Just consider this a repost of the Ecosystem Marketplace Water Environmental Trading News. Why? Because Lotic was featured twice. Well, at least 1 and a 1/2.
1. Can his water bank help Montana solve its water problems?
1.5 Instream Flow Transactions are Big Deals in the West.
In addition to this greatly appreciated media, the newsletter is also full of other great reads on one of my favorite topics: water markets. A recommended read worth reposting.
This blog post is about CHANGE. CHANGE is tough. A water right CHANGE is really tough. Not only does a water right CHANGE impact social norms, but it also impacts the basis of life–water. A CHANGE process that receives scrutiny from the state’s administrative agency, and also the public potentially adversely affected.
Even so, our ability to change water rights among users and uses is a basic premise of water marketing. And for markets to efficiently allocating resources, CHANGE is essential.
For this reason, I wanted to highlight a recent article on Montana water rights changes by the Trout Unlimited, Montana Water Project: Changing Changes; A Road Map for Montana’s Water Management. This article was first published in the University of Denver Law Review and can be purchased here. I recommend doing so.
I’ll be the first to admit reading law review articles is not what gets me up in the morning, but this article is the exception.
This paper states it best: ”The hallmark of twenty-first century water management is the transfer of water from one use to another.”
I am in the middle of my first water quality trading (WQT) project. The project covers WQT markets in 10 states spread from Washington state to Florida. Exploring this new market, I am seeing striking similarities to the water quantity market. This observation was further highlighted by the The Water Resource Institute’s publication Water Quality Trading Programs: An international Overview. This paper identified five key factors that drive water quality trading. Below, I’ve listed each of these five factors recognized in the WQT program paper and provide additional narrative of how these factors play out in the water quantity market.
1. Strong regulatory and/or non-regulatory drivers, which helped create a demand for water quality credits.
Water Quantity Market. Although simple supply and demand can drive water quantity markets, the most active markets include regulatory closure and mitigation or augmentation requirements for new demand.
2. Minimal potential liability risks to the regulated community from meeting regulations through Trades.
Water Quantity Market Regulatory risks plays a prominent role in water transactions. I’d even argue these risks are driving use of exempt wells and other means to avoid the regulatory uncertainty (e.g. time and expense of a new permit).
3. Robust, consistent, and standardized estimation methodologies for nonpoint source actions.
Water Quantity Market. The water quantity equivalent of this statement is the need for clearly defined water rights.
4. Standardized tools, transparent processes, and online registries to minimize transaction costs.
Water Quantity Market. A water rights deal where the transaction costs exceed the cost of water is not uncommon. Standards (e.g. 2 AC-FT acre) will increase efficiency and decrease regulatory risks. Water rights are complex- really complex – developing standards and transparency will help expedite transactions.
5. Buy-in from local and state stakeholders.
Water Quantity Market. The ability to object to water rights changes and transfers make this element essential to even the smallest of water rights transaction.
