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Toward Better Water Transfers in Colorado and Cumulative Cost Avoidance

Toward Better Water Transfers in Colorado and Cumulative Cost Avoidance. John Wiener Presentation at USCID Conference on Urbanization of Irrigated Land and Water Transfers Phoenix, AZ, 28-31 May 2008 <John.Wiener@Colorado.Edu>; Extended Abstract and Hand-outs

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Toward Better Water Transfers in Colorado and Cumulative Cost Avoidance

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  1. Toward Better Water Transfers in Coloradoand Cumulative Cost Avoidance John Wiener Presentation at USCID Conference on Urbanization of Irrigated Land and Water Transfers Phoenix, AZ, 28-31 May 2008 <John.Wiener@Colorado.Edu>; Extended Abstract and Hand-outs SLIDE SET MODIFIED FOR POSTING – References in Speaker’s Notes

  2. Context: other talks in this conference • Commissioner Johnson: Climate change, institutional change, reducing rural losses • Jennifer Thorvaldson et al: new transfer forms and farmer interests • Jay Winner: the Super Ditch project… Organizing irrigators with different ditch companies, water rights, different diversions • MaryLou Smith will describe the process of working together in a situation structured by severe past adverse impacts and incentives pushing against cooperation

  3. So, what’s my point? • Closer but not yet – needed transition to useful participation of the full range of interests affected by water transfers • Where market-based interest coordination fails, there will very likely be political assertions of interests, often without compensation to those affected. (Unless already a political process – e.g. IWRM). • Progress on “the elephant”, but risk that we hear the elephants’ question…

  4. Conclusions • Better water transfers COULD BE DONE • Using 3 forms IN COMBINATION (handout) • PARTICIPATION of all interests is needed • COST COMPARISONS needed… • PARTNERSHIPS… • CUMULATIVE COSTS are NOT SMALL • Loss of agricultural capacity • Biological issues – almost unknown • Opportunity Costs – the loss of chance to make better use of land and water – The next frontier – Seeing a better future

  5. Housing Density Change 1960 - 2050 (Tom Dickinson, C.U. Center for American West, and IBS Social Sciences Data Analysis Center)

  6. (Center of the American West, on the internet with two other cases) Colorado Front Range

  7. South Platte North Platte Yampa/White/Green 10,300 AF Gap 107,800 AF Colorado 107,600 AF Identified Projects 404,300 AF Gunnison Dolores/ San Juan/ San Miguel Rio Grande Arkansas 2030 M&I Water Demands and Gaps (Colorado Statewide Water Supply Initiative slide -- except for comments) Beware! Self- reported “identified projects”! – --- If the big ones fail, the “gap” soars…

  8. Ag water is still cheap! This is for the sale of water rights, not one use or a lease From Denver Water Integrated Resource Plan, and in Luecke et al., 2003, What the Current Drought Means for Colorado… (on-line from Trout Unlimited, Colorado)

  9. $700 to $1400 “retail” prices not counting tap fees, etc… Even with ethanol… WATER WILL MOVE This is likely not correct - with inclining block rates, prices may be higher in most if not all cities.

  10. 12 to 23% of what’s left – or more ? ! BIG questions about this: water to acres varies, and the basis of the demand estimate is uncertain… And, no climate effects! SWSI slide

  11. What’s a “Better” transfer?From whose point of view? • Better than “buy-and-dry”… traditional transfer: no future irrigation on that land • drop in value of production • drop in tax base • drop in labor • drop in inputs used and purchased • LESS RANDOM than traditional? Water right values not strongly linked to soil qualities, environmental values, spatial coherence with other values – important unknowns! (Briand et al. JAWRA 2008)

  12. IF WITHIN MARKETS: New forms of water transfer wanted ( in handout – not just climate) • Short term spot market -- “water bank” • Long-term “rotating crop management” -- timing specified intermittent transfer to meet “base load” demand for municipalities (M&I sector), other high-value uses • Long-term interruptible supply arrangement -- transfer when condition is met, to meet foreseeable but timing-unspecified demand • [Along with temporary “bridge” deals (substitute water supply) and micro deals]

  13. Markets in Colorado Are Not Working Well • Little information on who owns what, or prices paid. Compare real estate or almost anything else... • Lack and/or cost of information probably favors the few buyers over the many sellers • Asymmetry probably favors brokers even more! • Historic limitations on “beneficial” uses of water… • Biggest change: In-stream Flow Rights – recent innovation, unfinished project, many of these quite junior • Exclusion of those affected by “third party impacts” or externalities – limits on standing, timing of entry bad • Public interests not well identified or represented yet • Un-represented seek “entry” by political or regulatory means • Limits on kinds of contracts and arrangements – • short-term moves very limited • no long-term lease deals yet • “interruptible supply” very limited in Colorado • POOR MATCH of Costs and Benefits – physical, economic, temporal  Inhibits INCENTIVES for better (Cf. IWRM!)

