How to Address Conflict over Water Transfers: WGA and WSWC Issues Valuable Study on Water Transfers in the West

Water Transfers in the West released last December by the Western Governors Association and the Western States Water Council presents a comprehensive framework to achieve the policy goals of western governors, who passed the following policy statement in 2011:

“The Western Governors believe states should identify and promote innovative ways to allow water transfers from agricultural to other users (including urban, energy and environmental) while avoiding or mitigating damages to agricultural economies and communities.” 

The study reviews the broad spectrum of issues related to water transfers that warrants study by policy makers, professionals and stakeholders.  In this post, I focus on some key takeaways from the study and a WGA/WSWC Webinar from last month.

Foster Local Solutions

States should foster local solutions to water resource issues.  Take a programmatic approach to basin issues than have issues serially addressed on a case-by-case basis.  State funding assistance to local groups should focus on improving science, engineering and law (I would add economics) to reach a common understanding of the issues, alternatives, and impacts of water transfers.  A common understanding should help reach agreement about impacts and reasonable mitigation measures.  Otherwise, individual transfers (especially the early ones) face the burden of addressing basin issues, often within the context of contentious regulatory proceedings that lead to litigation.

The study has three case studies where local stakeholders are working together to resolve water resource issues cooperatively.

Deschutes Water Alliance.  The Deschutes Water Alliance is a proactive coalition of irrigation districts, cities, tribes, private utilities, counties, state and federal agencies and conservation groups to address the challenges from new environmental regulations, a rapidly growing population and urbanization in central Oregon.  By using water transfers, reservoir management and conservation, the Alliance will free up 260,000 acre feet of water by the year 2025.  Water conservation will create about half ot the total, water transfers (sales and leases) 32%, and reservoir management 19%.  About 75% of the water conserved could be left instream to help endangered fish.

Stakeholder collaboration on solving local issues facilitated success.  Solving problems meant that the Alliance received state support not state intervention.  A Bureau of Reclamation study of the basin informed water management strategy and sparked cooperative action.  A federal grant provided initial financial support, but conservation measures are funded locally.

Lower Arkansas Valley Super Ditch Company.  Incorporated in 2008, the Super Ditch is another cooperative venture to address water transfer issues.  Historically, “buy-and-dry” transfers involving the sale of agricultural water rights to cities reduced irrigated lands by one-fourth and created land management problems in the Lower Arkansas Valley.  Rather than continuing a succession of individual transfers, the Super Ditch negotiates on behalf of irrigators to make water available to other water users through leases, interruptible water supply agreements, and water banking.  The Super Ditch works with and on behalf of farmers to put together a comprehensive local program to meet growing urban demand while improving the economic viability of agriculture.

The Super Ditch represents eight local ditch companies.  Their comprehensive program can avoid conflicts among different water right holders that often go with water transfers.  Their regional scope enables the use of a broader collection of water assets and management strategies than transfers involving few parties.  By strengthening and not eliminating agricultural, local economic bases will thrive, not wither.

PVID-MWD Fallowing Agreement.  This 35-year agreement between the Palo Verde Irrigation District and the Metropolitan Water District of Southern California provides between 30,000 acre feet and 120,000 acre feet of water annually.  MWD entered into agreements with landowners where they fallow between 10% and 35% of their acreage in any year.  MWD paid an upfront payment of $3,170 per enrolled acre and paid $602 per acre fallowed in 2012.  The agreement retains at least two-thirds of agriculture and strengthens the economic viability of agriculture.  MWD also pays the cost of PVID’s administration of the transfer.  It also capitalized with $6 million the Palo Verde Community Improvement Fund that invests in workforce training, small business investment, and development of community resources.  MWD has no say on how the Fund spends money.

Local interests solived the issues related to the PVID-MWD transfer.  The buyer, in this case MWD, funded solutions to resolve impacts of the transfer.   There is no state or federal money involved.

Promote Transfers

States have tools to promote transfers based on local initiative.  They can promote water conservation and efficiency through technical assistance.  States may also have a role in supporting regional infrastructure needed for the direct delivery or exchange of transferred water.  States can also promote cooperation with federal agencies.

Efficient Administration

States should assure that their regulatory/legal processes are efficient.  Accelerate reviews and set up clear guidelines for regulatory review and legal standards.  Increasing the predictability of regulatory/legal outcomes and reducing the time expended should cut transaction costs of transfers without jeopardizing implementation of state policy.

Welcome the Private Sector

The study also noted that state and federal funding has played a key role in infrastructure financing.  Public debt and deficits will limit the scope of future state and federal funding.  Infrastructure funds have raised billions seeking projects with long-term investment horizons and inflation-protected returns.  Transfers with infrastructure needs may represent an attractive investment opportunity for private funds.  The private sector should not be discouraged from investing in the water sector.

Next Steps

At the Webinar, WGA and WSWC discussed their next steps.  They are cooperating with Sandia Labs in New Mexico for a data exchange on transfers.  This is their first step in improving the transparency of transfers throughout the west.  They expressed an interest in improving state-federal collaboration, especially the use of federal facilities by non-project water.

Not Just Another Study

Water Transfers in the West will not be just another water study.  The WGA and WSWC are prominent organizations with a history of generating insightful studies.  They combine history, public policy considerations, state roles and perspectives and water transfer mechanisms that build on what is happening now and likely be part of the future.  I look forward to discussion of their ideas, especially how states foster local solutions.

Personally, I have already suggested that clients look at the case studies and consider whether they offer a model for their own long-term plans.

This entry was posted in Private Sector, Water Transfer Policy, Wheeling on by .

About Rodney T. Smith

Rodney T. Smith, Ph.D., President of Stratecon Inc.—an economics and strategic planning consulting firm—advises public and private sector water users on the acquisition, sale and leasing of water rights and water supplies in the western U.S. He is routinely involved in economic valuation of water rights, water investments, and negotiation of water acquisition and transportation agreements and has served as an expert witness in the economic valuation of groundwater resources, disputes over the economic interpretation of water contracts, economics of water conservation and water use practices, and the socio-economic impacts of land fallowing. For more information, see

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