Archives for category: water market

Why water markets aren’t everywhere: lessons from New Mexico

February 1, 13 //

I recently completed some market research for a client in New Mexico. This work confirmed my thoughts that markets aren’t everywhere. In fact, they’re few are far between. New Mexico does have active water markets (Rio Grande, Lower Pecos), although this project wasn’t in one of them.

Reflecting on this work, I identified 7 reasons why New Mexico water marketing is not everywhere.

Privacy. Water rights transactions tend to remain private in nature. Thus, uncovering private deals is easier said than done.
Record Keeping. The record keeping and tracking of potential transactions remained a challenge in the specific basin.
Political Opposition. New Mexico allows acequias or qualifying ditch companies to adopt bylaws requiring their approval as a condition to surface water transfers. Although this law does not specifically pertain to groundwater, the political opposition to trade still exists.
Administrative Cost. The administrative cost to change a water right in New Mexico can be high with great uncertainty of success. This creates a barrier to trade.
Water Sharing. Water right holders in New Mexico often informally share water within irrigation institutions, thus decreasing the need for trade. This “legal” sharing occurs in districts where the State Engineer has appointed a water master.
Exempt Water Use. Small “domestic” groundwater exemptions still exist in New Mexico in annual volumes up to 3 AF per household. The limited domestic demand that existed in this basin allowed for groundwater exemptions to meet demands and further reducing the need to trade
Economic Growth/Decline. Larger economic principles drive growth and a demand for water. Although this basins was closed, economic metrics showed a zero or negative economic growth in recent years.

Although specific to an undisclosed basin in New Mexico, these observations are common across the West.

Instream flow markets have arrived…..

January 19, 13 //

At least, in the Ecosystem Marketplace, State of Watershed Payments 2012 report. This is great news, as my “dislike” in the first addition of this publication pertained to this missing data set.

I’d like to, once again, commend the authors for their work. I’d like to see more transparency in all of these markets and feel publications like this one are a step in the right direction. You can read the publication for yourself, although two of my highlights taken from the report are embedded below. In case you missed the hyperlink above to the publication, here it is again:

http://www.forest-trends.org/documents/files/doc_3308.pdf

Montana Water Rights Application Reform: My Thoughts

September 16, 12 //

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As expressed in my previous post, I had the fortunate opportunity to present at the Montana Water Law conference last. I also took some important lessons and observations away from this conference. Because my work focuses on “marketing,” my biggest excitement centered around the new application process for water rights that will go into effect on October 10, 2012. The topic was informally referred to as “reform” at the conference. This new approach will involve regional offices performing much of the work associated with new permits and change applications.

In no particular order, here are my initial thoughts:

1. Bring on the reform. As no surprise, the critics are already mumbling. We should know by now, it is not the critic that counts. The reality is the old system needed help and this “reform” is designed to fix this process. Here’s to the courage and foresight to bring this to life.

2. Increased efficiency is key. The basis for this application reform is to increase efficiency, by having regional offices conduct much of the permit and change work. The biggest concern is this will create a bottleneck instead of a superhighway. Washington has faced similar challenges I acknowledged here, and we all hope this is not the case. Only time will tell.

3. Transparency. Transparency. Transparency. HB40 brought greater transparency to the change and permitting process. The “reform” appears to make this process that much more transparent. Starting with the first meeting, the emphasis on communication and reaching the end object, should make for a better process.

4. Headed in the right direction. Since the introduction of HB40 the average processing time for a new appropriations drop by an order of months. This is a vast improvement and shows this process is headed in the right direction, I expect the water rights application reform to carry this momentum.

5. Change is tough (as recognized here), I salute the leadership and vision of those bringing this change. Even if they get pieces of the puzzle wrong, the willingness to change can correct these mistakes and march forward. This excites me.

As we head into a new world of Montana Water Rights Appropriations, I’m reminded of this quote by Teddy Rossevelt.

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.

