6

Colorado Front Range-Arkansas River Valley: Interconnected Water Sources

A decision to take water from one source is inherently a decision to leave another source alone—at least for that party at that time. The consequences, both negative and positive, reverberate across political and hydrologic boundaries. The Colorado Front Range-Arkansas River valley illustrates how complex the interconnections can be among water storage and delivery systems and between ground and surface water use. It also illustrates the strengths and weaknesses of robust water markets.

Along the Front Range, water is allocated by a variety of entities that control large quantities of ground and surface water. Many different entities want water in many places, and the transferability of water rights has created a huge statewide market, but no mechanism exists to assess and regulate the market when private and social costs diverge. Political accountability is lacking because the state has traditionally abdicated any role in water planning. Thus, the market operates without regard for consequences except to those interests protected by law: water rights holders.

The effects on third parties—people, communities, and environmental interests—are beyond the scope of considerations legally required of state decisionmakers. This limitation is particularly acute in Colorado because transfers are controlled entirely by the law of prior appropriation; no judge or administrator is authorized to apply public interest criteria. The result is an inefficient system driven by a single allocation strategy: the pressure to acquire more water rights.



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment 6 Colorado Front Range-Arkansas River Valley: Interconnected Water Sources A decision to take water from one source is inherently a decision to leave another source alone—at least for that party at that time. The consequences, both negative and positive, reverberate across political and hydrologic boundaries. The Colorado Front Range-Arkansas River valley illustrates how complex the interconnections can be among water storage and delivery systems and between ground and surface water use. It also illustrates the strengths and weaknesses of robust water markets. Along the Front Range, water is allocated by a variety of entities that control large quantities of ground and surface water. Many different entities want water in many places, and the transferability of water rights has created a huge statewide market, but no mechanism exists to assess and regulate the market when private and social costs diverge. Political accountability is lacking because the state has traditionally abdicated any role in water planning. Thus, the market operates without regard for consequences except to those interests protected by law: water rights holders. The effects on third parties—people, communities, and environmental interests—are beyond the scope of considerations legally required of state decisionmakers. This limitation is particularly acute in Colorado because transfers are controlled entirely by the law of prior appropriation; no judge or administrator is authorized to apply public interest criteria. The result is an inefficient system driven by a single allocation strategy: the pressure to acquire more water rights.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment Large quantities of water are held by some entities who have earmarked it for future growth needs, while other entities can barely meet present demand with available supplies. Colorado's allocation ethic is the product of the region's effort to provide stable water supplies in the face of the variable ones provided by nature. In a semiarid area, periodic multiyear droughts create strong pressures to acquire sufficient water rights to assure adequate water supplies during water-short years, as well as for future growth. In anticipation of agricultural growth, federal projects were built to augment available supplies along the Front Range by importing water from other regions. This produced abundant supplies for agriculture. These systems were expanded to provide additional imported water for urban growth. In general, the Front Range has historically followed a pattern of importing more and more water rather than reallocating water from existing agricultural uses to higher-valued municipal and industrial ones. On the surface, the Colorado Front Range (CFR) cities' approach may seem illogical: they first claim and develop the most distant unappropriated water and only later resort to transfers of nearby developed agricultural rights. Thus, the sources of water for CFR growth historically have not been the easiest and least expensive to develop. The most likely sources of water would seem to be the farming areas close to growing cities, but most of the water sought by cities such as Denver, its suburbs, and Colorado Springs has been from distant watersheds like the Colorado River basin and the Arkansas River valley. The pattern reflects the water rights system's incentives to claim and develop the resource as rapidly and fully as possible. This phenomenon is explained in part by a desire to avoid a political backlash from dewatering the most productive farming areas in the state. A less obvious explanation is that developing water in the Colorado River watershed—the west slope—gave the cities senior rights in water that has not been developed for a “beneficial use.” The Colorado Supreme Court encouraged this by tolerating long lead times to allow cities to design and construct municipal transwatershed projects. The beneficial use doctrine is supposed to curb speculation in water rights by tying the right to use, but it did not perform this function in the CFR. Although transbasin imports are more expensive than the transfer of nearby agricultural water, imports give the cities (and the state generally) more control over large quantities of “unused” water as well as providing a more stable water supply for the region and extending the life of local agricultural economies. In effect, this strategy allowed urban areas to bank future supplies on the farm and then withdraw them as needed. This

