WSP06117

• File Number: 8583
• Description: Rio Grande Decision Support System
• State: CO
• Basin: Rio Grande
• Water Division: 3
• Date: 1/1/1988
• Author: Steven J. Shupe & Jo
• Title: The Upper Rio Grande: A Guide To Decision-Making
• Water Supply Pro - Doc Type: Publication

46

00114.1

WATER MARKETING AND
TRANSFERS

ThE RIO GRANDE, like many west-
ern streams, has been fully
appropriated for years, How can
recently defined needs for water be
met if there are no new supplies to
appropriate? One answer has been
water marketing, that is, a form of
voluntary transfer of water from
one use to another. There has been
great interest in this concept, but
how relevant is it to the future of
the Rio Grande?

Water marketing arises whenever a
person, city, or corporation wants
to obtain a water supply for new
development in a region where
water resources are fully utilized-
and they have money to spend. In
the previous century, people with
an eye to new development in the
West would invest their money sim-
ply in constructing diversion works
to tap the unappropriated water
that flowed in the region's rivers
and streams. Later, investments
were made in dams or trans-
mountain diversion networks to
increase the available supply,
Today, however, these options
involving new construction are
limited in most areas of the West,
including in the Rio Grande basin.
No longer are new supplies readily
available; and even where dams or
diversion networks could tap addi-
tional sources, the construction
costs are generally prohibitive
under current economic conditions.
Consequently, those with the
money and a need for water are
looking at purchasing existing
water rights in order to obtain relia.
ble supplies,

In the upper Rio Grande region,
water marketing is occurring on a
somewhat smaller scale than in
other arid areas of the West.

Although EI Paso has obtained
20,000 af 1 yr of agricultural water
entitlement for municipal use in the
past, the city's preferred plans for
future supplies involve developing
additional groundwater supplies
from sources in New Mexico. A
number of municipalities and
developers in the New Mexico por-
tion of the basin also are purchas-
ing water rights, but the amounts
are generally smalL

Purchases by subdivision
developers in New Mexico are often
spawned by local ordinances which
require new subdivisions to dedi-
cate water rights to the town as a
condition to annexation or subdivi-
sion approvaL Towns with such
ordinances in the Rio Grande basin
incl ude Taos, Los Lunas, Las
Cruces, Espanola, among others.
Typically, the developer must dedi-
cate from 0,2 to 0.5 af of water rights
for each residential lot. The
ordinance will often allow the
developer to make cash payments
in lieu of the water rights, although
the payments are costly. In Taos, the
in lieu payment stands at $3,5001 af,
with Los Lunas requiring a $2,000 af
payment from those developers
that do not dedicate an actual water
right.

Water marketing is seen in many
forms throughout the West. In Col-
orado, the buying and selling of
water rights is common, with a
number of brokers and lawyers
making a substantial portion of
their living by assisting in water
deals, One entrepreneur north of
Denver has convinced investors to
put up $35 million for the purchase
of water rights with the hopes of
reselling them for profit in subse-
quent years. Numerous transac-

tions occur each year in Colorado,
typically involving the sale of senior
irrigation rights to municipalities or
subdivision developers. In Arizona,
the cities are buying up agricultural
land in order to obtain the
associated water right under state
law. In late 1986, Phoenix purchased
14,000 acres of agricultural land for
more than $30 million in order to
obtain a right to pump an estimated
30,000 aflyr of groundwater for
municipal use. A number of other
multimillion dollar "water ranch"
deals have closed in Arizona,
initiated by cities as well as by
investors who believe that the cost
of water will rise in the future.

Another form that water marketing
takes is in the purchase of large
blocks of shares in irrigation dis-
tricts. In late 1987, the Central Utah
Water Conservancy District
announced its intent to purchase
stocks in local canal companies
representing 30,000 af of water
rights, The district plans to transfer
these rights from agricultural use to
meet growing municipal and indus-
trial demands. Similar sales have
occurred elsewhere in Utah (for a
major power plant), as well as in
Colorado,

Although water transfers are occur-
ring in many areas of the Rio
Grande basin, the city of Albuquer-
que lies at the fulcrum of water
marketing in this region. Albuquer-
que is both an active buyer and
seller of water entitlement due to its
short-term surplus of San Juan-
Chama (SJC) water and its long-
term need for additional supplies,
The city's surplus of SJC water is
expected to last past the year 2020,
and Albuquerque is searching for
customers to lease the water until it

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