  14. Long-Term Rotational Crop Management • Very long-term is ideal -- stability for all (cf Jay, and Jennifer Thorvaldson reports on preferences – not there yet… But…) • Planned locations of fallow/etc • Farm incomes and financing improved? • “Base-load” predictable water supplies • Only Up-front infrastructural costs (e.g., diversions, conveyance) – financed; no revegetation mess • “Pay-as-you-go” acquisition, not bonding, (save 50% at 3.25% interest for 30 years), better match of costs and benefits • ALL terms of deals negotiable - including end of term, indexing, risk management (Still some limits in new CRS 37-92-103 and -305(4)(a)(IV))

  15. Long-Term Interruptible Supply • Also very long-term idea -- stability goals • NOT available in “3/10” years, 10 year limit deals in CRS 37-92-309 -- want much longer • Water moved on call, as specified, e.g. for... • Dry-year and drought recovery • Facility management • Wet-year opportunities (Aquifer Storage, etc) • Prices indexed to opportunity costs, costs of flexibility, and timing of “call” and situation • Pay-as-you-go instead of up-front and debt… • ALL terms should be negotiated!

  16. Stacking for Management • Base-load from rotational fallowing • Intermittent needs from interruptible supply • Unforeseen needs from spot market • COMBINATION – (Cut to the chase: this is partnership, whatever you call it… Contracts are a means of risk distribution) • But, don’t these cost more? Don’t know… • Why should a city do this? (“Like, uh, what’s my motivation?”)

  17. Missing Cost Information on “Buy and Dry” • revegetation required of formerly irrigated land… to what? “Native” may not be on the menu anymore…. • costs and duration of efforts required? • treated as proprietary, so far • successful cases? • standards may change – increased difficulty • soil erosion hazards increasing – higher intensity of precipitation • weed and fire loads questions – new obligations? • changed soils and new climate questions

  18. What urban interests count? • Urban constituents are ratepayers BUTALSOtax-payers paying bonded debt • Supporters of open space, agricultural preservation, and rural areas • Voters for conservation etc – See Trust for Public Land “Conservation Vote” • Even in No Plan, No Foresight Colorado: 110 elections, $3.8 Billion • Recreators and Users of rural places • Members of a lot of groups… mixed bag! • Any one ask them? Not sure… polls…

  19. What Urban Interests Count? • Simplicity, Reliability, “Invisibility”: Water System Management Values • Traditional is understood and predictable • New kinds of deals would require much more intensive collaboration – NOT SECRET! • Permanence (please see handout – principles page) • “We sell a tap forever” • Life of facilities and financing not a factor • Partnerships and long-term planning? Too new! • No incentive to match benefits and costs • Werner Von Braun

  20. Cumulative Costs or Losses • Agricultural Capacity • loss of irrigated acreage • loss of soil qualities, especially if not farmed • loss of farm families and labor • loss of agricultural sector linkages/infrastructure • Biological Capacity • loss of connectivity of habitats and chance to preserve it • loss of diversity of habitats and chance to preserve • Loss of Future Choices – especially cheap ones…

  21. March 2006 http://www.environmentcolorado.org/envco.asp?id2=23275

  22. Conversion of Best Farm Land – Near Loveland, in Weld County, CO I-25 BoydLake One square mile Slide by Tom Dickinson, IBS and Geography, Source: National Agriculture Imagery Program (NAIP),USDA-FSA Aerial Photography Field Office

  23. What is now happening to the farm-dependent areas? SOME ethanol relief, but Long-term questions – feed prices… messy… Where the land is NOT CONVERTED to urban use? Population Growth is NOT evenly distributed

  24. WEALTH and CAPACITY are not evenly distributed, either… d Effect of the ethanol boomlet? Hmmm… Source: USDA ERS (downloaded 17 May 08) http://www.ers.usda.gov/Data/PovertyRates/PovListpct.asp?ST=CO&view=Percent

  25. Loss of Future Choices • Financial constraints on agricultural areas • Planning not a preference? Lack of capacity? • Fragmentation of land – • “Ranchettes” proliferating – very fast • Lack of ability to control development (Will?) • County coffers drained by costs>revenues • Amenities and rural quality of life – luxury or necessity for future development? • Prisons and nursing homes don’t care…

  26. Newcomers and Exurban Development • The “ranchette” phenomenon -- currently 4 times the area occupied by all the cities and towns in Colorado -- but forecast to double in 30-40 years (Theobald et al.) … >35 acres unregulated… • Not new data… • Good neighbors? County and school services cost average of $1.65 for each $1 tax revenue • Coupal and Seidl, 2003 – CSU Dept Ag and Res Econ • Biologically, impacts may be disproportionate to area occupied -- (no planning allowed!) • Just hoping for easements to prevent problems? • THEY ARE NOT FARMING! (except for tax rate)

