I’ve been quoting, in this editorial series, from a fascinating article published last June on the Aspen Times website, written collaboratively by Luke Runyon (KUNC) and Heather Sackett (Aspen Journalism). Aspen Journalism is a nonprofit and investigative news organization that covers water and river issues. KUNC’s Colorado River reporting project is supported by a grant from the Walton Family Foundation.
The quotes have focused on the New York hedge fund called Water Asset Management (WAM), which has bought up millions of dollars worth of agricultural land in the Grand Valley west of Grand Junction, along with the senior water rights connected to those farms. The investors have also hired Denver attorney James Eklund, one of the chief architects of the Colorado Water Plan when he worked for the Colorado Water Conservation Board. These water rights purchases alarmed the Colorado General Assembly enough, this past session, to pass a bill forming an “anti-speculation” work group, to explore legal mechanism that could prevent investors from profiting from the sale or lease of Colorado’s publicly-owned resource: water.
Said the main sponsor of Senate Bill 48, rancher Kerry Donovan who represents District 5:
I also hope (this bill) sends a message to people that might be looking to Colorado to make a quick buck that we’re not interested in that type of behavior in our state. If you’re just coming up here to buy up water to turn into a profit in the years to come for your clients, like, ‘No, thank you.’
(WAM’s) goal is to buy assets, to make money — and as much money as they can. I don’t want that type of player in the prior appropriation system…
Surely, if certain folks are buying up water rights with the intention of turning a profit in the future… as water becomes ever more scarce in the American West… it’s not only Senator Donovan who ought to be concerned. There are literally millions of people, and hundreds of thousands of farms and businesses that rely on the free flow of water through, and out of, Colorado. But… should we be using the word, “speculation”?
From the Aspen Times article:
WAM attorney Eklund says the investment firm’s directors are not speculators; they are farmers.
“The characterization, of any farming or ranching operation that is putting water to a beneficial use, as a ‘speculator’, that’s just plain-and-simple wrong,” he said. “In light of Colorado water law, this is not accurate as a description that they’re speculating here.”
Eklund sees a bigger role for WAM and other similar players in a potential future water market. He would like to see Colorado fill up that insurance pool in Lake Powell as quickly as possible and said WAM can help the state do that.
“(WAM is) looking at how they can move water down to Lake Powell to avert a crisis,” Eklund said. “And they’re trying to make sure that we’re becoming more resilient in the agricultural economy in the Grand Valley by strategically planning for how that water gets into the account in Lake Powell.”
I have to agree with attorney Eklund. In light of current Colorado water law, there is no ‘speculation’ involved in purchasing a farm with senior water rights and continuing to operate the farm in a traditional matter. In light of current Colorado water law, ‘speculation’ would come into play if a person, corporation, or government entity tried to obtain water rights that they had no intention of using, just so they could later “sell” the water to another person or corporation or government.
That’s the type of ‘speculation’ that the Colorado Supreme Court wanted to make sure and discourage, when, in 2007, it denied the water rights applications from Pagosa Area Water and Sanitation District (PAWSD) and the San Juan Water Conservancy District (SJWCD) for 64,000 acre-feet of storage rights for a proposed reservoir in the Dry Gulch Valley… and when, in 2009, the Court again denied a revised application for 25,300 acre-feet for storage in the same proposed reservoir.
By the time the 2009 decision was handed down, unfortunately, PAWSD and SJWCD had already put Archuleta County taxpayers millions of dollars in debt by purchasing 660 acres of ranch property in the Dry Gulch Valley. PAWSD has since removed the Dry Gulch project from their long-term Capital Improvement Plan, choosing to focus instead on reducing the millions of gallons of treated water they lose each year through an aging water pipeline system — and, more recently, on building a new multi-million-dollar water treatment facility at their Snowball Road location.
SJWCD continues to discuss the Dry Gulch Reservoir as a feasible project. The SJWCD Board recently voted to spend about $19,000 to hire consultants Wilson Water Group to better define the currently available water resources, water uses, and likely future water demands for Archuleta County. The WWG study will provide information to allow the board to make better decisions regarding future water projects and related water rights.
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.
During the September 21 SJWCD meeting with the Wilson Water Group (conducted via ZOOM) lead consultant Erin Wilson suggested that, given the rate of population growth in Archuleta County, the community probably cannot justify both an 11,000 acre-foot reservoir at Dry Guclh and also a 24,000 acre-foot reservoir using the so-called West Fork Reservoir water rights, if the justification is based solely on local water needs.
Maybe ‘partners’ are needed… to justify these projects?
The water rights for both of these two proposed reservoir projects are ‘conditional’. In order to maintain ‘conditional’ water rights — water rights that have not yet been developed — a government entity like SJWCD typically spends tens of thousands of taxpayer dollars defending each water right in court, every six years or so. Alternately, a government entity can decide that the taxpayers really have no financial means to build this or that proposed reservoir… or that the community really has no need for the reservoir within the next several decades… and the conditional water right can be abandoned.
SJWCD has abandoned numerous water rights over the past 30 years or so, according to a recent presentation by Durango water engineer Steve Harris.
Time to abandon more water rights? In the era of ‘demand management’?