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment has been the case in the Arkansas Valley. A similar pattern is appearing in the Denver metropolitan area as west slope sources are more fully claimed and developed. The cities are now pursuing transfers from agriculture. Colorado presents a classic example of how growing demand for urban water affects rural areas that are a source of “new” water for the cities. Until recently, external effects have not been a significant concern for water developers and users. Even the rural areas where water originates accepted the fact that the state had a strong interest in developing all sources of supply before the water flowed out of state. As undeveloped water supplies dwindle and the west slope becomes more conscious of the effects of the depletion of the headwaters and the recreational and amenity value of these waters, sentiment for redress of third party impacts eclipses the theoretical benefits of keeping the water in state. In recent transactions and water development proposals, transfer opponents have found ways to force consideration of their interests. Recent experiences with transbasin diversions and transfers of agricultural water have demonstrated a potpourri of ad hoc, but occasionally powerful, levers that can be used by these third parties, such as the application of federal laws, local government powers, and litigation. Unfortunately, these actions do not operate in a consistent and predictable way, and they can impede or prevent transfers or developments that are, on balance, socially and economically beneficial. Thus, third party effects are now playing an important, although not always decisive, role in whether, where, and how water is developed in Colorado. But third party influence varies with the type and relative wealth of the developer and the federal permits required. There is no state law or system for considering how water resources can be developed most efficiently and with the least impact. Nor is there an integrated mechanism for weighing, avoiding, or mitigating the impacts on third parties. The results are uncertainty for both developers and affected parties, inefficient allocation of some water resources, excessive costs, and avoidable, uncompensated third party effects. THE SETTING The term Colorado Front Range refers to a 30- to 40-mi-wide (50-to 60-km-wide) area just east of the Rocky Mountains, extending from Walsenburg in the south to Wellington in the north. The estimated 1989 population of the 10 CFR counties was 2.7 million (approxi-

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment mately 80 percent of the state population). It had been one of the nation's fastest-growing areas, increasing about 2.5 percent per year from 1970 to 1980. The growth rate decreased to 1.7 percent per year in the 1980s (Colorado Department of Local Affairs, 1990), after the energy boom collapsed. The largest cities in the Front Range are Denver (498,000), Colorado Springs (283,000), and Aurora (188,000). About 65 percent of the state's population is concentrated along the South Platte River after it enters the plains southwest of Denver. The two major river basins in the CFR are the Arkansas in the southeast and the South Platte in the northeast (Figure 6.1). About 70 percent of the streamflow in both basins is from snowmelt, 60 percent of which occurs in May and June. Arkansas River Basin The seven counties of the Arkansas River basin had an estimated 1989 population of 210,000, approximately 6 percent of the state (Colorado Department of Local Affairs, 1990). The Arkansas River originates in the central part of the state and flows southward for 75 mi (120 km), then eastward for about 160 mi (260 km) into Kansas. The major water conservancy district in the Arkansas River basin is the Southeastern Colorado Water Conservancy District (SCWCD). It depends on the Frying Pan-Arkansas Project to get water from the Colorado River basin. Large-scale irrigation began near Rocky Ford in 1874. During a 7-year drought in the 1950s, water transfers, initially to the city of Pueblo, began in the lower Arkansas. The prolonged drought devastated the local economy and caused the closure of the Sugar City sugar factory in 1967. Major sales of water rights have continued to the Pueblo West Metropolitan District, Colorado Springs, Aurora, and Public Service Company (MacDonnell et al., 1990). South Platte River Basin The South Platte River basin occupies approximately 18 percent of the state. The South Platte begins in South Park and flows about 270 mi (440 km) northeast to the Cache la Poudre, a principal tributary, then east to Julesburg and into Nebraska. In the mid-1800s the flow in the South Platte disappeared into the river sands from Fort Morgan to the North Platte in Nebraska during July, August, and September. Early explorers reported that there were no trees along the river. By 1910, because of irrigation development and return

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment FIGURE 6.1 Water conservancy districts in the Colorado Front Range. SOURCE: U.S. Geological Survey (1986).

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment flows, the flow in the river continued throughout the year at the state line (GASP, 1989). Since then, with further development of irrigation and importation of water from the Colorado River, the year-round flow has increased. The Northern Colorado Water Conservancy District (NCWCD) is the major water conservancy district in the South Platte River basin. The district was formed in the 1930s to contract with the Bureau of Reclamation to serve the water needs on the east slope of the continental divide by using the more abundant water supplies from the west slope. The NCWCD depends on the Colorado-Big Thompson Project for interbasin transfers of water from the Colorado River basin. Areas of Origin for Transmountain Diversions The major area of origin for transmountain diversions is the upper Colorado River headwaters region on the west slope of the Rocky Mountains. Large quantities of water are imported to the CFR, into both the South Platte and the Arkansas river watersheds, from the Colorado River watershed. Lesser amounts are derived from the North Platte River basin. A proposal exists to transfer fossil ground water to Denver from the San Luis Valley in the Rio Grande River basin. Early in this century, importing districts and cities began to appropriate rights to Colorado River water for future growth, beginning with the large appropriations by Denver. Extensive diversion, pumping, and transmission facilities have been built in the headwater areas of the tributaries of the Colorado River. They currently convey about 0.5 million acre-feet (0.62 million megaliters (ML)) of water per year from the west slope across the continental divide to the CFR through several tunnels. Reservoir storage has been built on the west slope for the benefit of the CFR. The waters of the Colorado River are allocated by interstate compacts and U.S. Supreme Court decrees. The degree of use or nonuse by users in individual states cannot affect the state's share. The 1922 Colorado River Compact was designed specifically to ensure that the river would not be legally allocated to faster-growing states such as California to the detriment of Colorado and other upper basin states—then sparsely populated areas dependent on mining, irrigated agriculture, and livestock ranching. The compact guarantees that a share of the water could be used in Colorado if and when needed. In the meantime, the upper basin states must release water as long as lower

