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I I I I a I I I I I I I I I I I I I I Executive Summary LA WMA is a non-profit organization of groundwater users in the Lower Arkansas Valley in Colorado. The organization provides replacement water to offset the depletions to the Arkansas River caused by groundwater pumping of its members. Replacement water is provided through the administration of a replacement plan, in amounts sufficient to meet the requirements of Colorado senior water rights and the obligations to Kansas under the Colorado/Kansas Compact. LA WMA owns direct flow and storage water rights that constitute its permanent replacement water supply. To acquire these rights, LA WMA has borrowed money from the Colorado Water Conservation Board payable over the term of 40 years. LA WMA has sufficient permanent water to meet its members' replacement demand during average and wet years. During dry years demand by its agricultural irrigation members increases significantly (due partly to the fact that the junior surface water rights of its supplemental irrigators may be out ofpriority) while LA WMA's replacement supply decreases (due to the fact that LAWMA's jlll1ior direct flow rights may be out of priority). If LA WMA maintains sufficient storage reserves in John Martin Reservoir, LA WMA may be able to meet the demands of its agricultural irrigation members during a single dry year. Maintaining storage reserves, however, may require some pumping cut backs in average years. LA WMA's permanent water supply is insufficient to fully meet the demands of its members during a second consecutive dry year. Assuming that lease water is available in the "spot" market at a reasonable price, LA WMA may be able to meet all of its members' demands by leasing water at an additional cost. If not, LA WMA's water supplies will be insufficient to set aside reserves or to fully meet the demands of its members during dry years. LA WMA's existing organizational structure is not responsive to the circumstances and risks created by dry years. The structure does not provide a plan for the distribution of pumping reduction or curtaihnent among its members in times of shortage or for reserve purposes, nor does it guarantee a continuous source of revenue during years of reduced pumping. Under LA WMA's ClllTent fee system (which is based to a large extent on dollars per acre-foot of depletion), if pumping is reduced revenues will decrease which in tum affects LA WMA's ability to meet its obligations to the Colorado Water Conservation Board and others. The purpose of this study is to evaluate alternative organizational structures or modifications to the ClllTent structure that would be responsive to the conditions created by dry years. lhis report presents a total offive alternative methods of water and costs allocation. Two of these altematives (Cl and C2) keep the present membership structure. The other three (S I, S2 and S3) would change the nature of the organization from a membership-based structure to a "share" system. After a series of discussions with EnWater Resource Consultants September 5,1997 Final Report 4