* Disclaimer this post is taken from my alter ego personal blog. Don’t say I didn’t warn you.
Last Friday, (5/23/12), I had the fortunate opportunity to participate in my first podcast with 406startup. Even better, the topic was MARKETING and the subjects were Big Sky Brewing Company, Lotic Water, and Linsey Corbin – my three favorites. Here is the link to the show:
Slightly over a week removed from the Mitigation Banking Conference, I’ve finally found time to reflect on the lessons I learned at this event. The top 5, in no particular order, are as follows:
1. Highly fragmented and localized markets. Wetland mitigation banking success in Florida doesn’t lead to mitigation banking success in California. Similar to the water market, ecosystem service markets vary from basin to basin, state to state, and regulatory office to regulatory office.
2. Face time matters. I sponsored last year’s event and strategically followed up with likely clients. An email and phone call will never replace interpersonal communication–at least for me.
3. Regulations drive mitigation markets. It became obvious the majority of buyers for wetlands, streambank, and species credits, don’t do it because they like the product ( think iPhone or Car). They buy them because they have to. Similarly, simple supply and demand will eventually determine water allocations–and already does in certain markets– but regulatory closures are expediting many of the water quantity markets.
4. Regulators are also a target market. In most traditional markets, you direct your marketing efforts to the buyer. This is where mitigation markets differ. Because regulators are forcing the purchase, they play a critical role in the transaction. In some instances, they drive every deal.
5. I love water. I really enjoyed the conference and have tremendous respect for these markets and their players. I also greatly appreciate my water work within these mitigation markets. Although, time and time again, I was thankful for working in water markets. As cumbersome and inefficient as they be, water rights are assets that have survived the test of time.
water rights will play a critical role in ecosystem service markets of the West, so understanding and managing these assets should remain a top priority.
This previous post expands on this vision and role of water rights in these ecosystem service markets. I hope to see you there or along the way. Safe travels.
One of the many benefits of water markets is their ability to rapidly adapt to changes on short notice. Enter the Colorado Water Trust (CWT) and their implementation of “REQUEST FOR WATER 2012.” Faced with a 38% of average snowpack, this Denver-based nonprofit is actively pursuing short-term instream flow leases in priority basins. I’m obviously a fan of this market response to an anticipated water challenge and had the chance to ask CWT Executive Director, Amy Beatie, a couple of quick questions. Questions and answers are as follows:
1. It appears the Engineer must approve each loan, do you know how long this approval process will take? THE STATUTE DOESN’T PROVIDE TIMEFRAMES FOR SOME ACTIONS, SO WE DON’T EXACTLY KNOW. WE HAVE WORKED VERY CLOSELY WITH THE STATE ON THIS, THEY KNOW LEASES ARE COMING, AND THEY KNOW, AND APPRECIATE, THAT THE IDEA IS TO GET WATER QUICKLY INTO RIVERS. SO, WHILE THERE ARE NO DEADLINES, THEY ARE PREPARED TO MOVE FAST AND SO ARE WE.
2. At 38%snowpack how will CWT ensure they are targeting water rights that won’t be called by senior users? WE’VE ASKED IN THE INITIAL OFFER FORM FOR THE WATER USER TO LET US KNOW IF THEY HAD WATER AVAILABLE IN 2002. THAT’S THE BEST WAY FOR US TO DETERMINE WITHOUT MORE ANALYSIS IF THE WATER RIGHT WILL HAVE WATER AVAILABLE THIS YEAR. IF WE HAVE QUESTIONS ABOUT AN OFFERED WATER RIGHT’S RELIABILITY, WE HAVE ALSO BUILT A TEAM OF TECHNICAL EXPERTS (CONTRACTORS AND VOLUNTEER ENGINEERS AND HYDROLOGISTS) TO HELP US PROCESS THE OFFERS, SO THAT WE DON’T LEASE “PAPER WATER.” THEY ARE ALL ON CALL FOR TWO WEEKS STARTING ON MONDAY, MAY 14 RIGHT AFTER THE INITIAL OFFER FORM SUBMISSION DEADLINE TO HELP US PROCESS THE TECHNICAL ELEMENTS OF THE OFFERS FOR LEASES.
3. What is the ultimate goal for this request in CFS or AF? NONE. WE ARE STILL RAISING THE MONEY SO WE WILL LEASE AS MUCH WATER AS WE HAVE MONEY TO, AS LONG AS THE WATER OFFERED MEETS THE STATUTORY REQUIREMENTS. BEFORE WE PUT OUR REQUEST FOR WATER OUT, WE THOUGHT MAYBE TWO OR THREE LEASES WOULD BE A SUCCESS. WE’RE THERE ALREADY SO WE WOULD CONSIDER THIS A SUCCESS NOW IF WE COULD, SAY, ENTER INTO ONE IN EVERY BASIN? WE DON’T KNOW. THIS IS THE FIRST TIME WE’VE DONE ANYTHING LIKE THIS. MAYBE THE NEXT TIME WE’LL HAVE A GOAL. WE JUST WANT THE PROGRAM TO BE AS SUCCESSFUL AS POSSIBLE THIS SUMMER.