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment basin states have beneficial use for it and upper basin states do not. Thus, if additional upper basin storage facilities were built without upper basin beneficial uses, they would be operated essentially for the benefit of the lower basin (Getches, 1986). East slope-west slope tension has been an enduring factor in political life, but the need for formal area-of-origin protection did not arise until after the Supreme Court adopted the one-person, one-vote standard for legislative representation. Colorado legislation designed to protect areas of origin from water exports was passed in 1973. It applies only to exports by conservancy districts (i.e., not to importing cities such as Denver or Colorado Springs) from the Colorado River basin. In practice, exporting conservancy districts usually build “compensatory storage” projects within the Colorado River basin, sufficient in size to store the volume of water diverted out of the basin annually. This practice is considered by some to be wasteful and of little immediate tangible benefit to the area of origin because compensatory storage projects have stood largely unused for many years (Getches, 1988). MAJOR WATER TRANSFER PROJECTS Colorado-Big Thompson Project and Windy Gap Project Two major transmountain diversion projects bring Colorado River water to the NCWCD—the Colorado-Big Thompson (C-BT) Project and the Windy Gap Project. The C-BT was the first and largest transmountain diversion project in Colorado. It was authorized in 1937, the Bureau of Reclamation began construction in 1938, and the first water was delivered in 1947. The project was completed in the late 1950s. The C-BT was unique in that it was designed to provide supplemental water to an already developed area. It would deliver up to 310,000 acre-feet (382,000 ML) of water annually into the St. Vrain, Little and Big Thompson, and Poudre rivers for agricultural, municipal, and industrial users. The locally financed and more recently completed Windy Gap Project began deliveries in 1985. It provides rights to an additional 48,000 acre-feet (59,200 ML) of transmountain diversion water for municipal and industrial users in a special subdistrict of NCWCD. A significant portion of the water available from this project is not yet being used, although cities within the district are negotiating to transfer rights from holders of surplus rights from the project. At this point, transfers to cities outside the district are not permitted by district law.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment The Hansen canal delivers water to the Cache la Poudre River via the Colorado-Big Thompson project. The Colorado-Big Thompson project was the first and largest transmountain diversion project in the state. CREDIT: Northern Colorado Water Conservancy District. Arkansas River Basin Projects More than a dozen transmountain diversion projects have been built to serve the Arkansas River basin, although none approach the size of the C-BT. Most are small projects owned by individual municipal water service organizations. The two major exceptions are the Twin Lakes and Frying Pan-Arkansas (Fry-Ark) projects, built by the Bureau of Reclamation. The Fry-Ark Project, managed by the SCWCD, is the largest transmountain diversion works in the Arkansas River basin. It delivers approximately 80,000 acre-feet (99,000 ML) of water to agricultural, municipal, and industrial users in the SCWCD. About 70 percent of the water comes from transmountain diversions of Colorado River water, and the remaining 30 percent is developed from storable floodwaters of the Arkansas River and its tributaries (SCWCD, 1981). The Twin Lakes Project is owned in part by the federal government and in part by the Twin Lakes Reservoir and Colorado Canal Company. The shares of mutual stock that may be bought and sold on the market represent only that portion of the water in the reservoir controlled by the private water company. All remaining storage

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment space in the reservoir is used to support the Fry-Ark Project. Roughly 10 percent of the total average annual yield of Twin Lakes stock is attributed to native flow, and the rest represents transmountain diversion water rights deeded to the company by the Bureau of Reclamation (Saliba and Bush, 1987). About 50,000 acre-feet (62,000 ML) of water per year is delivered to Twin Lakes company stockholders, primarily the cities of Aurora, Colorado Springs, Pueblo, and Pueblo West (Saliba and Bush, 1987). Infrastructural Differences Between NCWCD and SCWCD Projects The water service infrastructure within the NCWCD is more integrated and extensive than that within the SCWCD. The system of capturing, storing, and distributing water resources in the NCWCD is one of the most complex water supply networks in the western United States. Dozens of different water service organizations operate hundreds of miles of canals, storage reservoirs, pumping facilities, and water treatment plants serving an area roughly the size of Connecticut. In the Arkansas River basin, water storage and delivery facilities are less sophisticated, and the opportunities for exchanging water among the many different and autonomous organizations are correspondingly more limited. The Fry-Ark and C-BT were both conceived as multipurpose projects to supply supplemental water to existing irrigated lands and growing urban centers. The characteristics of each project are quite different, however. Shortly after its creation in the late 1950s, the governing board of directors of the SCWCD decided that the allocation of Fry-Ark water would be fixed at 51 percent for municipal and industrial use and 49 percent for irrigation. The allocation may be changed by the board in the future to reflect conversion of agricultural lands to nonagricultural use. Users of Fry-Ark water who sell other (non-project) water rights that they hold are not permitted to replace those rights with Fry-Ark water (SCWCD, 1981). The unit price for Fry-Ark water is predetermined by the board and is the same for all users. The SCWCD holds both the primary and the return flow rights to Fry-Ark water, and individual users may not resell their project water (Saliba and Bush, 1987). Fry-Ark water users may store their Fry-Ark entitlements in project reservoirs. Agricultural users may hold their unused water until May 1 of the following year, and municipal and industrial users may carry their unused water over from year to year (Saliba and Bush, 1987). The SCWCD also allows agricultural users to store their own (non-

