Selling water to the highest bidder

 

At some point, the way Colorado River water gets divvied up is going to have to change. As we've noted in past writings, the lower basin states of Arizona and Nevada frequently push close to the limit of using the amount of water they are allocated use more water than they're allowed to under the compact that runs the river. Climate change will likely make droughts worse, and reduce the total amount of water available to states using the river's water. In preparation for this inevitable need to change the system, the Bureau of Reclamation, which manages the river's dams and reservoirs -- including the giant storage systems of Lakes Mead and Powell, recently took suggestions from the public for new ways to manage the river. (Read the list of submitted ideas here)

Intake towers for Nevada at Lake Mead. If the lake level drops below 1,025 feet above sea level, Nevada can't get its water. Image courtesy Flickr user Thomas Hart.

One of these ideas involves what's known as a water market. If you follow environmental policy at all, you know it's become fashionable to look to markets to solve some types of environmental problems. The idea is, when prices are attached to a limited resource (like water or a pollution permit), those who need the resource the most will pay the most for it, and it ends up divvied up in the most efficient way.

A paper published this week in the Journal of the American Water Resources Association details this concept for the Colorado River Basin. The researchers, economists Rich Wildman and Noelani Forde, take as their model Australia's Murray-Darling Basin, which has adopted a successful water market. The needs pressing the Australian basin are akin in many ways to the Colorado River Basin, and western policy makers (including water wonk Brad Udall, whom we have interviewed on the topic) have been interested in learning what they can from the changes to management that Australia implemented during a 10-year drought known as the "Big Dry," where runoff was at 40 to 50 percent of normal.

But while there are many parallels between the Australian situation and what is likely to happen in the Colorado River Basin, there are also many hurdles to following the land of Oz down its market-based path, as the paper details.

First, in order to have a water market (or any market, really) you need a common authority to set the rules, monitor transactions, and run the show. Australia's three states dependent on the water in the Murray-Darling Basin had to cede authority to the Murray-Darling Basin Authority, a new organization created to manage the water resources in the basin "in the national interest." No such authority currently exists in the Colorado River Basin, and it would probably take an unprecedented drought and water shortage similar to what Australia experienced for Basin states to cede water authority to a federal or quasi-federal entity.

Australia's once-might Darling river became paltry during the "Big Dry." Image courtesy Flickr user Wolf.

If there was a drought significant enough to force states past that hurdle, there are many other details to sort out. The new market would have to deal with senior and junior water rights (how do senior water holders get extra compensation on the market?), in-stream flows or other environmental concerns (which are currently treated differently state-to-state), and impacts on hydropower generation (for instance if water got moved around enough to reduce generation capacity from big dams). There's also the difficulty in simply setting up a system where water can be traded and moved around in a timely enough fashion to make the market work.

And then there's the question of culture. Right now, the paper's authors write, the only states that really have an incentive to change anything are Arizona and Nevada. They will be the first to run out of water; the Central Arizona Project, which provides water to Phoenix, relies on one of the most junior water rights in the state and will quickly experience problems when there is a shortage. Las Vegas, meanwhile, is so concerned about water that it is pursuing what the paper calls a "politically contentious and expensive pipeline" to pump groundwater from the Snake Valley.

The Upper Basin states, particularly Colorado, have been very resistant to change. When now-Interior Secretary Ken Salazar was a Colorado Senator, in 2008, he said any change to laws divvying up Colorado River water would be "an anathema to the fundamental principles of Colorado's water rights."

Wildman and Forde, the economists behind this paper, think money could solve the cultural problem; if senior water rights holders see the opportunity for a steady source of reliable income (perhaps better than weathering the up-and-downs of agricultural markets), they might change their minds about a water market.

But they also worry that, if it takes a crisis to spur change, the attendant panic might preclude the setup of a smart, well-monitored market-based solution such as the one they propose.  While it worked fairly well for Australia, the country's Murray-Darling river basin management was also initially set up differently from the Colorado's. For example, instead of set allocations, upper and lower basin users were already accustomed to receiving percentages of yearly flows.

At some point, maybe in the next few years, maybe in the next few decades, a water-shortage crisis will hit the Colorado River Basin and the communities it supports. Whether change happens before then or in the midst of a chaotic and painful drought, I suppose it is at least comforting that smart people are thinking about ways the transition to this water-poor future can work. In the meantime, I'm just feeling lucky I live in an Upper Basin state. (neener neener)

Stephanie Paige Ogburn is the online editor at High Country News.