3 water rights observations from the Eastern Snake River Plains

September 3, 12 //

I’ve started working on my first project in the Eastern Snake River Plains and immediately made three observations I felt inclined to share:

Groundwater is exempt to priority–at least initially. The Eastern Snake River Plains is fighting a battle I previously recognized regarding groundwater’s potential exemption to priority.
This basin possesses all the characteristics that drives water markets.
Markets provide solutions to water problems, even in the Easter Snake River Plains.

a water market that doesn’t care about supply and demand

June 27, 12 //

I just completed a project in a water market that ignores the traditional wisdom behind supply and demand. In this market, total water rights supply exceeds demand by 3.2 million acre-feet. Yet, buyers continue to purchase water in excess of $4,000 an acre-foot, when similar volumes, for other uses, are awarded for free.

Why?

Timing, location, and margin.

Although excess supply exists, the buyers need large amounts of water, in select locations, for short durations of time. Furthermore, the buyer’s industry holds excess margins to the extent that $4,000 an acre-foot is a minimal cost of input. Waiting for the inefficient regulatory process to reallocate the excess legal water rights supply is not an option. The recognition of this non-traditional water market surprised me, but in a weird way, I also enjoyed the new lesson in economics.

I now realize it’s not plain ‘ole supply and demand. It’s the TYPE of supply and the TYPE of demand that matters most. This observation, also, reiterated the importance of the regulatory component in the world of water.

California Water Rights Checklist

June 24, 12 //

I wanted to take the time to applaud and reshare a California Water Rights Checklist provided by Wes Stickland from Brownstein | Hyatt | Farber | Schreck. My impetus to share is four fold:

1. I like Wes Stickland and his work. In addition to his blog, you’ll also find good “water market” content via his twitter feed @privatewaterlaw

2. I liked this marketing piece. It adds value to the target market (water rights holders) – for free – and positions Brownstein/Hyatt as a thought leader in this market. It also frames the problem (water right filings), and need for their services, in a less obvious means.

3. It highlights the complexity, red tape, and inefficiency that still exists in water rights markets. Seriously, a 28 cell table and 3 pages of text is necessary to keep up with water rights filings in California? More importantly, what’s the larger economic gain from all these filings?

4. I have a ~~small~~ large obsession with checklists. Long before checklists were recognized as life saving devices, I was a compulsive checklist user. My latest and favorite checklist tool is Todoist. I can know mark this blog off of my “Lotic Media” checklist.

the joy of water (2)

June 11, 12 //

I’m frequently reminded of the joy of water (mentioned first here). Yesterday, I observed this joy and snapped a photo. These two couldn’t help themselves; the joy of water was overwhelming.

Montana Exempt Well Meetings

June 5, 12 //

I wanted to take time to share some Montana Exempt Well meeting information I received in an email this morning. If you’re wondering what the big deal is, I believe the image below (shared previously in this post) still says it best.

Here’s the info:

The Water Policy Interim Committee will be traveling to Bozeman, Kalispell, and Hamilton this month to gather public comment on legislative proposals regarding exempt wells.

The schedule for the public hearings is:
June 19 - Bozeman, Gallatin County Courthouse, 311 W. Main, Room 306, 7:00 p.m.
June 20 - Kalispell, Red Lion Inn, 20 N. Main St., 7:00 p.m.
June 21 - Hamilton, Bitterroot River Inn, 139 Bitterroot Plaza Dr., 7:00 p.m.

The exempt well options that will be discussed at the meetings are:
LC 8000 - Define combined appropriation and require CGWA mitigation
LC 8001 - Require public water and sewer in certain subdivisions
LC 8002 - Reduce exempt well rate and volume
LC 8003 - Limit exempt appropriation in confined aquifers
LC 8004 - Limit exempt appropriation in subdivisions

If you have questions, please contact Joe Kolman at 444-3747 or jkolman@mt.gov.

colorado water trust’s request for water

April 27, 12 //

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.

Where to go for information on water markets

April 19, 12 //

I’m frequently asked a simple question:

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.

Academia

Books

Web

And, strategic use of digital media searches. Actually, digital media is my most powerful tool to aggregate information on the market.