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment project) decreed native flow rights during the winter season for use in the summer (SCWCD, 1985). Contractual shares in the water rights under the C-BT are held directly by the individuals and water service organizations within the project service area. The NCWCD retains all rights to the return flows of project water, but each water user has the full right to purchase, sell, trade, or rent rights to the primary flows (U.S. Bureau of Reclamation, 1938). Return flows from the C-BT may be neither recaptured nor resold by C-BT users. Return flows that are not allocated by the NCWCD to its users simply remain in the river for others downstream. The effect has been to firm up the water supply available under native flow appropriations on the lower reaches of the South Platte because the imported water becomes just like other return flows once it is returned to the stream. As a result, the flow in the South Platte has increased substantially since 1950. Water users at the downstream end of the NCWCD have found little advantage in holding shares in a project that effectively provides them with water whether they participate directly in it or not. Consequently, many downstream appropriators have sold most, if not all, of their C-BT rights to upstream users (Harrison, 1984). INSTITUTIONAL AND LEGAL CONSIDERATIONS In its 1876 constitution, Colorado adopted the prior appropriation doctrine. Changes in use, which accompany most transfers, are reviewed in water court to determine if there is injury to these vested rights. Third parties can participate in these proceedings; however, appropriations and transfers ordinarily are approved unless there is harm to water rights. Colorado has a long history of water transfers. About 85 transfer applications seeking a change of use were processed each year from 1975 to 1984 (MacDonnell et al., 1990). In normal years, agricultural water users in many conservancy districts are able to rent or purchase water from others within the same district as needed to mature a high-value crop if their own water supplies are limited. In some areas, such as the NCWCD, individuals entitled to use water in excess of crop needs in one year can rent water to someone else within the district who must simply complete and mail a postcard. In other areas, approval of a “temporary substitute supply plan” by the state engineer is required for temporary transfer of water. Ground water hydraulically connected with surface water streams is administered in the same general way as surface water in Colorado. Deep bedrock ground water that is not hydraulically connected to surface streams is administered by the state engineer, but out-

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment side of the prior appropriation system. Ground water in certain “designated basins” is administered by the Colorado Groundwater Commission under a special statutory system. Neither the state engineer nor the water court historically has dealt with water quality issues as they relate to the use of water rights, although these issues are arising more frequently. The Colorado legislature, however, has passed several laws subordinating water quality regulations to the diversion of water; that is, diversion of water for beneficial use cannot be restricted for water quality protection. Colorado generally has not planned for the development or management of its water resources. Instead, it has chosen to develop highly technical acquisition rules administered by the courts. Neither policy direction nor consistent technical data are provided as guidance to the state engineer, water court, or water users. State direction is lacking on the amounts of water needed for various present or projected uses by unit area or on the quantity per unit output. Data bases on water rights, water diversions, and control structures along the South Platte River are being developed, however, for use as decision-support systems by the state engineer and others. CURRENT WATER TRANSFERS AND WATER MARKETING Water marketing in northeastern and southeastern Colorado has differed in several important ways. In northeastern Colorado, buyers and sellers generally have been within the NCWCD service area as required by district law, whereas market participants in southeastern Colorado have not been exclusively within the SCWCD area. Users within NCWCD can transfer large quantities of water rights over the wide geographical areas included in the district, though not outside the district, by signing a water stock certificate. In southeastern Colorado, however, most transfers require formal water court proceedings to change the point of diversion and place of use of the water rights. Appropriative water rights represented by water company stocks having a large service area, and approval for multiple uses can be transferred readily within their service area at low costs. As is apparent from other types of transactions in the NCWCD and SCWCD, market transfers can also be subject to expensive, time-consuming, and complex approval procedures and litigation. Northeastern Colorado The single largest source of water in northeastern Colorado, the C-BT, is also the easiest type of water to transfer. Municipal water service organizations and rural-domestic water companies within the

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment In the fall of 1986, Colorado Springs purchased 17,500 acre-feet (21,600 ML) of direct flow and storage rights in a complex transaction entitling the city to store unused water from some of its direct flow water rights in the Henry and Meredith reservoirs should there ever be insufficient storage capacity in Pueblo Reservoir. Water stored in these reservoirs is then available to serve downstream users, who in turn may exchange their flow rights to Colorado Springs for water upstream in the Pueblo Reservoir. The city of Pueblo, located along the Arkansas River just below Pueblo Reservoir, purchased shares of stock in other ditch companies and has built some water development projects of its own. In recent years, Pueblo's principal water company acquisitions have been the purchase of storage rights in the Otero Canal Company and the Booth-Orchard Canal Company and the purchase of both storage and flow rights in the Rocky Ford Highline Canal Company (Saliba and Bush, 1987). The city of Aurora, a suburb east of Denver that experienced rapid growth until the mid-1980s, concluded three acquisitions of water rights from the basin at the close of 1986. A majority interest in the Rocky Ford Ditch Company was acquired, giving the city 8,200 acre-feet (10,000 ML) of water at a cost of about $2,500 per acre-foot ($2,000 per ML). Aurora also bought 5,600 acre-feet (6,900 ML) from the Colorado Canal Company, at a cost of approximately $2,500 per acre-foot ($2,000 per ML). Finally, Aurora acquired 45 percent of the outstanding shares of stock in the Busk-Ivanhoe Ditch Company, yielding about 3,000 acre-feet (3,700 ML) at a cost of $3,500 per acre-foot ($2,840 per ML). The city was willing to pay a premium price for the Busk-Ivanhoe stock because it included transmountain diversion rights, which are both legally and hydrologically easier to transfer to the South Platte River basin than are native flow and storage rights in the Arkansas River, and which can be consumed (Saliba and Bush, 1987). FUTURE TRANSBASIN DIVERSIONS Numerous reservoirs and an extensive water distribution network allow great flexibility in using and managing transferred water. For the foreseeable future, no significant increase in agricultural demand for water in the CFR is predicted. The primary demand for increasing or reallocating water supplies will be municipal growth. Demographers continue to predict that population, and thus demand for water, will increase in CFR urban areas. Although projections are more modest than in the past, and actual growth has decreased be-

