

With money to spend, the South Florida board met in December to hand out the contracts to Alico and the other landowners. But several speakers raised questions about how the contracts were working out.

One, former water district attorney Keith Rizzardi, pointed out that the contracts called for the water agency to alter the land to hold water back, but the 10-year contracts could easily be terminated by the landowner.

"We're making a capital investment in rental property," he said. "We're making improvements on these guys' land."

And what if there was a drought, he asked, one that left the land bone-dry? The taxpayers would still have to pay for water farming, but without the water.

Then there was the audit produced by the agency's own inspector general just a month before. The 57-page audit said the program was far more expensive than it needed to be, basing its calculations on a water-volume measure called acre-feet — in other words, how many feet (in depth) of water per acre. One acre-foot equals about 325,000 gallons of water.

The contracts the agency had approved averaged $103 per acre-foot a year, the auditors said. The highest-priced one was the one pending with Alico, which would go for $135 per acre-foot a year for its 91,000 acre-feet of water retention.

By contrast, the auditors said, if the agency were to avoid private land and instead store the water on land the public owns, it would cost a mere $8 per acre-foot.

In other words, putting 91,000 acre-feet of water on public land would cost the taxpayers $728,000 a year. But the Alico contract would cost about $12 million a year for 11 years, or $122 million total.

Despite that difference, the auditors said, the district staff had yet to do a study to look for other feasible sites. Agency officials say they have already found some public land for storing water in addition to the water farm spots.

The auditors also predicted another cash shortfall of $17.5 million between 2018 and 2024 unless the Legislature rescues the program again.

Despite those concerns, the water board approved the contracts.

For Alico, that means its 35,192 acres of ranchland will be closed in to retain an annual average of about 91,000 acre-feet of water. The rest of the contracts added another 4,000 acre-feet, for a total of about 95,000 acre-feet, or about 36 billion gallons of water.

That's the equivalent of about 1.5 inches of water in 730-square-mile Lake Okeechobee, held back for about $125 million total.

By comparison, the agency's scientists have calculated the region needs to hold back 750,000 acre-feet to be effective.

• • •

This isn't the way the program was supposed to work, according to one of its designers, Sarah Lynch of the World Wildlife Fund. She spent years working with ranchers and state officials to set up what was dubbed the Florida Ranchlands Environmental Services Project.

It was intended as a market-based solution to an environmental problem, one in which all the ranchers and farmers would compete for the contracts, Lynch said. The end result would benefit both Lake Okeechobee and the small mom-and-pop farms and ranches that were struggling to get by.

"It would keep cattle ranchers ranching, and there would be less pressure on them to leave ranching," she said. "It was a way to enhance the ecology as well as the economic sustainability of the area."

It wasn't intended to be a program that allows one big landowner to get the biggest contract by lobbying the Legislature for millions of taxpayer dollars, then using a state agency as a pass-through for the money.

But Putnam, the agriculture commissioner, said he didn't see anything wrong with the way the Alico contract was handled by the South Florida water agency.

"To hold water out of Lake Okeechobee, you're probably going to have to make an agreement with people whose names you recognize," he said. "You can't get around that. That's who owns the land."

Times researcher Caryn Baird contributed to this report. Contact Craig Pittman at craig@tampabay.com. Follow @craigtimes.