Dwindling surface water supplies [in the Southwest and particularly in the Colorado River Basin] have revealed cracks in the roughly 150 year old bedrock foundation of Western Water Law – the prior appropriation doctrine…
[Prior Appropriation] is a system that has tended to concentrate the ownership of water in historic uses (such as agriculture) at the expense of more recent uses (such as industry and cities). Most states allow these rights to be moved to a different place or type of use (such as industry and cities) through a “sever and transfer” procedure, although this process can be complex and cumbersome.
One hundred fifty years ago, the primary concern being addressed by the law of prior-appropriation was ensuring that the first people to stake mining claims would have enough water to mine…Today, water from a single river system supports countless competing uses on a much grander scale that could not have been anticipated in the 19th century, including mining, agriculture, industrial, municipal/domestic, and environmental. Completely cutting off lower priority water uses on a river to ensure the full allocation of senior right holders’ deliveries are made at the expense of people downstream who depend on that water source for domestic potable uses can seem unfair at the least, dangerous at the worst. On the other hand, it is also unfair to force senior water right holders to give up water rights that they believed were fully protected under the law when deciding to invest in their use of that water. In both cases, there are also significant economic impacts associated with reduced or eliminated water deliveries that should be considered.
The solution to this problem, however, is probably not to completely scrap the aging prior appropriation doctrine. Rather, the doctrine can be salvaged by improving transferability of water rights. Peter Culp, Partner at Squire Patton Boggs (US) LLP, recently co-authored a comprehensive analysis of investment opportunities in the Colorado Basin and explored potential strategies for adapting the prior appropriation doctrine to the 21st century. Those strategies include water sharing agreements, water banking, leases, exchanges, and others.
For example, on the Colorado River, water users have come together voluntarily to address water scarcity in order to avoid the potential catastrophe that could result from a strict enforcement of the prior appropriation doctrine. Back in January of this year, I wrote about how Colorado River water users have agreed to preemptively share the burden of decreased supplies as a result of drought and climate change. The Lower Basin states are taking steps to develop (often through conservation) additional water in Lake Mead in order to stave off a shortage on the river that could have serious economic consequences…
Whether water users like it or not, change is not only coming, change is here. Even if drought ends tomorrow, a rigid system of water rights based on prior appropriation that lacks flexibility for allowing right transfers, water sharing agreements and other arrangements is untenable in the modern world where competing demands with high social and economic value conflict over limited water resources. The current shift to sharing risk and cooperative solutions to water scarcity problems is the way of the future.
