Transcript Toward Better Water Transfers in Colorado and Cumulative Cost

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
<[email protected]>; Extended Abstract and Hand-outs
SLIDE SET MODIFIED FOR POSTING – References in Speaker’s Notes
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
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…
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
Housing Density Change
1960 - 2050
(Tom Dickinson, C.U. Center for American West,
and IBS Social Sciences Data Analysis Center)
Colorado Front Range
(Center of the American West, on
the internet with two other cases)
2030 M&I Water Demands and Gaps (Colorado Statewide Water
Supply Initiative slide -- except for comments)
Yampa/White/Green
North
Platte
South Platte
10,300 AF
Colorado
Gap
107,800 AF
107,600 AF
Gunnison
Dolores/
San Juan/
San Miguel
Identified
Projects
404,300 AF
Rio Grande Beware! Self- reported “identified projects”! –
--- If the big ones fail, the “gap” soars…
Arkansas
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)
$700 to
Pueblo Chieftain Survey November 2005 - Retail Water Rates
$1400
“retail”
prices
not counting
tap fees,
etc…
Even with
ethanol…
WATER
WILL
MOVE
Front
Range
City
Golden
Highlands Ranch
Aurora
Thornton
Broomfield
Westminster
Northglenn
Arvada
Colorado Springs
Pueblo
Boulder
Lafayette
Pueblo West
Englewood
Denver
Louisville
Pueblo
150,000 g
$645
$632
$590
$511
$498
$490
$475
$472
$471
$452
$432
$409
$374
$354
$352
$345
$327
Without block
increase, charge for
325,000 g -- one
acre-foot
$1,397
$1,369
$1,278
This is likely $1,107
$1,079
not correct
$1,062
- with
$1,029
$1,023
inclining
$1,020
block rates,
$1,020
prices may be $936
higher in
$886
most if not all $810
$767
cities.
$763
$747
$708
Based on annual use of 150,000 gallons and 1-inch meter
rates. Figures are rounded.
12 to 23% of what’s
left – or more ? !
SWSI slide
BIG questions about this: water to acres varies, and the basis
of the demand estimate is uncertain… And, no climate effects!
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)
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]
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!)
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))
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!
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?”)
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
What urban interests count?
• Urban constituents are ratepayers BUT
ALSO tax-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…
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
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…
March 2006
http://www.environmentcolor
ado.org/envco.asp?id2=232
75
Conversion of Best Farm
Land – Near Loveland, in
Weld County, CO
I25
Boyd
Lake
One square mile
Slide by Tom Dickinson, IBS and Geography, Source: National Agriculture
Imagery Program (NAIP),USDA-FSA Aerial Photography Field Office
What is now
happening to
the farmdependent
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
Percent of total population in poverty, 2005
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
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…
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)
Housing Density Change
In Colorado
Housing Density Change
1960 - 2050
(C.U. Center for American West, Tom Dickinson)
2000 - 2020
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
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?
Inhomogeneity of salt loading suggests 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 salinitythreatened 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
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?
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
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>
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?
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…)
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.
Denver Post,
18 May 06,
Brian Rutherford