03 December 2009

Rob Harmon on in-stream water markets

[NB: I had a great time at the water footprinting thing; blog post to come.]

In this 40 minute water chat [7MB mp3], Rob Harmon of the Bonneville Environmental Foundation and I discuss how they have implemented a market for in-stream water in which farmers are paid to leave water in-stream (restoring ecosystems) in exchange for money paid by businesses and individuals.

According to Rob, these in-stream markets are only possible in Oregon, Washington and Montana, where laws ensure that farmers who sell water for in-stream use do not "lose it." That means that they cannot function in California until the legislature approves "a simple amendment" to water rights laws. What are we waiting for? (I am wondering how environmental water accounts in Scott Valley and elsewhere in CA are "legal.")

Listen to the whole chat and learn about who pays, how easy it is, how streams are chosen, how auditing occurs, and who's putting money at risk. Oh, and read this blog post for Rob's emotional reaction to seeing steelhead trout fry dancing about in the shallows of a previously-dry creekbed.

Rob and BEF deserve some prizes for this excellent work!

Oh, and I am interested to hear if these types of markets function elsewhere, clear laws or not, USA or not.

Bottom Line Farmers and environmentalists can trade water for money, leaving both better off.

7 comments:

  1. WaterSource/WaterBank03 December, 2009 05:26

    In stream water use and the resulting available market for such use has been available in CO since 1978. ( My signature appears on scores of approvals).

    Changes of water rights from say "agricultural" to an instream flow must 1) give proper notice to everyone on the stream system, 2) show that no damage will occur to anyone else's water rights and 3) have an authority of jurisdiction confirm the change in writing.

    The FACT that a junior water right is entitled to the conditions that existed on the stream at the time they made their appropriation must be taken into account by a senior water right that wants a change.

    The senior water right is only entitled to the credits that resulted due to the consumptive use that has occured because of his historic use. These historic consumptive use credits are far smaller than the decreed amounts of water that have been used because the junior water rights are entirled to the historic return flows.

    Whether a senior water right is at the mouth of a stream or high up in the stream basin can make a big difference in whether or not the stream is "dried-up" to effecutate the appropriation.

    Storage facilities can be important component parts of these plans to augment dry streams. Consumptive Use credits can/may be stored at the time they can be shown to historically occur for release later to the stream when they would not otherwise been available, less evaporation losses.

    Exchanges can enhance the objective to keep the streams flowing.

    Aguanomics "shoots itself in the foot" when it limits the degree of discussion involving new non-tributary water that can be developed for distribution to solve environmental concerns and provide for real mitigation throughout huge drainage basins in the Southwestern US. Restoration of the entire Colorado River Delta for example may be possible.

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  2. I could be wrong, but I think that Washington also limits instream flow transactions to historic consumptive use (like WaterSource/WaterBank noted about transactions in Colorado).

    You can add Texas to the list of western states with emerging (actually, fully developed in some cases) water markets for instream flows. The Trans Pecos Water Trust has been working to restore flows through leases in the Rio Grande for a few years.

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  3. Actually, it can be done in California under Water Code section 1707, and under state- and federal-run programs such as the environmental water account that operate under the control of the State Water Project and Central Valley Project that in essence control the Sacramento River System.

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  4. WaterSource/WaterBank04 December, 2009 03:23

    This comment has been removed by a blog administrator.

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  5. ScottRiverWaterTrust07 December, 2009 11:23

    The Scott Valley water leases are legal by using forbearance agreements with water users and not leasing appropriative water rights for more than 5 years in a row. CA water law does allow instream use via Water Code sections 1700-1735 but the process is cumbersome and expensive. Several 1707 instream petitions have been submitted to the State for sites in Scott Valley but none are yet approved.

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  6. I apologize for some miscommunication on this topic. Part of the problem with presentations and interviews is that it is at times difficult to make the choice between complex (long) answers and simple (short) ones. Given the tremendous intellectual horsepower that resides in the readers of this blog, I am not surprised that a lively dialog has begun. This is all good.

    My hope is that this can be part of a broader conversation where we can all move the conversation forward and include more participants in both the conversation and the development of solutions. With that it mind, please allow me to clarify.