High Country News Classifieds
  • 10 ACRES OF NEW MEXICO HIGH DESERT
    10 Acres of undeveloped high desert land in central NM, about 45 minutes from downtown Albuquerque. Mixed cedar and piñon pine cover. Some dirt roadways...
  • WATERSHED RESTORATION DIRECTOR
    $58k-$70k + benefits to oversee watershed restoration projects that fulfill our strategic goals across urban and rural areas within the bi-national Santa Cruz and San...
  • CUSTOMER SERVICE ASSISTANT - (PART-TIME)
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks a part-time Customer Service Assistant, based at...
  • OPERATIONS DIRECTOR
    We are a Santa Fe-based nonprofit that builds resilience on arid working lands. We foster ecological, economic, and social health through education, innovation, and collaboration....
  • COMMUNITY ORGANIZER
    Come work alongside everyday Montanans to project our clean air, water, and build thriving communities! Competitive salary, health insurance, pension, generous vacation time and sabbatical....
  • CAMPAIGN MANAGER
    Oregon Natural Desert Association (ONDA), a nonprofit conservation organization dedicated to protecting, defending and restoring Oregon's high desert, seeks a Campaign Manager to works as...
  • HECHO DEPUTY DIRECTOR
    Hispanics Enjoying Camping, Hunting, and the Outdoors (HECHO) was created in 2013 to help fulfill our duty to conserve and protect our public lands for...
  • REGIONAL REPRESENTATIVE, COLUMBIA CASCADES
    The Regional Representative serves as PCTA's primary staff on the ground along the trail working closely with staff, volunteers, and nonprofit and agency partners. This...
  • FINANCE AND OPERATIONS DIRECTOR
    The Montana Land Reliance (MLR) seeks a full-time Finance and Operations Director to manage the internal functions of MLR and its nonprofit affiliates. Key areas...
  • DIRECTOR OF CONSERVATION
    The Nature Conservancy is recruiting for a Director of Conservation. Provides strategic leadership and support for all of the Conservancy's conservation work in Arizona. The...
  • EXECUTIVE DIRECTOR
    The Amargosa Conservancy (AC), a conservation nonprofit dedicated to standing up for water and biodiversity in the Death Valley region, seeks an executive director to...
  • BIG BASIN SENIOR PROJECT PLANNER - CLIMATE ADAPTATION & RESILIENCE
    Parks California Big Basin Senior Project Planner - Climate Adaptation & Resilience ORGANIZATION BACKGROUND Parks California is a new organization working to ensure that our...
  • SCIENCE PROJECT MANAGER
    About Long Live the Kings (LLTK) Our mission is to restore wild salmon and steelhead and support sustainable fishing in the Pacific Northwest. Since 1986,...
  • NEW BOOK BY AWARD-WINNING WILDLIFE BIOLOGIST, BRUCE SMITH
    In a perilous place at the roof of the world, an orphaned mountain goat is rescued from certain death by a mysterious raven.This middle-grade novel,...
  • MOUNTAIN LOTS FOR SALE
    Multiple lots in gated community only 5 miles from Great Sand Dunes National Park. Seasonal flowing streams. Year round road maintenance.
  • RURAL ACREAGE OUTSIDE SILVER CITY, NM
    Country living just minutes from town! 20 acres with great views makes a perfect spot for your custom home. Nice oaks and juniper. Cassie Carver,...
  • A FIVE STAR FOREST SETTING WITH SECLUSION AND SEPARATENESS
    This home is for a discerning buyer in search of a forest setting of premier seclusion & separateness. Surrounded on all sides by USFS land...
  • CARPENTER WANTED
    CARPENTER WANTED. Come to Ketchikan and check out the Rainforest on the coast, HIke the shorelines, hug the big trees, watch deer in the muskeg...
  • CAUCASIAN OVCHARKA PUPPIES
    Strong loyal companions. Ready to protect your family and property. Proven against wolves and grizzlies. Imported bloodlines. Well socialized.
  • ENVIRONMENTAL GEOPHYSICS
    "More Data, Less Digging" Find groundwater and reduce excavation costs!