BOARD0123

• Board Meeting Date: 1/21/2001
• Description: State Affairs Issues
• Board Meetings - Doc Type: Memo

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RECOMMENDATION:

EXPLORE INNOVATIVE SOLUTIONS TO
COLORADO'S WATER NEEDS

Rapid growth. inadequate
water supply and extremely
dry conditions have left cities
thirsty for more water. This often
means buying out and drying up
irrigated lands to meet increasing
demands for municipal and industrial
water use. Meanwhile. the farm
economy is in dire straits. Higher
production costs. record-low
commodity prices and dry conditions
leave many farmers and ranchers
with little choice but to sell their
land-for farming and ranching
without water in Colorado's dry
climate is nearly impossible. It is
ironic that as many of Colorado's
urban areas try to stop sprawl. the
purchase of water rights from farmers
by urban communities actually
encourages sprawl by making the
land of little use for farming-thus
encouraging its sale to developers.

If farms and ranches are to be
preserved into the distant future.
another solution must be found to the
growing need for water in the cities.
Conservation measures-in the cities
and on the farms-help stretch limited
supplies. However. conservation
alone may not produce enough new
water supply to save agriculture for
the long term. since conservation
typically yields only a ten percent
increase in supply.

In these difficult times. farmers and
ranchers need incentives to keep
water on the land and continue their
operations. Water owners who fail to
use their appropriated water risk

losing it. The Commission
recommends alternatives that allow
water owners to leverage the value of
their water without permanently
severing it from the land. These
alternatives include:

. The development of water trading
and water banking programs. A
water market is emerging in some
basins of the state as water owners
who wish to sell. trade or lease
part of their supply look for
potential buyers or lessees. The
Commission supports the creation
of an information exchange that
matches those who have supply
with those who have demand. The
Commission recommends the State
Engineer seek legislative authority,
if necessary. to conduct a pilot
water trading project.

. The use of water conservation
easements. Conservation
easements on land are an effective
tool for protecting open space.
Conservation easements may be a
useful way to protect water. and
the Commission recommends that
they receive the same state and
federal tax credit benefits as
conservation easements on land.

. The creation of a water advisory
group. The Commission
recommends that the Department
of Natural Resources and the
Department of Agriculture establish
an advisory group consisting of
local officials. farmers. ranchers.
water law experts. and other

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interested parties. This advisory
group should examine the impact
of water trading. banking and
conservation easements on
downstream users and devise
trading. banking and easement
pilot programs that can be used in
accordance with Colorado water
law and/or recommend changes in
water law that may be necessary co
implement these programs. The
advisory group should also
consider the need for in-basin
storage projects to facilitate t..'1ese
programs.

. The use of interruptible supply
agreements between urban and
rural water users. These
agreements would act as a water
lease between a farmer and a city.
For example. a city could contract
with a farmer to use his water in
the event that the city experiences
a severe drought. The city would
then pay to retain the farmer as a
back up supplier and pay the
farmer when it used his water. The
Commission recommends that t..I1.e
advisory group also develop a
template for interruptible supply
agreements.

. The development of water basin
planning. While improving the use
of Colorado's water supply is
important. Colorado's water
districts should also plan to meet
the State's future water needs. The
Water Conservation Board is
currently conducting public
meetings around the state to hear