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment cause of a 10-year economic slump, future expansion is still expected. Continued municipal and industrial growth in water demand will maintain some pressure to transfer existing agricultural water rights. Major proposed or pending transfers are (1) within the NCWCD, (2) from the irrigation districts in the Arkansas River basin to Colorado Springs, (3) from the NCWCD to the city of Thornton, (4) from the San Luis Valley in south central Colorado to municipal use in the CFR, and (5) from Colorado River tributaries such as the Gunnison River to the CFR. Conditional water rights already exist for several transbasin diversion projects to bring water to the CFR. One of them is a large diversion known as Homestake II that would take water from Eagle County to Aurora and Colorado Springs. Significant west slope opposition to the project based on environmental, land use, and economic impacts has led to major legal challenges. Although opponents lost in water court, they continued their opposition in other forums. Using county powers under an otherwise weak state land use law, Eagle County halted construction of the project for the time being. Recent proposals of the city of Aurora and Arapahoe County would remove large quantities of water from the Gunnison River. Local residents have joined with environmentalists throughout the region to oppose dewatering of the river. Faced with this strong opposition, Aurora dropped its proposal. The water court is considering the Arapahoe County case, in which the opponents are raising both traditional water rights issues and effects on third party interests. If the court considers matters such as fish and wildlife impacts, recreational effects, consequences for the local economy, detriment to public uses, and other public value or public trust arguments, it will be the first time in Colorado water jurisprudence. The largest project proposed to develop water for the CFR is Two Forks, a 1.1-million-acre-foot (1.36-million-ML) reservoir on the South Platte River that would flood about 30 mi (50 km) of the river and its North Fork. About two-thirds of the water to supply the project 's 98,000-acre-foot (120,000-ML) yield would originate from the Colorado River basin. The project was opposed vigorously by west slope interests, sportsmen, area residents, and environmentalists. During a lengthy and expensive ($40 million) environmental impact statement process, required by federal law because the dam needed a federal permit, an elaborate mitigation plan was developed. The plan, with some modifications, was incorporated as conditions in the permit approved by the U.S. Army Corps of Engineers.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment The Two Forks mitigation plan was a highly detailed description of recreational facilities, trails, picnic and campgrounds, boat ramps, highway relocations and improvements, and relocation aid for residents. It provided for improvements to fishing streams, fish-stocking programs, flow modifications, riverbed and fishery enhancement on the west slope, big game habitat improvements, wetlands rehabilitation, protection of archeological sites, water quality monitoring of affected streams in both watersheds, and attention to endangered species problems. A variety of adverse residual environmental and social effects were identified in the environmental impact statement. There was no state process to deal with the far-reaching impacts of the Two Forks Project, nor any occasion for the water court to review the matter. Denver had long held conditional water rights for the project, and under existing water law water courts consider only effects on other water rights. The only reason there was a forum to voice diverse affected interests was that Section 404 of the Clean Water Act requires a permit to place fill in “waters of the United States.” The U.S. Army Corps of Engineers made an extensive review of third party effects and then granted a permit. The Two Forks permit was vetoed by the U.S. Environmental Protection Agency administrator in late 1990 on the basis of the agency's finding that there were less environmentally damaging alternatives. Like the U.S. Army Corps of Engineers, it tried to integrate state and federal concerns and to reach an appropriate policy choice, but it came to the opposite conclusion. Throughout the process, federal officials expressed frustration over the lack of any state water plan or policy by which state interests could be judged. The governor, when asked for a position on the project, voiced many grave concerns but said that he believed that a long-term permit could give proponents time to pursue alternatives, such as water conservation and cooperative use of existing substantial water supplies. He was uneasy about the destruction of natural resources on both sides of the mountains but said that he had no legal authority to impede or modify the plans of water developers. A recent major water development proposal would pump large quantities of deep ground water from the San Luis Valley in the watershed of the Rio Grande River and convey it to unspecified customers on the CFR. There is considerable local opposition in the San Luis Valley to the transfer because of the possible effects on existing water users and related socioeconomic impacts. The proposal is being reviewed in water court, where, as has already been noted, objections are confined to allegations of interference with water rights.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment THIRD PARTY IMPACTS Socioeconomic Impacts AGRICULTURAL SECTOR Agriculture has been declining in the Arkansas River basin since the 1960s as water has been transferred to cities. Many of the remaining farms and fields are small; the primary crops are melons and vegetables. Continued decline is expected because these are labor-intensive operations, and many younger people do not wish to remain in farming. Still, the primary economic base of the seven-county area in southeastern Colorado is agriculture and agriculture-related enterprises. Although the transfers from agriculture to municipal use involve willing sellers and buyers, and the direct economic effects are favorable, indirect local and regional economic impacts can be significant; these include (1) reduction in demand for agricultural production inputs; (2) reduction in crop outputs, which provide inputs to other production processes; and (3) reduction in consumption due to reduced income, or multiplier effects. Models of these effects with and without agricultural buyouts generally show that lands removed from irrigation would not be suitable for other dryland agriculture (Howe et al., 1990). RURAL COMMUNITIES Rural communities in the area of origin have suffered most from water transfers. In many cases, the communities were in decline prior to the transfers, but transfers accelerated the process. In the Arkansas River basin, the population of the six rural counties of southeastern Colorado in 1930 was 68,576 and the population of Pueblo County was 66,038. The estimated 1987 population was 50,000 for the rural areas and 132,000 for Pueblo County (Howe et al., 1990). This represents a net growth rate of –0.55 percent per year for the rural areas and 1.22 percent per year for the urban area. A study of Crowley County, where major shares of water were transferred from agricultural lands to Colorado Springs, Aurora, Pueblo, and Pueblo West, illustrates the potential impacts on rural communities (Weber, 1989). There has been little reinvestment of the water transfer proceeds into the local area. Rather, 60 to 75 percent of the sales proceeds went to debt payment and taxes. For many farmers on the verge of bankruptcy, the opportunity to sell water

