Colorado Corn

Colorado Water Conservation Board Grant
Alternative Agricultural Water Transfer Methods

The Colorado Corn Growers Association has applied for and received a grant from the Colorado Water Conservation Board to develop alternatives to the current agricultural water transfer methods that lead to the “buy and dry” of Colorado’s farm land. CCGA has assembled a team of experts in various fields for this project. The partners in this project are, the Colorado Water Conservation Board, Brown & Caldwell, (an engineering firm), Ducks Unlimited, and Aurora Water.

The CCGA’s vision for achieving avoidance of water transfers over the long term lies, to a significant degree, in developing successful “alternative transfer” or “leasing” processes for some portion of agriculture’s water to be treated as an annual “crop” while the balance stays directly in agricultural production. With agriculture controlling over 80% of Colorado’s useable water, the leased portion could satisfy significant present and future needs of growing municipalities. Rural agricultural ownership of the water rights is a critical factor. The development of practical templates to achieve long term ag ownership while providing for long-term alternative uses is seen as critical to avoidance of permanent transfers.

The arrangements must be desirable in the eyes of producers who own water and care about the future and economic health of their rural communities. We believe the key to long-term preservation of agricultural water relies heavily on success in developing methods of keeping water ownership in the hands of producers in ways that are financially sustainable.

The option for long-term leasing of a portion of their water does not exist for the majority of producers. However, to the degree we are successful in developing a template for long term options that fulfill needs of growing municipalities while providing appropriate income to agricultural producers via “water as a cash crop”, we can realize success toward the goal of long-term agricultural water preservation, and long-term hope of economic viability for rural Colorado agricultural communities.

• The CCGA has suggested the development of a “perma-lease” instrument, which would provide lease terms that include provisions for readjusting levels of compensation to reflect market conditions, while allowing for permanence in water asset ownership by agricultural interests. If successful, this type of instrument could make long-term leases more attractive both to municipal interests who desire long-term use arrangements and to agricultural producers who desire to preserve irrigated agriculture for future generations.
• A recent survey conducted by Colorado State University suggested that at least 60% of respondents were willing to lease water rather than sell so long as they are suitably compensated. It suggests there is enough interest among agricultural water owners to justify this effort. This project will provide tools in the Business Plan (a “handbook” of practical guidance for enacting alternative transfers and a financial evaluation tool) that agricultural producers can use to establish levels of compensation that would allow them to lease water without transferring ownership.
• Ducks Unlimited projects ensure long term transfers by using conservation agreements which include leases of water for 30 years and conservation easements which provide protection of water supplies in perpetuity. The use of these legal tools ensures that water supplies and lands remain in agriculture and/or open space. This effort, through the development of the three wetlands projects, will demonstrate to producers that long-term leases are possible and can be profitable to their farming operations.

In addition to the above, the CCGA team is anticipating that by developing the Business Plan tools and by providing some publicity and education on the tools, agricultural producers will feel that they have more control over their water rights assets and will be more likely to enter into long term leases.

In our conversations with some agricultural water rights holders, we have discovered that there is a fear that by participating in the Alternative Agricultural Water Transfer Methods grant program, the transfer of agricultural water to municipalities will be accelerated. Our viewpoint is quite the opposite. In fact, the goal of the Alternative Agricultural Water Transfer Methods grant program is to reduce permanent transfers and to preserve irrigated agriculture.

It should be noted that the CCGA does not anticipate that this project will end permanent transfers of agricultural water to other uses. It is important to remember that agricultural producers are the owners of water rights and can sell their rights if they choose. The CCGA feels that there is currently a trend for non-agricultural water interests to buy water rights as a hedge against future inflation of water prices. However, it is also felt that non-agricultural water users are primarily interested in reliability of supply rather than ownership in and of itself. As these interests satisfy their needs for purchased water, it is anticipated that there will be increased demand for temporary transfers of water to fulfill dry-year and other water needs. The results of this project will be applicable both as a potential alternative to purchased water and to directly fill the need for temporary transfers. In addition, this program will provide alternatives to producers that they may not have fully understood in the past, and the CCGA is confident that this project will result in future perpetual leases of water that allow for the preservation of irrigated agriculture.