Water Transfers in the West Efficiency, Equity, and the Environment (1992) / Chapter Skim
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2 Third Party Impacts and Opportunities
2 Third Party Impacts and Opportunities
Pages 38-69
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From page 38... ...
Third parties are described in detail in Chapter 4; they can include · other water rights holders; · agriculture (including farmers and agricultural businesses in the area of origin) ; · the environment (including instream flows, wetlands and other ecosystems, water quality, and other interests affected by environmental changes)
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From page 39... ...
For example, transfers that involve surface waters may decrease instream flows, leading to degradation of wetlands and water quality and to loss of riparian habitat. Such transfers also can result in increased sewage treatment costs to municipalities that rely on the depleted streams.
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From page 40... ...
These studies raise some concerns about the barriers posed by transaction costs but conclude that current transaction costs do not appear to be excessive in light of the need to protect the expectations of water rights holders sharing a common source of supply. As one report acknowledges, "[pierhaps the major policy challenge facing the western states in this area is how to address third party effects" such as instream flows, recreation, area-of-origin equity, and water quality associated with the reallocation of western water (MacDonnell, 1990b)
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From page 41... ...
THIRD PARTY IMPACTS AND OPPORTUNITIES rather to address the major policy ch:ail Ping br:oa~der~sta~ndards~ four evaluating third par impacts
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From page 42... ...
In general, other water rights holders receive more protection in state review processes than any other third party. Water laws in the western states protect affected water rights holders from damage resulting from changes in use in order to make their rights more secure and valuable.
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From page 43... ...
~al~so~compa~red characteristics of water transfers in several ~westernl~states and found considerable variation among , ~~s~t.a.t,~e~s'~., bins Colorado,, 80~,percent of transfe~r:appli:cation~s~were~ e`7ent:ual~1y~approved over the 10-year study period (~1975~'to 1~984)
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From page 44... ...
The review process can be expensive; therefore affected parties who do not have the financial means to employ attorneys, hydrologists, engineers, and other experts to substantiate potential damages are unlikely to be effective participants in a review proceeding. Federal and state environmental laws on water quality, wetlands, and endangered species protection also may restrict transfers or increase their costs by requiring that alternative water be provided for environmental needs.
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From page 45... ...
This report does not attempt a comprehensive analysis of the issue of rural community preservation but does suggest processes and factors that can be considered to decide which rural communities should be protected and how this might be done. Retiring irrigated land can lead to losses of farm jobs, crop production, and farm income.
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From page 46... ...
Local government fiscal losses, for instance, may occur well before water is actually transferred out of an area, and thus some earlier event such as the purchase of land and water rights must trigger a mitigation requirement for fiscal impacts. Direct fiscal impacts, including the loss of property tax base and bonding capacity and reduced debt limit and state revenue sharing, occur immediately upon purchase of the land by a municipality or other tax-exempt entity.
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From page 47... ...
When water rights are sold and the irrigated farmland is retired, this typically results in a reclassification and reduced valuation of the land for property tax purposes. Induced economic and fiscal impacts begin to occur after the farmland is retired.
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From page 48... ...
Such losses, however, tend to be concentrated in particular areas and can seriously impair the viability of small rural communities, which may lack the economic strength and diversity to respond to such rapid changes. Environmental Effects of Retiring Irrigated Farmland When land is retired from irrigated agriculture, the natural process of revegetation produces a secondary succession of plant species.
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From page 49... ...
. A significant portion of the Arkansas River Valley of Colorado has been purchased and retired from agriculture by the cities of Aurora and Colorado Springs in order to transfer the associated water rights to municipal uses.
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From page 50... ...
Some believe that the transfer of significant quantities of water to the urban sector would prevent farmers from reacquiring adequate water supplies in the future should irrigated agriculture become significantly more profitable than it is today. This concern arises even when leases instead of sales are contemplated, partially because of a distrust of the contracting process.
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From page 51... ...
Loss of local control over water resources also diminishes the opportunity of people to participate in water management, which is a strong unifying bond for many communities. Irrigated agriculture is still seen by many minority communities as offering good economic opportunities and at the same time being culturally compatible with their way of life.
