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.