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment shares provided a better option than possible future foreclosure. In addition, Pueblo and Pueblo West acquired more water than is currently needed and have leased water back to the users in the county. But in time, Crowley County's businesses, social institutions, and nonselling families are expected to pay for the water transfers. Agriculture, which has been declining, was struggling to support a local service sector before the transfers. With the transfers, however, land values have dropped drastically, and the local economy may fall below the threshold of viability. MINORITIES The impact of water transfers on minority populations arose under a recently approved change in use from irrigation to mining in the San Luis Valley. The change was bitterly opposed by some members of nearby Hispanic communities concerned about the impacts of mining on the San Luis watershed—site of the oldest water rights in Colorado and of the San Luis Commons, one of the last remaining such lands in the Southwest, a legacy of the early grazing commons of the Hispanic settlers. The change in use was approved, with some conditions to prevent impairment of other water rights. The court allowed community members to express their concerns at a hearing, but Colorado water law does not provide a basis for considering these types of concerns in reviewing a change in water use. Environmental Impacts INSTREAM VALUES Fish and wildlife habitat and riparian vegetation along the Arkansas and South Platte rivers have deteriorated during the past century. Because of controlled, greatly altered flow regimes, the landscape along the rivers has changed dramatically. Old cottonwood groves that developed because of irrigation development and controlled flows provided habitat for raptors, other birds, and a variety of wildlife. Without water, these groves have died out, bringing a decrease in wildlife. Wetlands historically sustained by irrigation, which supported waterfowl, also have dried up. There has been some replacement of lost wetlands and other riparian habitat, however, especially for waterfowl, as old gravel mines along the rivers have filled in with water. Water transfers within the watersheds of the Arkansas and South Platte rivers have tended to consume water high on the river because

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment urban uses are upstream of the established agricultural areas. This situation reduces the quantity of water available for fisheries, riparian vegetation, and recreational uses downstream. Because the water in the streams is heavily appropriated, releases from reservoirs and water uses are timed to meet established water rights involving large consumptive uses. There is, therefore, little consideration for instream flows except to the extent that instream flow rights are held by the state. Colorado has an instream flow program that allows the Colorado Water Conservation Board (CWCB) to appropriate rights to sufficient water “to preserve the natural environment to a reasonable degree.” The program provides only limited protection for instream flows in the Arkansas and South Platte for a couple of reasons. First, the rights appropriated by the CWCB are usually quite junior. The instream flow law was passed in 1973. Water in most streams was already appropriated by that date, so the instream water right ensures flows only in years when there is enough water available after all senior rights have been satisfied. The law does provide some protection against changes in point of diversion, however, because the CWCB is treated as any other water user: its rights may not be harmed by a transfer upstream, even if the transfer is of a senior right. Second, the CWCB has interpreted its authority narrowly, providing minimal instream appropriations to maintain cold-water fish such as trout. Water rights needed to maintain riparian vegetation, wilderness characteristics, and other types of fish and wildlife have not yet been the subject of CWCB appropriations, even though preservation of these values appears to be within the purpose of preserving “ the natural environment to a reasonable degree.” Because of the CWCB's present narrow reading of the statute, only small appropriations have been made. Another problem is that because fish habitat, and the natural environment generally, were seriously degraded long ago on many parts of these rivers, it can be argued that there is not much to “preserve” at this late date. Thus CWCB instream flows have been appropriated largely on tributaries to the two river systems in the mountains, not in the main stems. There is growing interest in protecting instream flows in the rivers as they flow through cities. In Denver, for instance, citizens have organized the Platte River Greenway Foundation and developed an attractive system of trails and naturally landscaped park areas along the South Platte River. The Greenway Foundation has built boating facilities and plans to reintroduce fish to parts of the river. Efforts are being made to maintain sufficient flows to give these public amenities

