Local Opinion: Drought contingency plans embrace water marketing

The act authorizing the plans, which Congress enacted in a rare display of bipartisanship, is only a few paragraphs long. It simply instructs the secretary of the interior to carry out the provisions of various state drought plans. Remarkably, these plans embrace water marketing as an essential policy tool.

Water markets involve the reallocation of water from one user to another through the sale or lease of water rights. For several reasons, markets have been an under-utilized tool for addressing water shortages in the American West. Antiquated federal and state laws impede or prohibit water transfers. Cumbersome, time consuming processes drive up transaction costs. And permissive groundwater rules prioritize drilling new wells over retiring existing wells.

Water markets can be controversial. The water that changes hands is usually agricultural water that had been used to grow a low-value crop, such as alfalfa. Those who often oppose markets, surprisingly, are those who would financially benefit from them: farmers. To understand farmers’ opposition, one must distinguish between the short-term outcome — a check from a city, developer or environmental organization, and the long-term outcome — a reduction in the amount of water available for the farming community in the future. Farmers often resist water marketing because they fear, sometimes correctly, that selling water to cities would doom the farm community to a less prosperous future.

The state drought plans move gingerly toward encouraging transfers of water by using clever euphemisms that avoid any mention of water marketing. The grim reality becomes a “structural deficit,” and the solutions include “intentionally created surplus,” “system conservation,” “forbearance agreements,” “water exchanges,” “dry-year options,” “mitigation payments,” “offset components” and “fallowing agreements.” The euphemisms share a common feature: one entity is paying another entity to change its water consumption.

Arizona’s plan, for example, seeks to persuade water rights holders to “forbear” from using their water in favor of leaving it in Lake Mead. This benefits the state of Arizona because if buyers and sellers produce “intentionally created surplus,” the water level in Lake Mead may remain high enough to prevent automatic cuts to Arizona’s water supply.

These euphemisms are tools that usher in a new frontier in western water law that will increase resilience in the face of droughts, floods and forest fires fueled by climate change. These tools are helping water managers in the Basin states prepare for a future with catastrophic events.

Water marketing can become a robust tool of water policy only if the market protects the long-term viability of agricultural communities. That can be done through transactions that encourage farmers to slightly reduce their consumption in exchange for financial help from municipal and industrial interests.

Inefficient flood irrigation is still used on three-quarters of the irrigated lands in the Colorado River Basin. Center-pivot, micro-irrigation and sub-surface drip irrigation systems are highly efficient but quite costly to install. If the cities were to finance a program to modernize irrigation systems, farmers could grow the same volume of crops with slightly less water and cities could use the conserved water.

This program would protect rural communities as it frees up water for cities.