Archives for category: mitigation

Water Bank Update (Montana)

January 1, 13 //
0

IMG_0111

This time last year I reflected on my 11 lesssons of 2011. Although many of these lessons hold true for 2012, I’ve decided to share 1 piece of news for the New Year: a Montana Water Bank Update.

Today, I enter my fourth year of determined effort to establish Montana’s first Water Bank. 2012 ended on a high note with a letter (above) from the DNRC determining our application correct and complete. This is a step in the right direction, but far from the finish line. As we begin this next chapter, I’m reminded of this quote by Benjamin Frankin:

Diligence is the mother of good luck.

Happy New Year!

Additional information regarding this water bank are found in this Ecosystem Marketplace article: Can his water bank help Montana solve its water troubles?

5 lessons from the mitigation banking conference

May 21, 12 //
0

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.

Mitigation Banking Conference Here I Come

May 3, 12 //
1

I even splurged for an airport shoeshine on my way.

I’m on a 10-day California journey that will culminate with a water rights presentation at the National Mitigation and Ecosystem Banking Conference. The take home message for the presentation is this:

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.

changing water mitigation into water marketing

November 17, 09 //
0


As you probably already know, I’m intrigued by mitigation and by capturing value of water resource assets. AKA, turning blue into green. My time at the AWRA conference strengthened my belief that the two (mitigation and water assets) go hand in hand. I saw a number of presentations that detailed great mitigation design and execution. The projects ranged from aquifer recharge, to ASR, to nutrients, to water quantity, etc. The overarching goal of these mitigation projects were similar: provide adequate regulatory means of mitigation. In other words, mitigation is a liability, how can we minimize its impact on our financial performance. I propose a paradigm shift from “mitigation is a liability” to “mitigation is an asset.”

Here’s the big idea. If you are already required to mitigate and are designing a system to achieve this objective, why not invest some additional capital to not only meet your current needs, but also future mitigation requirements of others (see illustration above). After all, you’re having to mitigate, so chances are upcoming impacts in the area will be required to do the same. This action will provide your project with a marketable mitigation asset and increase your bottom-line.

montana mitigation water

September 20, 09 //
0

The 2007 Montana Legislature created MCA § 85-2-360 Ground Water Appropriation in Closed Basins. This legislation was passed in response to a 2006 “Trout Unlimited” court case that confirmed groundwater and surface water connectivity. The statute requires water users in closed basins to mitigate net depletion of new groundwater use (over 35 gallons per minute and 10 acre feet per year) for permit applications.

The DNRC’s rules governing new groundwater development under this statute require the following: 1) a hydrogeologic study to determine net depletion, 2) augmentation of net depletion mitigation and aquifer recharge, if a net depletion does occur, and 3) an extensive mitigation plan with necessary permit and change applications filed with the DNRC.

Step 3) appears to represent the greatest challenge and the bottle neck to the emerging mitigation market. To date, not one single project has reached final authorization (see graph above). The hope is this process will become more efficient over time. Nevertheless, it is off to a slow start.

two aspects of mitigation water

June 12, 09 //
0


With increasing demand and decreasing supply, many western states are requiring water right mitigation or augmentation. In essence, if you take a bucket of water out, you must put a bucket of water back in. This generally occurs through acquisition and reallocation of existing water rights. The growing question is how do you execute these transactions to insure you are meeting the mitigation requirements? Two underlying factors are emerging: time and place.

Time
Most water rights being reallocated for augmentation are agricultural water rights. These water rights possess a period of use associated with the irrigation season. In contrast, the domestic water use being mitigated for possesses a period of use year round. This presents a challenge for the augmentation to meet winter net depletions.

Place
The other critical factor is location. The location of mitigation water is generally determined by the estimated net depletion of the new water use. This also presents a challenge when trying to reallocate existing water rights. This challenge pertains directly to the state’s change process and availability of existing water rights.