The conversational tone at the October 7 meeting of Colorado’s new Anti-Speculation Law Work Group was definitely friendly. Despite the possibly enormous implications of Colorado water rights purchases by wealthy investors — something already taking place here — and the equally enormous implications of future laws that might make the sale of water rights more difficult, everyone kept their cool and offered their ideas without getting pushy or aggressive.
Perhaps the pushy aggressiveness will come later. This was only the first meeting.
Most of our Daily Post readers are, I assume, municipal water customers, and probably have little concern about how agricultural users utilize our public water resources. For a smaller group, recreational and environmental uses might be important. I quoted briefly, yesterday, from some ‘anti-speculation’ comments made by Alexandra Davis, Water Resources Division Deputy Director in Aurora, Colorado. She mentioned that Aurora expects to triple its population by 2070, and has established a special team to purchase water rights, in expectation of that growth.
A water right in Colorado is considered a ‘property right’ which can be sold — often, to the highest bidder. It’s no doubt painful to be the highest bidder, even if you are using taxpayer funding. When the Colorado courts determined, back in the 1890s, that water rights could be sold, at a profit, to someone who would utilize then those rights for a different use and in a different location, they surely did not foresee the situation that would be facing the state’s residents in 2020.
“So, we’ve talked about property rights,” Ms. Davis remarked. “We’ve talked about flexibility, and a program that allows for uses. We’ve talked about conditional water rights. One of the things that [the term] ‘speculation’ brings to mind for me, is ‘price’ and ‘use’.
“The law talks about the actual use, and whether you can put water to use. But speculators — to me — are acquiring water, not because they intend to use it over the long term, but because they want to make a significant profit when they flip it, to the ultimate end user.
“And I think, as a state, it’s important to look at how much one of our most precious natural resources is costing the citizens — whether it’s the citizens who are acquiring drinking water or it’s new farmers who want to get into agriculture. What is the cost of that resources? And where does the money associated with that resource flow to? Is it staying in the community, or is it flowing out of the state?
“So that’s one thing I’m really interested in exploring, in terms of ‘anti-speculation’, because I think that’s the only place where Colorado water law might address those issues.
“And the idea that water is a resource ‘of the people’ as well as ‘of the individual’. How do you strike that balance? Where individuals use or benefit from this resource, but because it’s a resource ‘of the people’ and is necessary to all life, it’s important to make sure it’s available to everyone. I think it’s a really interesting challenge we have, and I’m so glad Steve [Leonhardt] brought up the High Plains court case, because I think that was one of my last cases at the Attorney General’s office, and also I got to litigate that case. And it was very interesting…”
Writing about water issues occasionally for the Daily Post over the past 16 years, I had not previously heard mention of the High Plains case. Briefly stated, High Plains A&M, LCC. v. Southeastern Water Conservancy District concerned speculators who were buying up agricultural water rights and wanted the water court to decree a ‘change of water right’ without defining who, exactly, would be using the water, or where, exactly the water would be used. The change of use application was denied, as violating the state’s ‘anti-speculation doctrine’.
That case, unfortunately, dealt with only one type of ‘water speculation’. Another type that seems to be currently unregulated involves investment groups buying up agricultural property, with attached senior water rights, and then… holding onto them? For what reason would an investment group buy a farm, and hold onto it?
Alexandra Davis and many others assume the goal might be to flip the water rights for a profit. From what I can tell from my preliminary research, any person or corporation is allowed to buy property in Colorado… and water rights are treated as property. From what I can tell, Colorado currently has no laws that can prevent an investor group from making a profit when flipping property. The ‘anti-speculation doctrine’ appears to have nothing to say about that particular business model. From what I can tell…
Several decades ago, during a vacation in Sweden, I learned about an effort to preserve farmland. Sweden has a limited amount of land suitable for agriculture, and people had became concerned about the conversion of farmland into suburban housing tracts and shopping centers. To solve the problem, I was told, the government passed a law allowing the sale of existing farmland only to farmers who planned to grow food.
I’ve not been able to verify if that law is still in effect in Sweden. But we know that laws can be updated, and that new laws can be created, if the political will exists. And we know that Colorado is not the same place it was in 1891, when the courts declared a water right to be ‘private property’.
I wish the Anti-Speculation Law Work Group the best of luck in saving us from water speculators.
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can’t seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.