    BEF thought about western water law first because it is most conducive to flow restoration. The reason BEF chose OR and MT, and soon we hope WA for our early projects is because those states have very clear statutes that have been on the books for some time regarding how instream flow transactions work, how the water is protected, and the parties that need to participate. This clarity makes it possible for us to meet both our environmental responsibilities and our consumer protection responsibilities — responsibilities that we take very seriously. These are also states where organizations (and funding mechanisms) have emerged to focus on instream flow enhancement in dewatered rivers and streams. As a result, myriad instream flow transactions have been implemented on a broad scale, and these transactions have been tested and proven effective.

    CO is another state with substantial success in the flow restoration arena. CO has clear statutes, a transfer process, and an organization dedicated to this work. We continue to communicate with organizations in Colorado that do this work, and as instream flow enhancement strategies continue to gain traction there, it is our hope that the WRC program will provide funding for Colorado projects as well.

    There are other states where such statutes, organizations and infrastructure appear to be evolving in very rapid and positive ways. Based on my understanding, recent policy and organizational developments in California, for example, continue to make this work more and more feasible across a broader scale. Organizations dedicated solely to instream flow improvements have emerged recently in the state.

    There are still other states where this work is legally possible only in certain specifically designated basins or only where creative organizations and/or agencies are putting unique and specific deals together (for example, specific basins in Idaho and sections of the Rio Grande in Texas). Many such deals, however, may be very hard to replicate state-wide because explicit state statutes do not exist, and/or it is not clear what steps must occur to implement instream transfers on a broader scale.

    And finally, in some western states, the laws pertaining to instream transfers are simply convoluted and cumbersome, and there may be no clear pathway to do this work.

    In summary, in most western states current laws do not explicitly preclude transferring water rights instream for environmental benefit. But without statutes, institutional capacity, and a process to guide this work through state bureaucracy, it can be very difficult to effect an instream flow transaction that results in clearly protected water.

    Again, I apologize for any confusion I may have caused.

    My hope is that we can use this opportunity to discuss how to get the best possible framework in place in the broadest number of places to move this important work forward.

    I appreciate the opportunity.

    Rob Harmon
    Bonneville Environmental Foundation

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  7. The Pacific Northwest is by far and away the leader nationally in instream flow leases and purchases.

    The Oregon Water Trust (now a part of the Freshwater Trust) set the bar high and led the way. Fortunately, other groups followed the tradition of innovation and cooperation.

    Here are a couple of resources that have attempted to summarize the market activity westwide that may be of interest.

    Saving Our Streams Through Water Markets 1998 - written by some hack.
    http://www.roundtableassociates.com/ywe/docs/Saving%20Our%20Streams.pdf

    Research from that publication was peer reviewed published in Water Policy in 1998. Simon (1998) published a nice piece in Contemporary Economic Policy that focused on Federal acquisitions of water for environmental purposes.

    Both of these articles along with a many other great articles have been assembled by Dr. Quentin Grafton in a two volume series "Economics of Water Resources".

    Saving Our Streams was updated in 2008 with interesting and surprising results in terms of market growth across the western US. http://www.perc.org/articles/article1006.php

    One of the interesting aspects of the instream market that is not showing up in any of the market research is the growth of private instream purchases and leases by entities other than the nonprofits. Increasing, private parties are typically buying water rights and dedicating all or a portion of the rights "voluntarily" as part of a mitigation proposal.

    I'll go out on a controversial limb here and state that instream acquisitions can be done in every western state, but as Rob correctly pointed out, some states are easier and less convoluted than others.

    Regarding California, some of you may be interested to learn that the state's first water trust, Scott River Water Trust has been operational since 2007 (www.scottwatertrust.org). In addition, TNC has been working to establish a leasing program in the Shasta River Basin. Finally, over the last few years there have private permanent purchase of of pre-14 water rights in northern California for flow enhancement.

    The Freswater Trust - www.thefreshwatertrust.org

    Washington Water Trust - www.thewatertrust.org

    Columbia Basin Water Transactions Program - www.cbwtp.org

    Montana Water Trust - www.montanawatertrust.org

    Deschutes River Conservancy - www.deschutesriver.org

    Washington Rivers Conservancy - www.warivers.org

    Colorado Water Trust - www.coloradowatertrust.org

    Klamath Basin Rangeland Trust - www.kbrt.org

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