  27. Housing Density Change In Colorado 2000 - 2020 Housing Density Change 1960 - 2050 (C.U. Center for American West, Tom Dickinson) 2020 PEOPLE MOVING INTO THE RIPARIAN CORRIDORS 2000 David M. Theobald. “Targeting Conservation Action through Assessment of Protection and Exurban Threat.” Conservation Biology, 17(6):1624-1637. Dec. 2003

  28. Cumulative Limits? • Water quality issues – • TMDLs? (total maximum daily loads) • Only very recently can Colorado Water Courts even consider water quality… Will there be a limit? How will transfers interact with NPDES? • Effects of erosion and changes in runoff from termination of irrigation? • HOW WILL A LIMIT WORK? WHO BEARS THE COSTS? • RACE TO BEAT THE LIMIT? Door slam? On whose future choices? Whose growth?

  29. Inhomogeneity of salt loading sug-gests remediation by ending deep percolation in source areas -- Can we move irrigation someplace else? Figure from Gates et al., 2002, Monitoring and modeling flow and salt transport in a salinity-threatened valley. J. Irrig. And Drainage Eng., 128(2): 87-99; downloadable from journal site. Salinity above 1500 mg/l is bad for even stock watering; these levels also reduce crop yields. GROUNDS FOR FLEXIBILITY IN MOVING WATER FROM CURRENTLY IRRIGATED LANDS

  30. Environmental Limits? • Endangered Species Act – What’s next? • lack of information on private land • Minimalist Minimum Stream Flow Vs Climate Change? (Trout Unlimited studies: Dry Legacy 1 and 2) • Wetlands-related limits? Invasives? • Changes to land and water already extensive • Re-Redistribution of water? • (Water Resources Impact May 2008) • No cumulative impact studies – stay blind? • Again, how will limits work? Whose cost? Incentive to race to avoid? Whose future?

  31. The green area includes land unintentionally wetted by irrigation return flows and conveyance loss -- it may now be important habitat that we should pay to secure Data source: Landsat Enhanced Thematic Mapper, 2005. Map by Thomas W. Dickinson, Institute of Behavioral Science, University of Colorado at Boulder

  32. Climate Change Vs Western Irrigation • USGCRP Sectoral Assessments (Water, Ag.): • Small changes with big water consequences? (2000) • Nationally, moderate effects on ag., no “crisis” (2001) • USGCRP: Central Great Plains (Ojima et al 2002) • With less water, irrigation hurt • With more water, irrigation loses to dryland • USGCRP: Great Basin/Rocky Mtns. (Wagner et al. 2003) • Ag declines in all scenarios • Recent Integrated Assessments (2004, 2005): • Current management in trouble • Ag. Loses water, all scenarios, even “best case” (references, interpretive memo available) -- changes in comparative advantage of irrigation versus dryland • IPCC Fourth Assessment, 2007 – various reports on website • US Climate Change Science Program, see CCSP website” <www.climatescience.gov>

  33. Two Constants and the Low-Cost Social Welfare Function • Constant 1: Urban ability and will to pay -- for water AND ALSO for amenity, environment, open space, ag. preservation…. $24 billion locally voted in 5 years (US); $3.8B in Colorado so far, passing 110 of 148 measures (TPL) • Constant 2: Soil formation is very slow; climate is faster! • Suppose you owned all the pieces? What could you do to maximize the outcomes? • Answer tells what you want to maximize (pie flavor) • Answer tell how much you might get (pie size) • Problem: you don’t own it all. So, how to organize so as to get the biggest and best possible pie, for owners and others affected? • We use markets,mostly… Can they work better? • ECON 101 – CAN WE GET THERE?

  34. MAKING MARKETS WORK • Markets need good information about prices and supply and demand… AND COSTS!!! • Markets can’t reflect unknown interests • Lack of vision – what value is possible? • Lack of planning and public interest, non-market interests, future interests, state interests? CUMULATIVE IMPACTS!!! Bite the bullet… • Internalize “externalities”! Third-party interests – Get them to the table! • Coordinate interests – make better deals! • Pay for interests! (Not necessarily money…)

  35. Thank you! Notes • Hand-out has summaries of several parts of project on moving towards climate-responsive water management - available by e-mail also • See also Wiener, J.D., 2007 and 2008 USDA CSREES Water Meetings: • http://www.usawaterquality.org/conferences/ 2007/abstract_index.html#W • http://www.usawaterquality.org/conferences/ 2008/abstract_index.html#W • Disclaimers: Nothing here represents any position of the National Oceanic and Atmospheric Administration, the National Center for Atmospheric Research, or the University of Colorado, and the secretary will disavow all knowledge.

  36. Denver Post, 18 May 06, Brian Rutherford

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