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Colorado Water Conservation Board Page 2 of 3 • of water to the CWCB creates a risk that the water right could be deemed abandoned altogether. Faced with these risks, it is not surprising that few water rights holders have loaned or leased water to the CWCB's instream flow program. Another reason that the CWCB has not made greater use of its water rights acquisition authority is that the program has not been adequately funded. While the CWCB has made loans and grants of hundreds of millions of dollars over the years to aid in the development of reservoirs, pipelines and other water delivery projects, the CWCB has never dedicated funds to purchasing or leasing water rights for instream flow. The handful of instream flow transactions that the CWCB has completed have all come by way of donation from a charitable water rights holder willing to commit water to instream use without compensation. The CWCB staff is proposing legislation to address both of these issues. One bill the staff recommends would protect the water rights of parties who loan or lease water to the CWCB against loss of consumptive use credit or abandonment. It would exclude from any historical consumptive use analysis any period of time that the CWCB puts water to instream flow use pursuant to a long term loan or lease with a water right holder, and it would clarify that the CWCB's instream flow use of a water right, pursuant to a long-term loan or lease with the water right holder, will not result in a finding that the water right has been abandoned. As you will recall, during the 2007 legislative session Governor Ritter signed House Bi1107- 1012, which provides these same protections for short term loans of water to the CWCB under C.R.S. 37-83-105(2). The second piece of legislation, which would be included in the CWCB's annual projects bill, would appropriate $1 million from either the Severance Tax Trust Fund Perpetual Base account or the Construction Fund to the instream flow acquisition program. The CWCB could use these funds to compensate water rights holders for committing water to the instream flow program or for helping to cover the transactional costs associated with converting water rights to instream flow use. These two sensible pieces of legislation will have obvious benefits for Colorado's aquatic environment, breathing life into the underutilized water rights acquisition program and aiding in the important effort to protect and restore flows in Colorado's rivers and streams. Perhaps less obvious are the benefits and options this legislation will create for water rights holders. For example, an irrigator could elect to rotationally fallow a portion of her land and could commit the unneeded water to the instream flow program. The irrigator would receive market-based payment for the instream flow use of her water while continuing to irrigate a portion of her lands. Additionally, municipal water providers with currently unneeded water supplies could receive payment for temporarily leasing their water rights to the CWCB for instream flow. We strongly urge the CWCB to support your staff's proposed legislation.