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Section 3 <br />Alternative Agricultural Water Transfer Methods to Traditional Purchase and Transfer <br />~ Legislation may be needed to authorize water <br />court transfers under this program. <br />Administration issues would be more <br />complicated and difficult to monitor. <br />~ In some instances there may not be a market for <br />the low water use crops. <br />~ New farm equipment may be needed for planting <br />and harvesting a different crop type. <br />~ Reduction or elimination of irrigation of alfalfa <br />during the summer months will likely affect the <br />quality and quantity of subsequent cuttings. <br />~ Adjusting to new crop types and limited <br />irrigation schemes will likely require <br />advancements to existing irrigation systems/ <br />methods. <br />~ Changing irrigation patterns or crop types still <br />requires water to irrigate the planted crop. <br />Consequently, this alternative will not provide as <br />much "transferred" water (per acre) as a <br />permanent or temporary dry-up. <br />~ There will likely be fewer "inputs" (e.g., seed, <br />fertilizer, fuel, etc.) acquired in the local economy <br />3.5.5 Purchase by End User with <br />Leaseback under Defined <br />Conditions <br />The final alternative considered as a means to <br />provide additional M~eI, environmental, and <br />recreational water supplies is Purchase by End User <br />with Leaseback under Defined Conditions and is <br />perhaps the most common means presently used <br />within Colorado. A purchase and leaseback <br />arrangement, while commonly only implemented for <br />a fixed term of 5 to 10 years, can be a permanent <br />agreement where the municipal, environmental, or <br />recreational interest purchases agricultural water <br />rights with the agreement that the new owner will <br />lease back water to the farmer (or ditch system) <br />under specified and pre-determined hydrologic <br />circumstances. For example, a municipality may be <br />limited to making a call on this new supply only <br />during dry years or when there is a compact call in <br />place. The farmer may lease the water during <br />hydrologically average and wet years. <br />Purchase leaseback arrangements can be viewed as a <br />more permanent variation of ISAs that provide more <br />certainty to the purchaser. If the new owner of the <br />water right begins using the water for "new" and <br />growing demands (versus just for firming pre- <br />existingsupplies), apurchase and lease-back <br />arrangement could eventually result in the <br />permanent dry-up of irrigable lands or regions and <br />in this case could be characterized as a "soft landing" <br />transition period when moving from irrigated to <br />non-irrigated farmland. Annual leases by M~SCI <br />providers of previously purchased irrigation rights <br />are quite common in the Arkansas Basin. <br />The benefits of purchase and leaseback <br />arrangements include: <br />~ Land remains in agricultural production during <br />wet and/or normal years or other defined <br />hydrologic conditions for some period of time. <br />~ The purchaser holds title to the water rights and <br />is guaranteed delivery under conditions when the <br />water is needed. M~eI reliability is improved <br />since there is a guaranteed additional <br />supplemental supply of water each year. <br />The potential issues and conflicts with purchase and <br />leaseback arrangements for meeting future water <br />needs include: <br />~ May not sustain agriculture for the long term, but <br />rather is a permanent transfer that is deferred for <br />some period of time until the water is needed by <br />the M~SCI user. <br />~ Agricultural users relinquish appreciation of the <br />water rights when selling the rights to the <br />municipality or end owner. <br />FINAL DRAFT 3-19 <br />