Click here to read the report. Here’s the Executive Summary:
The Upper Division States of the Colorado River Basin are currently investigating the feasibility of a potential Demand Management program. Demand Management is defined as temporary, voluntary, and compensated reductions in consumptive use. The Demand Management Storage Agreement, one element of the Drought Contingency Plan (DCP) finalized by the Colorado River Basin States in 2019, provides the authorization for the Upper Division States to store water created pursuant to a Demand Management program in Lake Powell. The water would only be used for Compact compliance purposes at the direction of the Upper Colorado River Commission. Whether a program is set up and how such a program would operate are still open questions. Each Upper Division State must make an initial determination that Demand Management is feasible before moving forward with creating a potential program.
The Colorado Water Conservation Board is Colorado’s agency charged with setting the State’s water policy, and is therefore the agency with authority to determine whether Demand Management is feasible for Colorado. Following adoption of the DCP in March 2019, the CWCB Board adopted the 2019 Work Plan to help guide the initial stage of this feasibility investigation, to take place in Fiscal Year 2019-2020. The Work Plan had three primary components: (1) establish workgroups comprised of subject-matter experts and key Colorado River stakeholders, which were directed to meet publicly at least four times in Fiscal Year 2019-20, and to identify key threshold issues for board consideration; (2) regional workshops designed to facilitate the public discussion around Demand Management and provide opportunities for CWCB staff updates on the feasibility investigation; and (3) continued education and outreach. In addition, the Board directed staff to facilitate a literature review, currently underway by consultants hired following a Request for Proposal process.
The purpose of this Report is to provide an update of work done pursuant to the 2019 Work Plan. This report will assist the CWCB Board in considering the key threshold issues associated with a potential Demand Management program. The purpose of the report is not to provide guidance on next steps of the feasibility investigation. However, it may help shape the discussions and decision-making about the next phases of Colorado’s feasibility investigation. While the complete report provides a full summary of workgroup discussions and other work, below is a summary of each workgroup’s main discussion points.
Agricultural Impacts
- To encourage agricultural participation, a potential program must be viewed as equitable and proportional while remaining voluntary; furthermore, it must be adequately communicated that the potential program is necessary to achieve the objectives set out in the Upper Basin Drought Contingency Plan and will serve as an insurance policy against mandatory curtailment.
- In designing a potential program, care must be given to program design to minimize and mitigate on-farm and off- farm agronomic impacts such as reductions in crop yield and soil erosion, including the provision of technical assistance and information; furthermore, the program should account for secondary economic impacts and evaluate potential benefits.
- Non-injury to water right holders and non-participants is critical and can be achieved through the possible consideration of utilizing existing change of water use approval processes and providing additional mitigation expenses to agricultural water providers to account for potential operational impacts.
- Structuring the potential program application, review, and the contracting process should consider alignment with the timing of when producers make critical operational decisions and allow for some operational flexibility; furthermore, payments should consider all potential impacts including both agronomic and operational changes.
- In considering the design of a potential Demand Management program, current programs in place similar to a potential Demand Management program, such as the Federal Conservation Reserve Program and Colorado Fallow-Leasing Pilot Program should be further analyzed; furthermore, pilot and demonstration projects could be useful in better understanding potential impacts and effects of temporary irrigation reductions and should be explored with an effort to capture the potential diversity of projects.
Economic Impacts and Local Government
- Any potential Demand Management program will be voluntary; those who do not wish to participate should not do so.
- In designing any potential Demand Management program, the initial goal should be to “do no harm,” meaning to minimize and mitigate any adverse impacts to communities. A number of factors should be considered in analyzing this question, including but not limited to the type of water use, the duration of the Demand Management program, the length of individual project participation, and the geographic location and concentration of projects.
- Any potential program should create benefits for individuals, the community, and the economy wherever possible. Potential benefits may include avoidance of Compact administration actions, increased revenue to local economies, environmental benefits, and opportunities to improve long-term management of water and land.
- A number of process considerations should be taken into account when considering how to assure no harm is done to communities where possible, or mitigated if there is harm.
- In operating a potential Demand Management program, the process should be transparent and collaborative.
Education and Outreach
- Workgroup members identified many challenges in helping the State explore threshold questions related to communication, education, and outreach needs around a potential Demand Management program.
