Archives for category: water rights

Water Marketing: Frenchtown Technology Center, Montana

April 8, 13 //

For the past year +, I’ve had the fortunate opportunity to work with Green Investment Group, Inc. at their Missoula, MT Frenchtown Technology Center. The former pulp mill includes 25,000 acre feet of documented historic industrial/power generation use and extensive irrigation water rights. Together, it’s the largest industrial water rights portfolio in the Middle Clark Fork Basin by over 4x. In a basin with groundwater restrictions (35 gpm, 10AF per year) , this portfolio provides an obvious source of water for future demands.

This recent interview with KVGO highlights some of the assets and marketing opportunities. Additional information is available upon request.

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

Report: Water Transfers in the West

December 3, 12 //

In continuation of these survey results and observations I posted at the beginning of the year, I felt inclined to share the presser and full report from this work. It’s a good one.

December 3, 2012

Contact: Tom Iseman (WGA), (303) 623-9378 or Tony Willardson (WSWC), (801) 685-2555

DENVER — The Western Governors today released a report, Water Transfers in the West, which provides an overview on how the region can help meet growing demands for water with voluntary market-based sales and leases of water rights.

“Voluntary water transfers have occurred for decades,” said Governor Gary R. Herbert (Utah), Chairman of the Western Governors’ Association. “But with so many new citizens and industries settling in the water-scarce West, now is the time to evaluate how we use transfers in our approach to providing water.”

A water transfer, as defined in this report, is a voluntary agreement that results in a change in the type, time or place of use of a water right. Water transfers can take the form of a sale, lease or donation and they can move water among agricultural, municipal, industrial energy and environmental uses.

Water transfers are one component of a suite of tools Western water managers can use to meet new demands from changes in farming practices, energy development, and urbanization. States can also develop new infrastructure and storage (such as dams), conservation and efficiency, and water reuse projects.

“There is no magic wand or silver bullet when it comes to meeting water supply, only well-informed decision making,” said Jennifer Gimbel, Director of the Colorado Water Conservation Board. “This report will help states learn from each other’s experiences with water transfers in order to make the best decisions for each state’s water future.”

Water transfers offer a means to “re-purpose” existing water resources for new uses. Since farmers hold many of the West’s senior water rights, the Governors passed a policy in 2011 advocating that states “identify and promote innovative ways to allow water transfers from other uses … while avoiding or mitigating damages to agricultural economies and communities.” The report also addresses ways to mitigate impacts to the environment.

The report is a product of a year-long project in partnership with the Western States Water Council (WSWC), a group of top water administrators in the Western states. The Western Governors’ Association and WSWCconvened three stakeholder workshops with more than 100 participants from July to December of 2011. The meetings drew state administrators, environmental organizations, farmers, academics, and water resource professionals from across the West, providing diverse perspectives on water transfers.

“The balanced approach to water transfers advocated for in the WSWC report is the same philosophy that must be advanced on an even larger scale here in the West,” said Patrick O’Toole, President of the Family Farm Alliance and a workshop participant. “Transfers are a way of meeting short-term water challenges, but they are only one instrument in a much broader suite of tools that also must include water conservation and modern infrastructure to store and move water.”

Rather than providing a “one-size-fits-all” blueprint for states to follow, Water Transfers in the West highlights successful transfers and innovative practices to allow Western states to learn from their collective experiences and take advantage of the “lessons learned.” The report also recognizes that each state’s individual circumstances will determine how it should address transfers. It addresses only transfers within states, and not interstate transfers.

“Transfers are already occurring in all of the Western states, and many state water administrators say that transfers will continue to play a vital role in the way they meet demands,” said Tony Willardson, Executive Director of the Western States Water Council (WSWC). “WSWC and WGA will continue to provide states with information on how to take advantage of the decentralized and flexible nature of transfers while avoiding or mitigating any negative effects of transfers.”

WGA and WSWC will continue their work on water transfers following the release of the report.

The report, titled Water Transfers in the West: Projects, Trends, and Leading Practices in Voluntary Water Trading is available for download online at westgov.org/water. Information from past stakeholder workshopsand perspectives from stakeholders are also available online.

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.

water rights prices vs. water rights values

July 27, 12 //

I’m frequently asked about water rights prices and hired to estimate water rights values. For the past week, my daily bicycle commute has passed the “Quick Shade Canopy” pictured above. The price began at $75, then $65, and now $50– a 33% reduction in value. As I pass this canopy, I’m reminded of the difference between an asking price and market value.

Water Rights are no exception. For example, these Tenmile Creek water rights have been listed at $9,600 an acre-foot for over two years.

This begs the question: Is this the market value or the asking price?

Just ask the seller of the “Quick Shade Canopy?” the substantial difference between the two.

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.

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.

Mitigation Banking Conference Here I Come

May 3, 12 //

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.