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From page 52... ...
TRIBES AS SOVEREIGN GOVERNMENTS Tribal governments have a distinct advantage over non-Indian rural communities in that they own extensive water rights and also have broad legal and political control of their reservation resources. Their sovereignty enables them to prevent disadvantageous transfers and to propose and shape favorable transfers.
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From page 53... ...
~ Pc'lit'ies '~ I that~li.m'it tribes t~'o''~on.-rese'rvation,w,',a~te~r~ u''es~, ~ , ~~.~the To f tribe 1~ water to Mu ppl.y ~2 growl ng d'ema oafs of T'~'~'res'er~f~atio~'ns Alfred If- deprive both tribe's an nc~n-ln~i~nc of the h~P~nPfi~iC of vo.luntarv of surface or ground water can have significant impacts on waterdependent flora and fauna within western riverine, rip arian, and wetland ecosystems.
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From page 54... ...
Thus foregone instream benefits can be a significant third party impact caused by water transfers. As noted earlier, instream flows are vital in preserving fish and wildlife habitat in arid regions.
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From page 55... ...
Instream flows also are critical to water-dependent recreation, like white water rafting, a significant contributor to many western economies. CREDIT: Friends of the River.
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From page 57... ...
The negative impacts of actions that deplete instream flows have been dramatically demonstrated at Mono Lake, the second largest lake in California. Mono Lake one of the relatively few, large deep saline lakes in the world is fed by five freshwater streams.
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From page 58... ...
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From page 59... ...
Attention to the benefits generated by instream flows in the West will help to identify hidden costs in proposed water transfers. State reviews of proposed transfers may continue to favor off-stream water uses if decisionmakers rely on more easily documented economic benefits provided by water for irrigation, energy development, and urban growth.
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From page 60... ...
Other studies indicate substantial benefits to recreationists from maintaining and improving surface water quality in Colorado's South Platte River basin along the populated Front Range (Greenley et al., 1989~. Water quality has a significant impact on the economic value of water rights because it affects the range of different uses to which water can be put and the cost of treating water to provide a quality level suitable for specific uses.
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From page 61... ...
Water quality does enter into water allocation decisions but generally through the back door. For historical reasons the right is vested in water quantities or flow rates, with quality considerations addressed through regulatory regimes.
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From page 62... ...
If agencies or courts must consider a broader array of third party impacts, the costs to cities of acquiring new water supplies will probably rise and so will household and business water rates. Because of the high value placed on municipal water use, it is unlikely that the additional transaction costs will render many transactions infeasible.
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From page 63... ...
, resolving reserved rights claims, protecting water quality and wetlands, and preserving endangered species.
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From page 64... ...
In 1979 the Idaho legislature created a water bank to facilitate the temporary transfer of water rights to other water users in a system with a long-term surplus. This approach actually began in the 1930s, when Idaho farmers began "depositing" water allocated to them from federal reservoirs in the upper Snake River system, to be "withdrawn" by other farmers who needed the water.
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From page 65... ...
At the same time, other water rights holders are not adversely affected by the conversion of offstream consumptive uses to instream flows, with the resulting benefits to the recreation and fish and wildlife values of the Gunnison River. The Nature Conservancy, the Environmental Defense Fund, and other environmental interests are also involved in acquiring existing water rights for wetland uses as part of the solution to the complex problems in the Truckee-Carson case study in Nevada.
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From page 66... ...
A water rights transfer during the energy boom of the 1970s illustrates that rural economies can be protected as water transfers occur. The Intermountain Power Project (IPP)
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From page 67... ...
However, broader third party protection also means that the transfer review process will likely become more complex and cumbersome, raising the transaction costs incurred by transfer proponents. Recent court rulings and legislative activity in the western states, reviewed in Chapter 3, suggest that policymakers are broadening the protection available, reflecting a growing appreciation of the environmental, recreational, and cultural benefits that water resources provide.
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From page 68... ...
1990. Transferring Water Rights in the Western States: A Comparison of Policies and Procedures.
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From page 69... ...
1990. Update on market strategies for the protection of western instream flows and wetlands.
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