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment their fullest value. These efforts were frustrated at first by the fact that only CWCB can hold instream flow water rights, but difficulties were overcome with agreements regarding upstream dam releases and operations. CONCLUSIONS Water Rights Transfers Water rights transfers are commonplace in Colorado. A well-established process for transfers exists in Colorado through the water court. This process has successfully protected those who hold water rights from injury resulting from transfers. The judicial process, however, can be complicated, time-consuming, and expensive. In spite of the time and expense involved, the water court process has not protected all third parties adequately. There is a need to improve the efficiency of the process and make it more accessible. In the Northern Colorado Water Conservancy District the newer nonagricultural water users are intermingled with older agricultural users, and both are part of the district, so water transfers often are simplified. In contrast to the-relatively smooth transfers of water rights within the NCWCD, transfers in the Arkansas River basin often are complex and difficult. Population growth is clustered around Pueblo, Colorado Springs, and Fountain, which are upstream from most existing agricultural water users. Therefore, transferring water rights from irrigators to urban users involves complicated exchanges over long distances and across jurisdictional boundaries. Furthermore, numerous ditch companies have contractual rights to water from the Southern Colorado Water Conservancy District, as well as their own appropriative rights to river water. These companies as well as the district must be reckoned with in any transaction. Although NCWCD transfers to expanding municipal uses within the district can be met with supplies of imported Colorado River water, future transfers in the Arkansas Valley are likely to require retirement of agricultural lands. Water rights exist for instream use. Colorado state water law includes an instream flow protection process. Maintaining instream flow to preserve the natural environment is considered a beneficial use, and water rights for instream flows are held by the Colorado Water Conservation Board and integrated into the prior appropriation system. However, the board has limited the quantity of water on which it will seek rights to the minimum needed for cold-water fisheries. Thus interests such as wildlife, water quality, recreation,

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment wilderness, and aesthetics have no protection beyond that required by fish. Further, the rights held by the board for instream flow are junior to most consumptive use rights of agriculture or municipalities, so in reality they provide protection only against transfers, exchanges, or other water rights changes that would injure the instream flow rights. Water quality effects generally are not considered. Water development interests have resisted consideration of effects on water quality in the process of administration or the transfer of rights. Rural interests are represented only by water rights holders and conservancy districts. Rural agricultural water rights holders in Colorado are given notice of transfers and their water rights are protected in the transfer process. The water court system allows anyone with potential water rights injury to become a party. Legal and engineering costs sometimes bar individual farmers from effective participation in those processes. However, to the extent that individuals ' rights are represented by conservancy districts, which usually become parties in water rights transfers, the districts effectively protect these water rights holders. Broader community concerns generally are not addressed by organizations representing individual right holders or by conservancy districts. Some evidence is emerging, however, that indicates a broadening of conservancy district concerns to encompass wider community concerns. The third party effects of water transfers need additional consideration in Colorado. Colorado is the only western state that has no law directing that the public interest be taken into account in some form during water transfers. Expanding consideration of interests beyond the traditional test of no injury to other water rights would be controversial in Colorado and would be strongly opposed by water developers. One way to proceed would be integrate the analysis of third party effects into federal permit requirements (e.g., Section 404 of the Clean Water Act or Section 9 of the Endangered Species Act). This might help avoid duplication and reduce political opposition. At a minimum, acceptable procedures need to be developed to compensate basin-of-origin residents for major transfers of water to urban areas. Basin-of-origin issues are handled on a case-by-case basis. Basin-of-origin issues are resolved on a case-by-case basis involving (1) negotiation outside the water court process, (2) political activities, and (3) the usual water rights appropriation and transfer process. This ad hoc resolution process has produced inconsistent results, but it has sometimes provided compensation or mitigation for the area of origin.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment Although there is no mechanism for comprehensively and consistently considering third party effects of water use and development in Colorado, these matters can be raised and resolved in a variety of ways. The level of success depends on the laws that apply, the political strength and sophistication of the parties, and the financial capacity of the project proponent to compensate or make adjustments in the project plans in response to third party complaints. Several examples in this case study show how case-by-case negotiation works to resolve third party effects associated with transmountain diversions in Colorado. They include notably the Windy Gap and Two Forks projects. Both resulted in major concessions to affected third parties in the area of origin and a redress of local and statewide concerns. The principal problem with the case-by-case approach is uncertainty. Project proponents do not know the potential costs or modifications required, and affected parties do not know which of their claims will be resolved satisfactorily and which will not. There can be wide variations from one case to the next in how third party effects are resolved. Also, it appears that in the case-by-case approach there is little leverage for third parties outside the context of major project construction; transfers in the absence of construction provide few legal levers for third parties. Water Resource Planning and Management Basinwide water resource management could be consolidated. Basinwide water resource planning and management could consolidate overlapping authorities and reduce the conflicts and costs involved in water transfers. Integrated water supply planning and management in the CFR area could increase efficiency and cost savings. Perhaps most importantly, integrated water supply planning and management could result in increased water supply as a result of the more efficient operation of combined systems. Unless leading water supply agencies or the state takes the lead in promoting integrated planning and management for water supply in the CFR area, the present “every government for itself” situation will continue. Planning for drought could be enhanced. Colorado law permits temporary and permanent changes in water rights. Contingency plans could be negotiated to provide that farmers would decrease the amount of low-value crops planted and sell available water to users willing to pay higher prices. (This practice is being proposed in the Northern Colorado Water Conservancy District.) Resistance to drought also would be enhanced if policies encouraged reduced wa-

