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Alternative Agricultural Water Transfer Methods -Grant Application Form <br />January 2008 <br />Part B. - Description of the Alternative Water Transfer ProgramlProject - <br />1. Purpose of the ProgramlProject. Please provide a summary of the proposed program/project, including a <br />statement of what the program/project is intended to accomplish, the need for the program/project, the problems <br />and opportunities to be addressed, the expectations of the applicant(s), and why the program/project is important <br />to the applicant(s). The summary must include a description of the technical, institutional (i.e., how the <br />programlprojectwill be organized and operated), and legal elements that will and/or have been addressed by the <br />applicant and proposed program/project. The summary should also discuss relevant project history, if applicable, <br />and any other relevant issues. <br />ProjectSummary. The proposed efforts will demonstrate local adoption and examine viability of agricultural <br />water rights leasing atworking-farm scales in the Lower Arkansas River Valley (hereafter "the Valley"), <br />Leasing (rather than selling) water shares allows farmer shareholders to transfer the historical consumptive <br />use of absolute water rights and apply these rights to another use and/or place on a temporary basis, <br />without permanently altering ownership (Colorado House Bill 03-1334, Colorado House Bill 06-1124). The <br />proposed activities will establish two long-term demonstration farms where actual water lease <br />arrangements will be initiated and implemented. The selected demonstration sites will fallow a portion of <br />land for periods of 1, 2, and 3 years, and transfer the associated water rights tonon-agricultural users, This <br />project is intended for two purposes. First, it will evaluate the technical (i.e., economic, biophysical, and <br />management) issues involved in maintaining or improving yields on fallowed lands when they are put back <br />into production after the lease arrangement ends. Secondly, it will provide a logistical analysis regarding the <br />practicability of coordinating these arrangements with a broker (likely the Super Ditch Company), and also <br />canal companies possessing both senior and junior water rights in the Valley, With respect to the funding <br />program goals, the proposed project will provide usable and transferable information that will increase <br />statewide understanding of how to continue farming within the context of lease arrangements, thereby <br />sustaining meaningful production agriculture. <br />Leasing strategies being advanced in the Valley are intended to avoid permanent retirement and blighting of <br />productive farmland. Water rights leasing promotes the fallowing of land from irrigation for a prescribed <br />number of years or on an interruptible basis, in order to supply water to municipal and industrial (M & I) <br />interests, In the mindsof farmerswhoare unfamiliarwith theconcept, however, water leasing strategies <br />raise key questions about: /)the extent to which this strategy can help sustain farming operations <br />economically; 2) the biophysical impacts (e.g., soil quality) on farmland during fallowing, and how these <br />impacts may affect future crop yields, and; 3) the required costs and management associated with bringing <br />land back into production after it has been fallowed. These questions must be answered to inform irrigators <br />of the lease value of their water rights. Actual and ongoing demonstrations of water transfer, as proposed in <br />this project, will address an information gap regarding the economic value and practicability of water leasing, as <br />ultimately required to maintain profitable farming operations. <br />The results of these demonstrations will also allow CSU Extension to provide recommendations on land <br />fallowing and returning fallowed land back to production. These recommendations are needed because of <br />the expectation that farming will continue to occur on rotationally fallowed lands, but little information <br />exists on the technical aspects of this farming practice, Conducting demonstrations "on the ground", in the <br />context of working farms is a proven approach for documenting and quantifying emergent challenges <br />inherent to untested strategies. As upland snowpack volumes and future water availability affect the water <br />shares desired by municipal and industrial interests, for instance, these variables in turn will influence the <br />acreage sought from agricultural areas for fallowing. Demonstration of leasing amid these variables will <br />5