Diamond Valley in rural Nevada has a critically overdrafted aquifer that supports its farming economy. Some irrigators want to shift to a market-based system to limit pumping, but the community is divided.

When Jake Tibbitts heard rumors about the two cattle shot at Sadler Ranch, it didn’t occur to him that water could be the potential motive, although the rancher would later make that claim. Water is a contentious topic in Eureka County, a tight-knit community of about 2,000 in rural central Nevada where Tibbitts, who oversees the county’s Natural Resources Department, has been working to prevent a vital water source from running dry.

Like many communities in the West, Eureka County faces a water crisis that stems from over-appropriation. For decades, state regulators have let irrigators in Diamond Valley – a high-desert basin with 25,000 acres of irrigated agriculture, mostly hay fields – pump more groundwater than the basin could replenish.

As agricultural operations became a thriving part of the county’s economy, Diamond Valley farmers brought jobs and revenue to the county as they exported alfalfa to countries as far away as China and Saudi Arabia. Meanwhile, the state had given farmers the legal right to use more than four times the amount of water than the basin was able to sustain. As a result, stream flows started to slow and, since the 1960s, the groundwater levels have dropped 2ft or more a year.

“There has been an entire community built on over-appropriation,” Tibbitts told state legislators in February. “And that’s kind of scary.”

To solve the problem, the valley may need to choose between two paths: mandatory curtailment or a groundwater market in which water rights are converted into tradable shares. And the community is divided between farmers pumping groundwater and ranch owners who want immediate action.

In 2015, the state engineer – Nevada’s chief water regulator – declared the basin a Critical Management Area, requiring water-rights holders to develop a groundwater management plan or face the mandatory curtailment of pumping. Local officials sided with farmers, saying the latter option would cripple the county’s economy, which brings in more than $22 million a year from farming.

The critical management designation gave irrigators leeway to depart from some tenets of Western water law and propose a creative solution to over-appropriation of groundwater. A group of farmers have backed an idea that could test those legal boundaries: They want to create a water market.

A Legal Fight Over Pumping

Sadler Ranch, where the two cattle were shot this spring, was developed in the late 1800s by Reinhold Sadler, Nevada’s ninth governor, and the ranch’s water rights predate water law.

With pre-statutory rights, Sadler is one of several ranches with first priority to water in the valley, but years of overpumping have decreased streamflows and its access to water. Since 2012, Sadler has taken legal action to restore its pre-1905 rights, most recently asking a court to halt pumping for junior rights holders. Other ranches with surface water have filed claims to restore the stream flow lost to pumping, too, and it has put a wrinkle in plans for a market.

“That’s created a sense of urgency for many people,” Tibbitts said in his testimony to state legislators. “But it’s also created a sense of futility – the water fights that continue to go on.”

The ranch’s co-owner, Doug Frazer, suggested in an op-ed published in the Elko Daily Free Press that a farmer had likely been behind the cattle shooting on his ranch. Although it was never confirmed, it highlighted the growing tension in the valley over water and an unpopular position pushed by Sadler Ranch.

As a result of Sadler’s legal actions, the state engineer granted the ranch some water to mitigate the amount lost to overpumping. But it was only a fraction of what Sadler Ranch asked for. The state engineer granted 975 acre-feet of replacement water. It is asking for 7,500 acre-feet, Frazer said.

“The bottom line is that we want the state engineer to follow the law,” said Frazer. “The law is really basic and it’s really simple. First in time and first in right.” Frazer’s efforts have made him unpopular with the community, because 90 percent of irrigators have junior rights or a mix of junior and senior rights.

“They are asking for an ungodly amount,” said Vickie Buchanan, an alfalfa farmer whose family helped settle the valley in the 1950s. Both the farmers and county have filed public documents alleging that Sadler has overstated its historical water rights. Competing estimates have created friction, and it could take years for the state engineer to complete an adjudication. “It’s never going to flow the way it did before,” Tibbitts said during an interview in his county office, and at the same time, the economy would take a hit as farmers stopped pumping.