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment ter demand. Municipalities could impose water use constraints and increase the cost per unit volume in order to reduce water use without reducing operating revenue. Policies for developing and managing ground water supplies could help stabilize water supplies and provide supplies during drought. Conjunctive use of surface and ground water is practiced, but policies and practices need further development. Water salvage could be encouraged. Colorado law is clear that water being consumed by evaporation or phreatophytes cannot be salvaged by reducing consumptive use and then be sold for use elsewhere. Colorado law is unclear, however, on the right of a farmer to reduce consumptive loss by more efficient agricultural practices or a change in crop and to sell the salvaged consumptive use elsewhere. Eliminating the legal uncertainties and reducing the legal costs associated with water salvage will enhance the potential of water salvage in water management. Critical examination of the technical merits of alternative salvage processes and their potential salvage amounts and costs is an important first step. More efficient processes for water transfers are needed. Increased efficiency in the water transfer process would reduce costs and promote desirable transfers. Development of standard procedures for estimating consumptive use, transit losses, ground water return flow delay times, and similar engineering calculations could avoid their repetition for every transfer and thereby lower costs. The Colorado state engineer's office could promulgate standardized procedures and coefficients for water transfers. The Colorado-Big Thompson Project could serve as a model for transfers of federal project water. The transfer of water within the NCWCD is a model for water transfers involving federal project water. The existence of the market for Colorado-Big Thompson Project shares and the ease of both short-term and long-term transfers of water provide an example of an efficient federal project water transfer system. The district could lead the way in removing barriers to out-of-district transfers as well. However, as with many other local water districts around the West, proposed transfers of district water to locations outside the district have been opposed by the NCWCD. These barriers to exporting water from a district can prevent transfers from providing a least-cost water supply for other users in the region.

OCR for page 137
Water Transfers in the West: Efficiency, Equity, and the Environment REFERENCES Colby, B. G. 1991. Water rights price trends: Prospects for the 1990s. University of Arizona, Tucson, Appraisal Journal. Colorado Department of Local Affairs. 1990. Colorado Municipal Population Estimates, 1981-1989. Denver, Colo. Colorado District Court. 1974. Water Division No. 2, Case No. W-3965. Twin Lakes Reservoir and Canal Company. Getches, D. H. 1986. Meeting Colorado's water requirements: An overview of the issues. Pp. 1-24 in L. J. MacDonnell, ed., Tradition, Innovation and Conflict: Perspectives on Colorado Water Law. Boulder: University of Colorado, Natural Resources Law Center. Getches, D. H. 1988. Pressures for change in western water policy. Pp. 143-164 in D. H. Getches, ed., Water and the American West. Boulder: University of Colorado, Natural Resources Law Center. Groundwater Appropriators of the South Platte River Basin (GASP). 1989. Pp. 1-31 in South Platte River Compact. Fort Morgan, Colorado. Harrison, C. 1984. Colorado water marketing: The experience of a water broker>. Presented at the annual meeting of the Western Agricultural Economics Association, San Diego, Calif. Howe, C. W., D. Schurmeier, and W. Shaw. 1986. Innovations in water management: An expost analysis of the Colorado-Big Thompson Project and the NCWCD. Unpublished manuscript. Boulder: University of Colorado, Department of Economics. Howe, C. W., J. K. Lazo, and K. R. Weber. 1990. The economic impacts of agriculture-to-urban water transfers on the area of origin: A case study of the Arkansas River valley in Colorado . American Journal of Agricultural Economics 72(5):2300-2304. MacDonnell, L. J., C. W. Howe, and T. A. Rice. 1990. Transfers of water use in Colorado. Pp. 1-52 in The Water Transfer Process as a Management Option for Meeting Changing Water Demands. Vol. II. Award No. 14-08-0001-G1538. Reston, Va.: U.S. Geological Survey. Saliba, B. C., and D. B. Bush. 1987. Water Marketing in Theory and Practice: Market Transfers, Water Values and Public Policies. Studies in Water Policy and Management, No. 12. Boulder: Westview Press. Southeastern Colorado Water Conservancy District (SCWCD). 1981. Water Allocation Policy, As Amended. Pueblo. October 22. Southeastern Colorado Water Conservancy District (SCWCD). 1985. Operating Plan: Winter Plan 1985-1986. Pueblo. November. U.S. Bureau of Reclamation. 1938. Repayment Contract Between the Bureau of Reclamation and the Northern Colorado Water Conservancy District. Loveland, Colo. U.S. Geological Survey. 1986. National Water Summary 1985—Hydrologic Events and Surface Water Resources. Water Supply Paper 2000, 516 pp. Weber, K. R. 1989. What Becomes of Farmers Who Sell Their Irrigation Water? The Case of Water Sales in Crowley County, Colorado. Grant No. 885-054A Report. Ford Foundation. November 16.