Presenter: Professor Bonnie Colby, Departments of Agricultural and Resource Economics and Hydrology and Water Resources, University of Arizona
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Colby, Bonnie

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Colorado Law

University of Colorado Law School Colorado Law Scholarly Commons Innovations in Managing Western Water: New Approaches for Balancing Environmental, Social and Economic Outcomes (Martz Summer Conference, June 11-12) 2015 6-11-2015 SLIDES: New Era of Water Banking and Refined "Water Accounting" Bonnie Colby Follow this and additional works at: https://scholar.law.colorado.edu/innovations-in-managing-western-water  Part of the Administrative Law Commons, Agriculture Law Commons, Aquaculture and Fisheries Commons, Energy and Utilities Law Commons, Environmental Law Commons, Environmental Policy Commons, Government Contracts Commons, Hydrology Commons, Natural Resources and Conservation Commons, Natural Resources Law Commons, Natural Resources Management and Policy Commons, Public Policy Commons, State and Local Government Law Commons, Technology and Innovation Commons, Urban Studies and Planning Commons, Water Law Commons, and the Water Resource Management Commons Citation Information Colby, Bonnie, "SLIDES: New Era of Water Banking and Refined "Water Accounting"" (2015). Innovations in Managing Western Water: New Approaches for Balancing Environmental, Social and Economic Outcomes (Martz Summer Conference, June 11-12). https://scholar.law.colorado.edu/innovations-in-managing-western-water/13 Reproduced with permission of the Getches-Wilkinson Center for Natural Resources, Energy, and the Environment (formerly the Natural Resources Law Center) at the University of Colorado Law School. New Era of Water Banking and Refined “Water Accounting” Professor Bonnie Colby Agricultural & Resource Economics, University of ArizonaJune, 2015, Law School, Univerisity of ColoradoThe organizations indicated below provided support for worksummarized in this presentation.Water bank:• legally authorized to conduct temporary &intermittent changes in place/purpose of use• offers streamlined procedures, “pre-approved” menu of transfers, alternatives to “buy and dry”• can be managed by state, federal or local agency, special district or private firmWhy Water Banks?• reduce economic losses of curtailment• supply reliability – M&I, high-value crops• compact compliance• habitat restoration, environ. Flows• “pressure relief valve” in regional water systemWater Banks & Transaction Costs• costs of finding trading partners, negotiating price, obtaining approval, implementing• water bank must keep TC “reasonable”• high TC make seasonal and temporary trading impractical:Purchase of 500 af @ $14,000/af = $7M dealLease of 500 af @ $100/af = $50K dealWhy Water Banks? … California ….'Almond shaming' targets California growers for water use. ‘‘Drought villains?’’ the Los Angeles Times asked. National Public Radio called almond farmers ‘‘a rogue’s gallery’’ of water users. Boston Globe Associated Press April 20, 2015Water shaming – get over it• Households and communities have their preferences – almonds, tall fountains, kentucky bluegrass, kayaking racecourses …• Focus on transmitting water scarcity signals• Use direct pricing signals where possible• Active water banks transmit value signals - by season, dry-wet years and locationRefining Water Accounting• Tighter accounting justified with rising $$/afcu• Pay for water on consumptive use basis• To participate in bank – “opt-in” to water accounting• Voluntary agreements:  juniors pay, seniors receive payment and reduce consumptive use• Benefits of trading provide incentive to accept  new accounting systemApproaches to CU Accounting• General area-wide: use average crop CU per irrigated acre for area, best available science• Field-specific: based on crop history of the parcel providing water• California DWR Water Transfer Program –most detailed and specific CU protocol. Disallows CU credit for alfalfa fallowing: when deprived of surface water, alfalfa roots tap groundwater.  