Planning for a Market

Buchanan lives on the southern side of the Diamond Valley basin, at the epicenter of farming activity. Despite having senior rights, Buchanan is working to avoid mandatory curtailment, a blunt regulatory instrument that she believes would splinter the community and lead to “water wars.”

She also lives near the basin’s cone of depression, meaning the water table below her farm has dropped lower than other areas, so in practice, Buchanan’s access to her water right is limited.

“I’m fully senior, but I don’t have any water,” she said.

In naming Diamond Valley a Critical Management Area, the state engineer required rights holders to devise a plan to bring the basin into equilibrium or face mandatory curtailment. With help from Duke University’s Nicholas School of Environment, which helps jurisdictions develop water markets, a group of irrigators came up with a market-based plan to avoid curtailment.

Under the plan, all irrigation water allocations would be converted into tradeable shares, taking seniority into account. The intra-basin shares could then be leased and sold. Each share would represent one allocation of water, an allocation that would decrease gradually over about three decades until aggregate pumping reached a sustainable level. A water market would allow Buchanan to sell a portion of her water instead of farming with an insufficient supply of water. Proponents also argue that it could give irrigators a financial incentive to conserve water.

“As everyone gives a little bit, hopefully we can make our valley survive,” Buchanan said.

Proponents argue that such a system would give farmers the most flexibility to prepare for the day when less water is pumped from Diamond Valley. They could still earn some income as they make new plans for the land. Some are looking at installing solar or growing alternative crops.

But the plan departs from Western water law in two significant ways.

Current law is premised on the idea of seniority. Those who were awarded rights first are the last to lose their rights in times of shortages. Though the plan would give senior rights holders more shares, their total allocation would decrease over time.

Those who were awarded rights first are the last to lose their rights in times of shortages. Though the plan would give senior rights holders more shares, their total allocation would decrease over time. Current law requires irrigators to use their whole allocation or face the possibility of losing their water rights, a provision known as “use it or lose it.” The plan would allow irrigators to use a portion of their allocation and sell unused water, encouraging conservation.

Buchanan is hopeful many senior rights holders will buy into the plan because many also hold junior rights. No one thinks it’s perfect. Tibbitts said he doesn’t agree with everything in the plan, but he’s been impressed at the farmers’ willingness to look at making a mutual sacrifice.

And he said it’s better than the alternative. “Curtailment doesn’t look at whether water is being used on the best ground. It doesn’t look at whether the farmer is using the [most efficient] techniques. Curtailment is blind,” he said. “It’s simply how you are in the list of priority.”

Even though 90 percent of irrigators have junior rights or a mix of junior and senior rights, that doesn’t mean 90 percent of irrigators support the plan. Some have indicated a willingness to give up their junior rights for an assurance that their senior rights won’t be harmed, Tibbitts said.

The proposal, which is under review by the state engineer, faces an uphill battle. The final groundwater plan must be approved by the state engineer and 50 percent of irrigators. Tibbitts expects that to take place in the fall. Local and state politicians are wary about changes to Nevada water law. Some are strict proponents of prior appropriation, and they believe veering from it could open the floodgates to speculation.

Although the Groundwater Management Plan has safeguards, lawmakers worry it could enable cities to buy into the market and remove water from rural basins. Nevada has never used a market-based approach to manage an over-appropriated basin, and some question whether the plan would comply with state water law. Tibbitts expects any plan to be challenged in court. At least one senior rights holder has a lawyer who said that any decrease in a senior rights allocation would be a taking of property. And if curtailment comes, stemming from the Sadler dispute, the plan could be moot.

“There are all these moving parts in trying to keep people together,” Tibbitts said. “With water, there is always conflict. But frankly, I’ve been surprised and pretty proud of people being able to come together and try to come up with something that’s a mutual sacrifice for everybody.”