Alternative Transfer Methods: “For 10 years we’ve talked about how a (water leasing) program would work” — Pat Wells

Straight line diagram of the Lower Arkansas Valley ditches via Headwaters
Straight line diagram of the Lower Arkansas Valley ditches via Headwaters

From The Pueblo Chieftain (Chris Woodka):

Colorado Springs Utilities wants to be Super Ditch’s “dance partner.”

“For 10 years we’ve talked about how a (water leasing) program would work,” said Pat Wells, water resources supervisor for Utilities. “Super Ditch has always seemed lik e a logical fit. . . . If you’re interested in another dance partner, it’s a natural fit for Colorado Springs.”

A formal letter suggesting a partnership was sent to the Super Ditch and Lower Ark district in October. It outlined the conditions under which Utilities would be willing to participate.

Wells made the offer again to the combined boards of the Arkansas Valley Super Ditch and Lower Arkansas Valley Water Conservancy District last week. They were reviewing the success of the first year of a pilot program that delivered 409 acre-feet of water from farmers on the Catlin Canal to Fountain, Security and Fowler.

While the pilot program aims to provide a sustained yield to the cities under varying hydrological conditions, Colorado Springs is interested mainly in topping off its supplies in drought recovery years.

One of the provisions of the 2013 HB1248 legislation would allow for leasing water from farms in three years out of 10. That scenario is most appealing to Utilities because it usually has enough water from other sources.

The Colorado Springs system can hold 252,000 acre-feet of water in storage, but small amounts are useful.

“In a recovery year, 2,000 acre-feet in the right place would help us,” Wells said. “We’re not looking for a base supply year-in and year-out.”

Colorado Springs does not anticipate needing to establish a program in the next year, but is looking ahead to have a program in place should it be needed.

“Our storage is as full as it has been in several years,” Wells said.

The breathing room will allow Utilities and Super Ditch at least a year to negotiate and the soonest a program would be launched is in 2017, both sides agreed.

Colorado Springs purchased part of the High Line Canal lease from Aurora in 2005. During that year, Utilities also leased water from Pueblo Water to make up for depletions from three drought years prior to that time.

Meanwhile, here’s a report detailing this year’s pilot alternative transfer from Super Ditch to Arkansas Basin municipalities written by Chris Woodka for The Pueblo Chieftain:

A handful of farmers on the Catlin Canal were able to dry up some of their land this year and lease the water to cities in the first demonstration of how the Arkansas Valley Super Ditch would work.

The temporary fallowing of ground was carried out under a program supervised by the Colorado Water Conservation Board under the 2013 HB1248 that allows lease-fallowing project demonstration throughout the state. No more than 30 percent of farm ground can be dried up in any year over a 10-year period, or any parcel more than three years in 10.

“I think it’s calmed down the water community statewide, because it’s not hurting farmers, and the farmers say ‘We’re getting a good deal,’ ” Peter Nichols, told the combined boards of the Lower Arkansas Valley Water Conservancy District and the Super Ditch last week. “We had a good year and learned to build a bigger project.”

There were 60 conditions placed on the project in a rule-making process earlier this year in the third attempt to get a lease program off the ground. The Lower Ark district helped form the Super Ditch in 2008.

About 409 acre-feet (133 million gallons) were leased to Fountain, Security and Fowler, netting $500 per acre-foot for the farmers. They were also paid a $150 per acre readiness to serve fee.

To get to that number, the farmers dried up 235 of the 900 acres — well under the 30 percent annual limit — which translated into 252 shares of the 1,047 Catlin Canal shares enrolled in the program. The yield worked out to about 1.75 acre-feet per acre, so the total payoff was a little more than $1,000 per acre. That was not a bad outcome, considering depressed commodity prices were the norm.

“We put more water into the ground than we would have owed,” said Jack Goble, an engineer with the Lower Ark district. “It’s paid up so we don’t have to release water from Lake Pueblo for the next 20 years.”

The program gave the district and Super Ditch a chance to look at the real-world impacts of weather conditions on a lease-fallowing program. The farmers used one augmentation station to show water was being bypassed and two recharge ponds that replace flows that would have seeped into the ground from fields. Water was transferred to Lake Pueblo, where it could be used directly by Fountain and Security, or for augmentation flows that support Fowler’s wells through the Colorado Water Protective and Development Association.

Ironically, a rainy May and June made it difficult to claim recharge credits because it was too wet to run much water through the canal. But the high water levels made exchanges and trades easier so the program could be a success. The test program provided about 90 percent of the water that would have been available under the best conditions.

Typical Drip Irrigation System via Toro
Typical Drip Irrigation System via Toro

“As a farmer, I couldn’t have been happier,” said Phillip Chavez, of Diamond A Farms. “We put in drip systems and laser-leveled the (fallowed) fields.”

One of the outcomes of the project was a leasefallowing tool that conforms the engineering of the project to other water models, including those set up for surface sprinklers and wells to comply with the Arkansas River Compact. Still, Kansas looked at each of the farms in the program twice during the irrigation season to make sure the required ground had been fallowed.

More about the economic effect of ATMs from Chris Woodka writing for The Pueblo Chieftain:

With farming, it’s always a wild guess in planning for the year ahead.

Crop prices could be high at the beginning of a season, and plummet by the end. Weather could bring drought, floods or hail — sometimes all of them — in any given year. Or, in that rare year, a bumper crop could bring premium prices as well.

All of which provides the groundwork for the theory of water leasing — providing a stable income with a known price for an expected amount of water.

It could be another crop for farmers, but there are hidden considerations.

“Leasing water depends on conditions. If it’s wet, no one wants it,” Brett Bovee, regional director for WestWater Research said. “It also depends on where you are in the state, and what kind of premium you can get over your baseline crop.”

Bovee was one of the featured speakers at a workshop last week at Pueblo Community College hosted by the Ditch and Reservoir Company Alliance. The workshop studied the economic, legal and political issues surrounding alternative transfer methods in Colorado.

ATMs, as the water community has chosen to shorthand them, have been a big topic in the state over the last decade. The Arkansas Valley Super Ditch is at the forefront, completing the first statesupervised transfer this year. ATMs also are a big piece in Colorado’s Water Plan.

ATM: The acronym conjures an unfortunate analogy, where you put money in and take water out. It’s not as simple as that.

Super Ditch has raised the bar for water prices in Colorado. While the average per-acre yield for the Arkansas Valley’s major crops is at the lower end in the state, it is leasing water to cities at the highest rate.

In other parts of the state, the rates range from $35-$337 per acrefoot, showing a wide disparity.

Farmers have to evaluate whether leases help their bottom line or pull water away from crops that might pay off better, Bovee said.

There are online tools that allow them to work out how much might be made growing a crop versus leasing the water.

Beyond the simple economics, there are multiple considerations to be taken into account.

On the plus side, leasing provides relatively stable prices, a high return, financing for other on-farm improvements and an alternative use for water while retaining a water right.

Drawbacks include impacts to the community, keeping a cover crop growing, keeping weeds down and the headaches of the transfer itself (engineering, legal issues and transaction costs).

“Leases can disrupt farm employment and business relationships,” Bovee said.

Statewide, water leasing has had little impact on the overall economy, but the effects locally can be tragic, as the dry-ups in Crowley County illustrate.

“The harm comes from taking water from one area and moving it out,” he said. “If agriculture makes up most of the economy and you move the water out, the effect is magnified.”

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