Apr 13

Alternative Agricultural Water Transfer Methods

Alternative Agricultural Water Transfer Methods

Tracy Kosloff, P.E.

Colorado Division of Water Resources

The following is a brief summary of the Colorado Water Conservation Board’s (CWCB) report, “Alternative Agricultural Water Transfer Methods Grant Program Summary, May 2011” (Grant Program Summary). The full report is available at the CWCB website:


Since 2007, the CWCB has provided $1.5 million in grants to six entities to study and/or pilot alternative agricultural transfer methods (ATMs), which are alternatives to the standard “buy-and-dry” irrigation to municipal water transfers. Approximately 9.1 million people are projected to live in Colorado by the year 2050; the Basin Roundtables and State Water Supply Initiative (SWSI) have identified ATMs as one potential source of supply to meet this future municipal and industrial (M&I) water demand. ATMs are anticipated to help address the water supply gap while minimizing the socioeconomic impact to rural communities when irrigation water is transferred to M&I uses. SWSI Phase 2 (2007) states “it is not the intent to interfere with or criticize traditional transfers of agricultural waters since these are a property right and…are needed to meet the future M&I water needs. It is the intent, however, to illustrate how and when [ATMs] may present benefits to not only the parties to the transfer, but other third party beneficiaries.” The CWCB’s goal is to further the development of alternative water transfers to the point that municipal water providers view them as viable options for a portion of their water supply portfolios.

The types of ATMs studied via CWCB grants have already been implemented to a limited extent. They include:

• Interruptible supply agreements (ISAs), which are currently allowed by statute with SEO approval, but no more than three out of 10 years. A long term ISA with more frequent interruption would require water court approval.

• Rotational fallowing, where a group of irrigators fallow lands in certain years or a certain percentage of their lands each year to transfer consumptive use (CU) to M&I water users.

• Water banks, where water may be “deposited” at times when it may not be needed and can be used by another party. Water banks are probably only viable to provide water on a short term basis, such as a year or two. Colorado law allows water banks, but a pilot project in the Arkansas Basin in 2003 was not widely used. The water bank concept is currently being studied as a means to allow post-1922 diverters to continue to use water under a Colorado River Compact call.

• Reduced crop CU/limited irrigation; Crop CU may be reduced by reducing irrigated acreage, switching from a summer crop to a cool season crop, switching to a shorter growing season crop, or applying less than the full ET and only applying water at critical growing stages for the crop. Then, the conserved CU could theoretically be transferred to M&I use.

• Purchase and lease-back, where an M&I user purchases the water right, changes the use of irrigation water and then leases the water back to the irrigator under certain circumstances.

Senate Bill 07-122 (i.e. CWCB’s Projects Bill) authorized CWCB to develop a grant program to facilitate the development and implementation of ATMs. The recipients of grant money to date include:

• Parker Water & Sanitation District and Colorado State University – $477,500

This group is studying alternatives to continuous corn including rotational crops, combining annuals with full irrigation with fallow periods or non-irrigated crops. Study results show reductions of 30 to 40 percent in CU.

• Colorado Corn Growers Association (CCGA) – $349,650

CCGA is working with Ducks Unlimited and the City of Aurora on three demonstration projects: the DT Ranch ISA, the Lower South Platte Co-op to facilitate exchange of excess augmentation plan credits, and a private water market. In the private water market, the producer sells a small percentage of shares (e.g., 10 percent, known as Base CU) to the M&I user. The remaining volume, referred to as Flex CU, is made available to the M&I user through variable leases. The producer manages the land through rotational fallowing or reduced CU. Recharge sites serve as vehicles for the delivery of CU and return flows.

• Lower Arkansas Valley Water Conservancy District Super Ditch Company – $320,000

Funds have allowed for further study of this project where ditch companies collectively lease CU made available primarily through rotational fallowing.

• Farmers Reservoir & Irrigation Company (FRICO) – $202,500

FRICO is investigating a water bank concept where both farmers and M&I users could deposit water in FRICO’s existing infrastructure and the water can be made available to other users on a negotiated price basis.

• Colorado State University Extension Office – $80,350

The Extension Office is evaluating common farm management issues that occur when lands are fallowed and then returned to production, such as weed and erosion control.

• High Line Canal Company – $70,000 (not yet under contract)

The Grant Program Summary includes an evaluation of which water districts in the South Platte and Arkansas River Basins might be amenable to which kinds of ATMs. Overall, areas closer to water demand centers are likely to undergo traditional buy and dry so that agricultural lands can be developed. Areas further away are more likely to remain in agricultural production at least some of the time and may support ATMs. However, the greater the distance from the M&I use, the more difficult it will be to get the water to the demand center, either through exchange or via pipeline. Additionally, diversions further downstream have the further disadvantages of junior priority dates and reduced water quality.

Many of the issues with ATMs from farms with diversion point further downstream are also issues with traditional “buy-and-dry” water transfers from these farms: reduced water quality, the need for storage prior to delivery to M&I uses, and the large distances for exchange or transmission.

Although some of the challenges with ATMs are the same as with “buy-and-dry” transfers, ATMs would generally have a higher transaction cost in order to yield the same amount of transferable water. For the most part, the transactions will still require water court approval and there will be more acres involved in each change case in order to yield the same volume of CU. The Grant Program Summary states, “The ultimate conclusion reached by the Super Ditch team is that the water court costs associated with a large-scale rotational land fallowing-water leasing program will delay and possibly kill fallowing-leasing”. The consensus seems to be that M&I water suppliers will require incentives to participate in ATMs. One concept geared towards lowering the transaction costs for ATMs is to create an administrative review process for ATMs rather than requiring a water court decree.

Other identified challenges with ATMs are:

• M&I users want a certainty of water supply that some of the ATMs do not provide.

• The ATMs must be clear, measureable, and administrable by the State Engineer. In particular, for reduced CU where less than the full ET is provided to plants, how is the amount of conserved CU quantified and administered on a daily basis?

Although some ideas for ATM implementation are identified, further work is necessary to advance this new area of water resources management. CWCB’s ATM grant program is ongoing, with an additional $1.2 million in funding awarded in early 2011 as summarized below.





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