Water Talks: Quantifying Water Right Ownership and the Term ‘Buy & Dry’

In Colorado, transfer of water from one type of use to another is a historical necessity and will continue throughout Colorado and the semi-arid West.

As economic and social needs change, water moves to new areas to satisfy changing needs.

Historically, mining utilized the majority of water in Colorado. As population increased the mining water rights moved to agricultural use. Due to improved transportation and the economies of scale in agricultural operations, much of our agricultural commodities are produced in areas with climates more conducive to large year-round production.

Many small agricultural operations that are no longer profitable have left the market and sold their operations and, in some cases, sold their water rights separately from the land to meet the changing demands. Some increase in the demand for water is now being driven by small specialty and organic farming operations. Still, in the larger farming areas of the state, there continues to be a demand for water and here these rights are not changing.

In recent years, the term “buy and dry” has become popularized by individuals intent on characterizing the purchase and transfer of an irrigation water right to other uses as an economic and environmental catastrophe. Doing so obfuscates the reason why drying up of formerly irrigated lands is necessary.

In fact, the need in water right transfers to dry up the land is to protect adjacent water rights from injury. This ensures that only the exact amount of water historically owned (used) by the irrigator is transferred to the new use. Without an exact proof of use, the amount of water moved may be much larger than was historically used and the environmental and economic damage would be large.

Of course, for many, the tedium of factual analyses does not lend itself to telling a “juicy” conspiracy story. To some others who really know the facts, there are ulterior motives. One of the motives deals with the promotion of an alternative method of moving water and not using the time-tested court process.

These promoters of the alternative wish to avoid the legal scrutiny and work of accurate analysis and quantification of historic use. They claim many reasons for advocating for alternative methods. Among these reasons are, “It takes too much time,” “It costs too much,” or “It’s too hard.”

The best but totally dishonest reason given is, “It means the land will be dried up forever,” all the while knowing their alternative would require dry-up too. From this has come another popularized term, “alternative transfer method,” or “ATM.”

Alternatives to the traditional water right transfer still require dry-up of former irrigated lands. There are actual alternatives, but these are marginally different from the traditional purchase and transfer of the water rights. These are temporary transfers, such as leasing of the water right and temporary fallowing of the formerly irrigated lands.

These temporary transfers or leasing of the historically consumed water from the irrigated land are complex transactions. To reduce the transactional costs in the engineering analysis required to accurately calculate the amount of water that could be transferred under a temporary lease without causing injury to adjacent water rights, the Upper Arkansas Water Conservancy District sponsored a study and development of a common technical platform called the “Lease Fallowing Tool.”

It is now available free of charge and is widely accepted by the water community. Except for pilot projects of limited duration, the water right still needs to undergo a legal decree change through the water court. In these temporary transfers or ATMs, the land is still dried up.

The legal requirement to prevent injury to remaining adjacent water rights becomes more difficult to ascertain and the ongoing monitoring and development of water infrastructure to maintain historic stream conditions is more daunting. One thing is clear about ATMs, to be effective in meeting future long-term needs, construction of more water storage facilities – reservoirs and recharge basins – will be required.

This really gets to the crux of the matter. Recently, articles have been written about Wall Street investors scooping up water rights in Colorado to market to out of state interests. This concern and others have triggered our legislators to promote legislation to prevent speculation.

The problem is the Colorado Water Doctrine already has anti-speculation inherently built into its water allocation system. In order to own a water right one must demonstrate beneficial use. As described above, it is this quantification of use that determines the amount of water owned that can be bought and sold.

So, unless a prospective buyer has a use in mind, in Colorado, buying a water right to simply hold without use gets him no water.