Water Bank Transaction Types• Contingent contracts to provide replacement water when curtailment occurs• Seasonal leases based on fallowing• Mid-season irrigation suspension – quick response to curtailment, habitat needs, pipeline breaksContingent Contracts Address Curtailment Risk– Multi-year contracts negotiated in advance of need– Rapid response when replacement water needed– Motivated by differences in cost of being curtailed– Provider of replacement water temporarily reduces consumptive use to free up waterContingent contract examples- summer hay fields irrigation suspension, triggered by low flows, high temperatures for fish- field crop irrigation forbearance to sustain orchards, triggered by curtailment for juniors- fallowing for compact compliance, triggered by low reservoir levelsPotential methods for creating replacement water - full season of cropland fallowing - easiest to monitor- change in crop mix to alter crop CU- change in irrig technology & practices- regulated deficit irrigationPart season irrigation suspension• Not consistent with how water rights administered, water applied vs consumed• BUT requires less sacrifice of net farm revenues• Can remote sensing make monitoring these arrangements practical?Mesilla Valley, New Mexico. Landsat-7, pecan orchards (white polygons).From New Mexico WRRI Technical Completion Report No. 357 ESTIMATING WATER USE THROUGH SATELLITE REMOTE SENSINGVALUE: one Landsat scene can include $500M in water assetstrack crop CU- field, sub-field scale - 2+ observations per monthPrize for identifying Landsat scene containing largest water right value• Likely in California or Colorado • Landsat scene is approx 115 miles x 106 miles• Boulder is located in 3rd-most downloaded Landsat 8 scene worldwide (Landsat Image Gallery)Cutting Edge Examples in US WestNebraska Platte Basin NRDs• NRDs must meet flow targets: compacts, ESA• Farmers paid per acre-foot reduced depletion to river (calculated using basin models)• Twin Platte NRD: online trading platform calculates transferrable quantities, matches buyers and sellers• Central Platte NRD: paying $8,000 per acre-foot depletion in 2014, up from $3,750Nebraska Platte Basin NRDs (cont)• online water trading system managed by private firm• online system accounts for spatial difference in impacts on river flows • water users well aware that broad regulatory reduction in water use likely if  trading system proves ineffectiveIdaho Snake River Basin – 60 years of water banking• motivated by salmon recovery, hydropower• Use remote sensing to facilitate and monitor changes in ag CU for streamflow improvements• LARGE benefits to ag from water bank                            - drought losses in farm profits reduced 80%- most water bank trades are ag-to-agColorado: Upper Rio Grande• control GW depletion, protect Rio Grande • USDA pays approx 50% farm conservation costs• incentives funded by feds, state and local sources• target reduced ag use where most advantageous for preserving river flows  (bonus zones)• Farm Service Agency administers, partnering with NRCS, Colorado DWR, Rio Grande WCDWater banks and refined water accounting – tools for the long haulRoman Aqueduct, Pont du Gard, FranceThank you!bcolby@email.arizona.eduGuidebooks: Innovative Water TradingReferencesBasta, E and B Colby, "Water Market Trends: Transactions, Quantities, and Prices," The Appraisal Journal, Winter 2010, volume 78, number 1, p 50-66.Jones, Lana and Bonnie Colby. “Weather, Climate, and Environmental Water Transactions”. Weather, Climate, and Society, American Meteorological Society, Volume 2, Issue 3: 210 –223, 2010aJones L & BG Colby. Farmer Participation in Temporary Irrigation Forbearance: Portfolio Risk Management. Rural Connections: 43-48, 2010b. Lindenmayer, Hansen, Brummer, and Pritchett, Deficit Irrigation of Alfalfa for Water-Savings in the Great Plains and Intermountain West: A Review and Analysis of the Literature, Agron. J. 103:45–50 (2010) doi:, Colorado State Univ., Fort Collins, COMacarena, Dagnino and Frank A. Ward. “Economics of Agricultural Water Conservation: Empirical Analysis and Policy Implications.” International Journal of Water Resources Development. 28.4(2012): 577-600, DOI: 10.1080/07900627.2012.665801. New Nexico State Univerity, College of Agricultural , Consumer and Environamentla Sciences, Cost and Return Estimates for Farms and Ranches 2013 http://aces.nmsu.edu/cropcosts/Ward, Frank A. and Manuel Pulido-Velasquez. “Economic Costs of Sustaining Water Supplies: Findings from the Rio Grande.” Water Resource Management (2012): n.p. PDF File.

SLIDES: New Era of Water Banking and Refined  Water Accounting

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SLIDES: New Era of Water Banking and Refined Water Accounting

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