I’ve spent the past several months looking into the issue of agriculture-to-municipal water transfers, a mechanism wherein farmers sell some or all of their water rights to growing and thirsty cities and suburbs, and one that will form a critical piece of the future of water resources in the American West. It’s also a process that asks serious questions about the tradeoff between urban prosperity and rural livelihoods, and one that requires care to avoid serious consequences in vulnerable agricultural communities. The paper I wrote summarizing my research, with some photographs added, begins below and will continue in three more posts to follow.

Agriculture, Water Transfers, and the Livelihood of the American West

Water is the scarcest and most precious of resources in the arid American West. It simultaneously must meet demands from agricultural, domestic, industrial and recreational users as well as sustain natural environments. These competing needs historically drove the construction of “water projects,” which impound variable supplies provided by rain and snowmelt to create a regulated and controllable water supply and transport it (sometimes across very great distances) from its source to its users. White settlement fundamentally transformed the rivers and grasslands of the West into locations for reservoirs and irrigated fields, and for a time this intensive management of water resources, backed by the largesse of the federal government, met the demands of burgeoning cities and the most productive agricultural practice in the history of mankind. As projects grew less cost-effective and sensible, and as reservoirs and diversions disrupted every one of the West’s great rivers, the “dam-building era” ran afoul of the growing environmental movement- as well as common sense. The Carter and George H.W. Bush administrations each cancelled major dams and signaled to water developers that their ways would have to change.[1] What did not change, however, was the growth in demand for water. Population growth induces a thirst in the cities and on the farms that feed them. In the late twentieth century, stakeholders from each community – agricultural, domestic and industrial, and non-consumptive (environmental and recreational interests) – began to recognize that urban growth must be watered, at least to some degree, by something other than new projects.

This new paradigm greatly alters the behavior of both rural and urban water leaders. Cities’ representatives now increasingly find water for their new customers not in the construction of new reservoirs and the development of new water rights, but in the acquisition of existing water rights from farmers and irrigation districts. For their part, rural water users know that senior water rights, those likely to be fulfilled in wet and dry years, represent an asset more valuable than land or produce. From a disinterested perspective, then, agricultural-to-municipal-and-industrial (AMI) water transfers represent a simple market transaction wherein a good has a higher value to the buying party than to the selling party. This is an accurate description- water market prices are both higher than the use value for irrigators and lower than the use value to municipalities, and transfer trends reflect basic market pressures.[2] But AMI transfers also cause nontrivial impacts to third parties in rural areas of origin that complicate the picture, and our understanding of these impacts and their implications is incomplete.

The question that needs answering is threefold. First, what are the impacts of a sizable AMI transfer on the community of origin, and on the purchasing municipality? This question is an empirical one with ecological, economic and sociological dimensions. Second, are these impacts, and the tradeoffs they entail, permissible? This is a theoretical question drawing on environmental ethics and a concept of justice. Third, what can be done to bring these impacts more in line with our ethical demands? This last question is a practical one that demands the promulgation of policy instruments which might have economic, political or ecological flavors. The fact that AMI transfers on a large scale are relatively new and have been the subject of rigorous examination only in the last several years, after scholars turned their attentions away from dams and pipelines, makes any definitive conclusions difficult. AMI transfers, like all water issues in the West, are highly dependent on geographic, political and historical context. Nevertheless, it seems clear that the pure form of water transfers that ignores consequences to third parties has serious harmful effects on areas of origin, effects that cannot reasonably be said to be outweighed by the gains made by receiving areas. Fortunately, there appear to be promising policy options for mitigating these consequences, protecting rural values at risk, and still allowing for the growth of urban regions.

The Arid West, Prior Appropriation and the Municipal Supply Gap

Water use in the arid West is predominantly governed by a system known as “prior appropriation,” a curious historical outgrowth of nineteenth-century law that simultaneously aimed toward four goals: first, putting limited water resources to full “beneficial use,” that is, not “wasting” any water on frivolous things like aquatic life or aesthetics; second, limiting injury to existing users, that is, those water uses already developed should expect to have the same amount of water in a similarly wet year; third, eliminating speculation and monopoly in water rights by requiring their use as a condition for ownership; and fourth, allowing use of water by the many rather than the few; that is, defeating monopolies and distributing water access to a wide category of beneficial users.[3] While these principles carry the unmistakable mark of being intended to benefit nascent agriculture, they persist today into governance of a complex, limited, tightly regulated hydrologic system that supplies irrigation water, domestic drinking water, water for industrial processes and energy generation, and water that maintains environmental quality. Put into practical application, prior appropriation regulates the use of water on a particular stream by giving priority to those users, regardless of type, who “develop” a water supply first. These users are said to possess “senior rights.” Their temporal followers, possessing “junior rights,” are the first users to be curtailed in times of shortage, for the benefit of those who came first.

