ECONOMY
Colorado group works to get ahead of water crisis
By George Oamek, PhD M
A drought- induced compact call would be without historical precedent, with on how to deal with the crisis.
aybe the biggest concern among Colorado water providers is the potential for a “compact call” on the Colorado River, requiring the
state to reduce water diversions in the Colo- rado River system to satisfy long-established downstream delivery requirements. This is a big deal because in addition to supplying water to the western portion of the state, transmountain diversions of Colorado’s portion of the river also supplies a large portion of the Colorado Front Range through the Colorado-Big Thomp- son project, Denver Water’s collection system and the Fryingpan-Arkansas project, creating a statewide dependence on this overworked river system. A drought-induced compact call would be without historical precedent, with no firm state plan on how to deal with the crisis.
There has been considerable discussion about who has water rights that predate the 1922 Col- orado River Compact and how a call might be geographically allocated. Regardless, Western Slope irrigators feel they have a target on their backs because they are the closest in proximity to the problem and irrigate a lot of acres of relatively low-valued forage crops. There is a reasonable fear they may bear the brunt of a call’s burden.
To get in front of this almost inevitable crisis, a local ad hoc group called the West Slope Water Banking Group hired a consulting team led by BBC Research in Denver to examine the eco- nomic implications of developing a program to “deposit” about 25,000 acre-feet per year in a Lake Powell water bank over five years, totaling 125,000 acre-feet. Under some planning scenar- ios, this was thought to be an equitable volume for the Western Slope to contribute.
The study estimated the levels of lease pay- ments it might take to entice irrigators to give
6 Irrigation TODAY | Spring 2021
up their water for this water bank in a “tempo- rary, voluntarily and compensated” manner. These quotation marks enclose very important criteria about Colorado’s view of demand man- agement. The study determined that, across the river’s sub-basins, the irrigation water had an economic value of about $160 per acre- foot, but it would take something more in the $250 per acre-foot range to get irrigators to risk participating in a newly developed demand management program.
Although the participating irrigators would be fairly compensated through the lease pay- ments, there has also been considerable fear that rural communities depending on irrigated crop production would suffer adverse second- ary impacts due to reduced spending on farm inputs and related services. Some of these fears were put to rest by the conclusion that partic- ipants would spend the majority of their lease proceeds locally, offsetting the reductions in farm input spending. Also, the program can be developed in a manner that spreads out these impacts across the basins, minimizing impacts to any single area. However, the long-term impact on the local hay markets, and ultimately the regional cattle markets, is still uncertain.
Since the publication of the BBC study, the Colorado Water Conservation Board and the Wyoming Water Development Commission have begun their own studies examining the economic impact of the development of an Upper Colorado River water bank. These are ongoing studies that will likely conclude in 2022. And thanks to BBC Research for letting me be on their team.
George Oamek, PhD, is an economist with Platte River Recovery Implementation Program’s
irrigationtoday.org
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