As the saying goes, water flows uphill toward money…
— from a September 2019 article, “New Water Demand Management Agreement on the Colorado River” by Thomas Morris, on Legisource.net
One of the key water discussions currently taking place in Colorado — in government offices, by email, via Zoom meetings — concerns the idea of ‘demand management’.
Some might see this term as misleading, because it doesn’t actually imply the management of demand — which might be a really good thing, considering the current condition of the Colorado River. Instead, “demand management” refers to a concept developed by a number of water planners, whereby the taxpayers of Colorado — or somebody else? — would pay farmers and ranchers to allow water, to which they have rights, to remain in the Colorado River and its tributaries and to flow into Lake Powell, to be used, eventually, by cities and agricultural corporations in Utah, Nevada, Arizona and California.
From Thomas Morris’ article on the Legisource.net website:
Demand management in this context means, roughly, a temporary, voluntary, and compensated reduction in consumptive water use by specific water rights owners. In Colorado, demand management could involve a front range metropolitan water provider (whose water rights postdate the 1922 decree and thus whose diversions would be curtailed if the upper basin failed to meet its delivery obligation) paying a senior agricultural user on the western slope to temporarily not divert water from the Colorado River or its tributaries. The metropolitan water provider would then be able to continue to export Colorado River water to its Front Range water users. As the saying goes, water flows uphill toward money.
One of the main architects of the ‘demand management’ plan has been Denver attorney James Eklund, the former director of the Colorado Water Conservation Board — the state’s main water policy agency. Mr. Eklund also served as the state’s representative to the Upper Colorado River Commission, another powerful policy board.
The New York-based hedge fund Water Assets Management (WAM) has reportedly been buying up small batches of agricultural property in Colorado’s Grand Valley, starting in 2017. Some folks aware of the situation have been speculating about the purchases, considering that WAM is not known for its agricultural expertise, and in fact has been leasing its property to actual farmers — sometimes, to the same farmers from which the property was purchased.
But recently, the hedge fund took a step that might signal its future intentions.
From an June, 2020 article on The Aspen Times website, written by reporters Heather Sackett and Luke Runyon:
WAM recently brought onto its team a heavy hitter in the world of Colorado River politicking: Denver-based attorney James Eklund…
…[Eklund] was one of the architects of the Drought Contingency Plan, the document that made the case for a demand management program throughout the Upper Basin. Soon after he left these public posts, he began representing WAM as counsel.
Eklund, who comes from a Western Slope ranching family, says WAM’s strategy is to buy irrigated land and then pump money into cutting-edge technology and practices, thereby increasing irrigation efficiency and crop yield. The leftover water could be, in exchange for payment, sent downstream under a demand management program.
“I definitely think that if there’s a program that pays farmers, (WAM is) interested in it — and for good reason,” Eklund said. “They want to make sure their investment is generating the types of returns that their investors expect.”
To summarize. Attorney James Eklund and a team of water experts helped to design the Colorado River Drought Contingency Plan that proposes to pay agricultural property owners to forego the use of their water rights, and one of the key methods to make this happen is the mechanism called ‘demand management’, which Mr. Eklund helped to invent. And now Mr. Eklund is working for a New York hedge fund that is purchasing agricultural property in the Grand Valley… and maybe elsewhere?
Disclosure: I currently serve on the San Juan Water Conservancy District board, but this essay does not necessarily reflect the opinions of the SJWCD board as a whole or of any other SJWCD board members.
As I write this in September 2020, the ‘demand management’ mechanism is still a somewhat vague idea. Perhaps even a pipe dream. One of the key issues waiting to be resolved is funding such a program. If Colorado’s government were to decide to pay farmers (and hedge funds) to allow water to flow down the Coloradso River to Lake Powell — water to which these people have the legal right to use, for agricultural purposes — where, exactly, would the money come from?
In Colorado, thanks to the TABOR amendment, our state government cannot raise taxes or create new taxes without voter approval. Most voters in Colorado are not farmers (or hedge fund investors). But most urban voters are served by municipal water districts that are, in turn, reliant on “junior” water rights — the types of water rights that are, under Colorado water law, first to be cut off in case of a water shortage.
The senior water rights in Colorado are generally connected to traditional agricultural properties… such as the properties being acquired by WAM. Is this “water speculation”? Or something else?
Most of the senior water rights in Archuleta County are likewise attached to agricultural properties, and those properties — according to the US Geological Survey — divert about 94% of the water used in the county. That diverted water would otherwise flow into the San Juan River… to then join the Colorado River at Lake Powell.
I don’t know whether WAM or similar hedge funds are purchasing agricultural properties in Pagosa Springs. I haven’t heard any rumors of such activity. But there is another wealthy group that’s been buying up our ranches and farms.