There are at least two essential implications of the prior appropriation doctrine in the modern West. The first is that agriculture, being the first arrival on the vast majority of streams, has had more senior water rights than cities and industry, and uses by far the most water in the Western states (in Colorado, for example, agriculture’s share of diversions was 87 percent in 2002).[4] The second implication is that many streams, having been the focus of attention from agriculture in the late nineteenth century and from growing cities in the early twentieth, are already “fully appropriated.” This term means that there are as many (or more) water rights on the river as there is water in it. Put another way, anyone developing a new project on such a stream could not have a reasonable expectation of a reliable yield; in most years the water they have claimed is simply not there.[5] In addition, the great reservoirs, canals and pump stations of the hydraulic West grew less and less sensible over time as cost-effective dam sites were occupied and rivers became more developed.[6] The political contentiousness of new water projects, the diminishing returns of dam-building on less optimal sites, and the lack of available water have made “new supply” an unappealing option for many urban water providers.

Meanwhile, the West grows at a rapid pace. Almost all of this growth has occurred, and is expected to occur in the future, in urban centers and their suburban surroundings.[7] These new arrivals, quite plainly, need a reliable, sustainable supply of water, and domestic water providers concern themselves with developing and operating such a supply.[8] Water planners have taken to projecting a “gap” in municipal supply that amounts to the difference between a city or region’s proven supply and its demands. In some areas these gaps are quite striking- for instance, the Colorado Water Conservation Board projects a municipal and industrial supply gap of 320,000 acre-feet per year, about enough to supply 450,000 homes, on the state’s Front Range by the year 2050 (note that the picture below is for 2030).[9]

Colorado’s projected municipal and industrial supply gap in 2030, broken down by east and west slope. Colorado’s portfolio of water supply strategies- not mutually exclusive, of course. Image courtesy CWCB

Water providers might seek to fill this gap through a variety of mechanisms; broadly speaking, these break down into the development of new supplies, reductions in per capita demand (“conservation and efficiency”), reuse of existing supplies, or acquisition of existing water rights. The first of these, as seen above, is unlikely except in the few places with unappropriated water; even in those places achieving political consensus and regulatory approval around large projects can be difficult. The second and third are subject to diminishing returns, and many municipalities have already picked the “low-hanging fruit” in reducing their demands. Also, depending on the state, reuse may be seen to injure downstream water users by depleting the amount of water returning to a stream. That leaves the fourth- an appealing, efficient, voluntary transaction between a low-productivity irrigator and a high-productivity city- as the “default” option after a lack of planning or construction of deliberate alternatives.[10] Water managers accordingly report that AMI transfers are occurring and are expected to continue as an important supply strategy in twelve Western states.[11] This begs the question: is this strategy justifiable? Answering it requires an assessment of the impacts of selling water on rural communities, a comparison to the values gained by urban purchasers, a critical examination of that tradeoff, and, perhaps, some creative mechanisms to transfer water out of agriculture in a more justifiable way.

Next time in this series: the scientific question: what do AMI transfers actually do, economically, culturally, and ecologically?

[1] Patricia N. Limerick, with Jason L. Hanson, A Ditch in Time: The City, the West, and Water (Golden: Fulcrum Publishing, 2012), 197-204; Peter D. Nichols, Megan K. Murphy, and Douglas S. Kenney, Water and Growth in Colorado (University of Colorado Natural Resources Law Center, 2001), 1.

[2] Bonnie C. Saliba, et al, “Do Water Market Prices Appropriately Measure Water Values?”, Natural Resources Journal 27 (1987): 619-21.

[3] David B. Schorr, “Appropriation as Agrarianism: Distributive Justice in the Creation of Private Property Rights,” Ecology Law Quarterly 32 (2005): no. 3, pp. 3, 24; Phillip C. Metzger, “Protecting Social Values in Western Water Transfers,” Journal of the American Water Works Association (1998): 58-59.

[4] P. Lorenz Sutherland and John A. Knapp, “The impacts of limited water: A Colorado case study,” Journal of Soil and Water Conservation 43 (1988): 294-5; Colorado Foundation for Water Education, Citizen’s Guide to Where Your Water Comes From, 2005, 12.

[5] Sutherland and Knapp, 294-95.

[6] Metzger, 58-59.

[7] Nichols, Murphy and Kenney, 5.

[8] Here, reliable means that a supply is expected to yield water in every year, and sustainable means that the water source is replenished by natural precipitation and does not have a “termination date.”

[9] Colorado Water Conservation Board, Basin M&I Gap Analysis (2011): 2.

[10] Nichols, Murphy and Kenney, 89-92, 111,122, 125-33.

[11] Western Governors Association, Water Transfers in the West (2012), viii.