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June 8 — With the growing gap between the demand for water and its availability, particularly in the West, market-based approaches are being used more often to manage the resource in a way that considers the needs of cities, farmers and the environment, speakers at a water law conference said.
Agricultural water transfers are one way to alleviate water supply concerns while also promoting efficiency, but rigid Western water laws dating to the turn of the last century impose certain barriers, said Anne Castle, a visiting fellow at the Stanford Woods Institute for the Environment. She spoke at the ABA Water Law conference in Denver, which ran June 4–5.
“Agricultural water rights are hemmed in by a law from 100 years ago that was designed to protect farmers and ranchers,” said Castle, the former assistant Interior secretary for water and science.
In the U.S., agriculture consumes the largest share of water—around 70 percent, but it varies by state—making farmers and ranchers easy targets when looking for ways to increase supplies for other users, such as municipal water agencies, she said.
Colorado Gov. John Hickenlooper (D) released the first draft of a water plan in December 2014 outlining strategies for managing the state's water resources.
The draft envisions a significant role for “agriculture transfer methods” as a way to address supply concerns, said Aaron Citron, manager and attorney with the Environmental Defense Fund.
One notable barrier to water transactions between agricultural entities and other users derives from a concept written into Western water law known as “use it or lose it,” Castle said. Essentially, a water rights holder must either use the water for its intended use or lose the right to that water, thereby making it available to another user.
“Use it or lose it discourages conservation,” Castle said. “There's a big risk to the farmer for forfeiture and loss of the use.”
To address the discrepancy between water rights law and the need to conserve water, several states—California, Montana, Oregon and Washington—have adopted policies that allow farmers to conserve their water without losing their right to it, Castle said. In some cases, government water banks are used to shield rights from loss of value.
A major concern of using markets to address supply issues, however, is what is known as buy and dry. Farmers sell their water rights, which are often the more valuable senior rights, to municipalities and then let their land, or a portion of it, lie fallow.
Castle said this practice carries a number of negative outcomes, including effects on rural economies, concerns about food security and the influence on so-called social capital—that water and agriculture are part of the fabric of Western culture.
P. Andrew Jones, an attorney with Lawrence Jones Custer Grasmick LLP in Jonestown Colo., said the practice of buy and dry also could mean cutting off irrigation to about 500,000 acres of productive cropland.
There are gains for farmers, however, including a supplemental income that can be used for other things, Castle said.
High transaction costs also are barriers to water transfers, Jones said.
Water rights can only be changed to another beneficial use if there is no injury to other water rights holders, he said.
There is also the cost of getting the right changed. In Colorado, it means going to water court, which can be expensive and time-consuming, Jones said. Transfers that are not buy and dry have more complicated components that usually necessitate lawyers and engineers, he said.
In some cases, Jones said in a paper that was distributed at the conference, the state engineer or the water conservation board can approve temporary changes of water rights for periods ranging from one to 10 years.
These rights can be changed or transferred as long as their depletive effect is limited to the depleted effect of the old use, he said.
Another option under consideration for facilitating water transfers is the “flex use” concept, Jones said. In Colorado, water rights are designated for a specific use. Under a flex program, when a water right is sold, the new user can apply to water court to have the use changed so that the water can go for irrigation and all other uses, he said.
He advocates for rulemaking that would establish a more transparent, uniform process for transfers instead of going to water court.
The rulemaking “should be initiated to create regionally applicable change in use standards that could be applied by any party seeking a change in use,” Jones said in the paper. “These standards should be tailored to specific locales as appropriate.”
Citron agreed on the need for more options to address water shortages.
“We need to find flexible institutions and do them in the face of rigid water laws,” he said.
The implementation of some of these programs tends to get caught up in the pilot phase and the idea that “we have to test it,” Citron said. “We need to just try things to see if they work.”
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