- In lieu of assisting with a communication plan for the active “investigation” process or a future program, the workgroup focused their expertise around priority considerations should the CWCB elect to continue with feasibility, project pilots, or full program development.
- While it is essential to develop a communications plan well before a Demand Management program is enacted, content substance is needed to proceed in which common terms are defined across workgroups and state partners, clear frames are developed to help unite messaging across stakeholder groups, and essential content from FY19- 20 workgroups are considered by CWCB and incorporated into an agreement on a Demand Management program’s general (initial/draft) shape.
- At this stage, there is a branding problem, as different stakeholders have different ideas of what a program may look like, how it can be explained, and how often communication is carried to individuals’ direct communities.
- This workgroup recommends immediate messaging discussions to identify shared priority framing. Several guiding examples are presented in the workgroup’s final deliverable.
- Throughout the investigation, workgroup members identified the need to help stabilize communication chains, the need for extra transparency, and the need to maintain an open line for all users to communicate concerns and ideas to/from CWCB and to/from one another.
Environmental Considerations
- A Demand Management program could provide opportunities for projects with net environmental benefits that would not be available under potential Compact administration.
- A Demand Management program should not harm the environment, should build in considerations to minimize adverse environmental effects, and should incentivize projects that provide net environmental benefits.
- A Demand Management program should use the suggestions in the Environmental Considerations document to evaluate project environmental benefits and impacts without creating an unnecessarily burdensome process for applicants. The suggestions should also be used as part of the criteria to prioritize projects. Potential environmental benefits are location and project specific and would need to be evaluated on a case-by-case basis.
- A Demand Management program should identify project impacts and benefits to environmental resources including changes to flow regimes, instream flows, water quality standards, critical habitat, management/planning documents, and conservation needs and strategies if evaluation tools are readily available and applicable (for a more detailed list of potential resources impacted, see Environmental Considerations document).
- Research and data gaps exist for evaluating environmental benefits and impacts, such as information on changes to hydrology, return flows, and wetlands. Streamlined approaches and methods are needed to make these assessments.
Funding
- The funding workgroup initially identified a number of questions to help frame the conversation around funding a potential Demand Management program, including how much funding would such a program require.
- To help quantify potential funding needs, workgroup members discussed factors that could affect a Demand Management program and built scenarios around them.
- The factors included: volume of water needed, cost of potential program (i.e. $/acre-foot), percent of water savings expected from a Demand Management program (versus funded investments in infrastructure), acute or chronic need, year by which water is needed, and reservoir storage options.
- Workgroup members came up with a preliminary list of funding ideas noting that not one concept, but rather a portfolio (potentially paired with a reverse auction model) would be beneficial: statewide tax (income, sales, property), regional tax, statewide fee, Bureau of Reclamation contribution, hydropower user fee, export user fee (i.e. Front Range water user rate increase).
- Even with a diverse portfolio, COIVD-19 fundamentally changed the calculus and workgroup members expect we will likely see transformations in many water use sectors and the larger economies of the Western US if hydrology continues to deteriorate and Compact Administration becomes necessary.
Law and Policy
- There are several open legal and policy questions relating to a potential Demand Management program, and the conclusions drawn could impact how a program operates and whether it works within existing law. These key legal and policy issues include, but are not limited to:
- Would participation in a potential program be considered a beneficial use under Colorado law? What is the definition of Compact compliance?
- How is program eligibility determined?
- How is conserved consumptive use defined for purposes of participation in a potential program?
- What is the appropriate definition of “temporary” in the context of a potential Demand Management program?
- What is the appropriate procedure for project review and approval?
Monitoring and Verification
Quantification, measurement, monitoring, and verification must be honest, accurate, and defensible. Participation and monitoring and verification must be protective of other water users. Participation must result in added water to the system. Participation and monitoring and verification must be as simple, easy, and flexible as possible while still meeting the first three principles. Water Rights Administration and Accounting
Any potential program should take into consideration the appropriate process for changing the use of a water right from its current use to Demand Management. The question of whether Demand Management is a beneficial use of water should be considered before a potential program is established. Changes in administration and accounting for storage should be considered in establishing a potential program. Appropriate scrutiny for any program should be balanced against the need for ease and flexibility.