One of my all time favorite Montana Water Right references is the Water Rights in Montana Handbook. Revisions to this publication closely follow the latest legislative session and the changes that it brings. This year of course, the state passed the the “Marketing” bill (AKA: My favorite bill ever). Here’s what the handbook has to say on this subject:
Marketing for Aquifer Recharge or Mitigation
The 2011 Legislature allowed existing water rights holders to change all or part of an appropriation for use as aquifer recharge or mitigation (section 85-2-420, MCA). Part of the appropriation may be marketed (e.g., leased) or sold. The appropriator may continue the authorized beneficial use until the change in use is completed.
The appropriator’s flow rate and volume at the point of diversion would then equal the initial beneficial use minus the amount sold or marketed. Changes to an appropriator’s right must be completed within 20 years. The appropriator must notify the department within 30 days each time a portion of change is completed.
The water purchaser or leasee would still be required to submit an Application for Beneficial Water Use Permit.
In short, the book was released today and I felt inclined to share.
I want to learn more about water markets, what are your recommendations?
In response to this question, I’ve decided to create a hyperlink list of my favorite resources. Some of these resources don’t solely focus on this this topic, but have provided valuable great water market content from time to time. As these markets are continually evolving and emerging, I imagine this list will do the same.
Feel free to email or submit in the comments of resources you enjoy and I missed.
The Back 40 recently asked for me to share some marketing communications framework for water. I happily received this invitation and thought the most logical starting point was the beginning. LISTEN. Here’s a link to the full article.
Enjoy. And, please feel free to provide any insight or feedback.
As a side, I have to give thanks to Seth Godin who has shaped much of my passion for marketing and thought process through his work and wisdom. If he writes it, I read it.
I’m pleased to promote a recent book release: Tapping Water Markets. As a fan and supporter of PERC, this one hits close to home. PERC was talking about environmental markets as a solution to our environmental problems, before it was cool. They’ve also been instrumental in planting and growing this seed within me and many others.
I had the opportunity to pass three burning questions past one of the book’s authors (and friend), Reed Watson. He was kind enough to respond. I told you we were friends. Enjoy.
1. Why Tapping Water Markets?
Our book is about the past, present, and future of water markets. It compares water markets with political water allocation, documents the growth of water markets, and explores the ways in which water markets can be improved and implemented further. This book provides up-to-date information of where and why water shortages are occurring and where and why water markets are evolving to resolve conflicting water uses. The title reflects the book’s primary thesis, that tapping water markets offers great potential for improving water use efficiency and water quality.
2. What is the most important lessons in the book?
Although water policy is a broad and complex topic, most water conflicts arise for the same simple reason: competing users cannot trade. Trading water requires clearly defined, secure, and transferable property rights; and whenever a water crisis develops, it’s usually because the water right system is lacking in one of these critical dimensions.
Tapping Water Markets applies this property rights lens to a number of discrete water management topics including surface water allocation, groundwater management, environmental flows, and water quality trading. For each topic, we analyze the barriers to trade and suggest policy reforms for reducing the transaction costs. We hope readers appreciate the book’s breadth but also notice the pervasive property rights theme.
3. What does the future hold for water markets?
The future of water markets depends in large part on the scarcity of water. After all, markets are only useful in allocating scarce resources to their highest valued uses. Rarely do you observe markets for abundant resources. The problem in the United States is that we subsidize the majority of our water consumption. These price distortions mask the actual scarcity of our water resources, reduce the political will for institutional reforms, and perpetuate inefficient use. Not until water users feel the sting of depleted supplies will water marketing come to the fore.
Update: This promotional video was released on 4/19 and I thought it was good fit here.
I assume my water “marketing communication” pulse is being felt, as I’m receiving an increasing # of emails on this subject. The latest was the following Farm Water Conservation Infographic, thanks to Killer Infographics. Although, I slightly disagree with the statistics and framing regarding efficiency, I find the graphic a compelling means to tell this story and position the message of farm water conservation.
Infographic by Seametrics, a manufacturer of water flow meter technology that measures and conserves water.
As you may or may not have noticed, I’m on a “marketing communications” kick. Continuing with this theme, I’d like to share a new thread from the Ecosytem Commons’ Soap Box: Good one! Communicating Ecosystem Services. I posted a comment and wanted to take the time to encourage others to do so. Here were my initial thoughts:
I enjoyed the examples above. Effectivley communicating these efforts is obviously a challenge. Not only are ecosystems complex, the means to measure and navigate regulatory frameworks further the confusion associated with these emerging markets.
Using an example close to home, I think Big Sky Brewing Company did a good job communicating their purchase of Water Restoration Certificates. The complexity of this transaction is endless: water right source switching, change applications, lease agreements, credit registry, monitoring, etc. Rather than getting bogged down in the details, Big Sky Brewing told a simple story: water makes Montana… Montana and we’re putting water back where it matters most.
Thanks again for starting this discussion. I believe “marketing communications” is overlooked and vital for the success fo these markets.
