#Water speculation flap signals need for review — The #GrandJunction Daily Sentinel #ColoradoRiver #COriver #aridification

James Eklund, hails from a Western Slope ranching family. He often works to add a touch of levity to otherwise serious-minded state-level water meetings. Photo credit: Aspen Journalism

From The Grand Junction Daily Sentinel editorial board:

Nothing unites rivals like a common enemy.

Colorado may be notorious for its intrastate water conflicts, but a recent flurry of newspaper articles on the potential for water speculation by Wall Street firms has water managers across the state agreeing on one thing: Private investment in a precious public resource that dictates every aspect of life in the West is too risky to tolerate.

On [the January 30, 2021] front page, the Sentinel’s Dennis Webb traced the angst stemming from press coverage of this issue to its primary source: friction between James Eklund, a Grand Valley native and fifth-generation Coloradan, and the Colorado River District.

Eklund should be a familiar name. He is the former director of the Colorado Water Conservation Board. He played a major role in getting the state’s water factions to agree to a state water plan that former Gov. John Hickenlooper called for in 2013. Perhaps more relevant, Eklund served as the state’s representative on the Upper Colorado River Commission during negotiations over a drought contingency plan that saw creation of a special storage account in Lake Powell.

Water conserved under a “demand management” program would be stored in this separate account to ensure adequate delivery of water to Lower Basin states. It’s a hedge against a disastrous “compact call” in which Upper Basin water uses could be curtailed to meet delivery obligations of the 1922 interstate compact.

Eklund has since moved to private practice as a Denver-based water attorney. Among his clients is Water Asset Management, a New York investment firm that has spent more than $16 million buying more than 2,000 acres of irrigated farmland in the Grand Valley.

Naturally, the Colorado River District is suspicious about WAM’s intentions — even though Colorado has some of the toughest anti-speculation laws in the nation. While individual landowners own water rights, they must put water to “beneficial use,” which doesn’t include selling water for profit.

Still, “buy and dry” scenarios — in which water is converted from one beneficial use (agriculture) to another (municipal taps) illustrate the ongoing battle against the commoditization of water.

The Colorado River District’s executive director, Andy Mueller, has openly speculated that Eklund is behind a media campaign “to discuss the virtue of free markets and water markets” in the western United States.

More troubling is the district’s assertion that Eklund is trying to help WAM take advantage of a potential drought mitigation tool he helped set up — the storage account in Lake Powell — by lobbying for private accounts within that pool.

That would grease the skids for marketing water from the Upper Basin (where the water is) to the Lower Basin (where the money is).

Eklund met with the Sentinel’s editorial board on Jan. 22. With every right to be indignant about assertions he labeled as “flat-out false,” Eklund struck a conciliatory tone.

“I’m leading with empathy here,” he said. “I share the anxiety of private investment in Colorado water. I understand it.”

Much of Webb’s reporting recounts the series of events that led to the imbroglio, but it’s also offers Eklund an opportunity to defend himself. He wouldn’t push for private accounts in Lake Powell, he said, because it violates the “Law of the River” and undermines the benefit of the bargain Colorado got when it joined the 1922 compact.

Nor would he represent a client bent on profiteering, he said.

In contrast, Eklund said, WAM hasn’t done anything but invest in improvements on agricultural land — boosting efficiency, sequestering carbon in soils and keeping land in production.

“I care too much about my family (his parents operate a ranch in the Plateau Valley), the Western Slope and Colorado agriculture to advise anyone that would cause harm.”

As Eklund noted, for all the district’s concerns, there’s not much separating their views. “They want the Western Slope to control the Western Slope’s destiny and I completely agree with that,” he said.

Eklund will be judged on whether WAM deviates from its current course. In the meantime, the silver lining in this all of this mistrust is that it has brought into sharp focus the need to protect water.

There are all kinds of doomsday scenarios at our doorstep. If we hope to continue life in western Colorado as we know it, we need to fight any changes to the law and work like hell to prevent a call on the river.

Colorado transmountain diversions via the State Engineer’s office

From The Grand Junction Daily Sentinel (Dennis Webb):

James Eklund remembers having to work to get the Colorado River District’s trust before, when he was director of the Colorado Water Conservation Board and was seeking support for a state water plan.

He said when talks began on the plan it was “dead on arrival” among representatives of the Western Slope district.

“People were saying it’s the wolf in sheep’s clothing. It’s going to be an excuse for more transmountain diversions” of water to the Front Range, he recalls.

Eventually, a plan was agreed on that the district got behind. But these days Eklund once again finds himself in a battle to gain the district’s trust, now because of his work as a private water attorney representing a New York investment firm that has been buying up Mesa County agricultural land and associated water rights and leaving the river district nervous about its — and Eklund’s — intentions for that water.

Viewed from the river district’s perspective, Eklund is a Denver water attorney that the district fears is trying to help his client take advantage of a potential drought mitigation tool he helped set up, involving the storage of water in a dedicated account in Lake Powell.

But Eklund also is someone who was born in Grand Junction, to parents who own a family ranch in the Plateau Valley that his great-great-grandparents homesteaded in 1888.

He spent every summer there while growing up, and continues to visit and pitch in doing ranch chores to this day when time allows. Given that background, he insists that for all the river district’s concerns, there isn’t much daylight between it and him when it comes to the desire to protect the Western Slope and its water…

He said the river district wants the same thing he does — strong Western Slope agriculture and water that is not at risk…

A MEDIA CAMPAIGN?

The river district’s concerns about Eklund and Water Asset Management, the New York company that now owns more than 2,000 acres of agricultural land in the Grand Valley, were amplified as a result of a Jan. 3 New York Times article on Wall Street investments in the West, followed by a Denver Post guest column in support of temporary, compensated, voluntary fallowing of Western Slope irrigated land to bolster water levels in Lake Powell.

Andy Mueller, general manager of the river district, views the two pieces as part of a media strategy by Water Asset Management, and likely Eklund…

He also views it as an attempt to put pressure on the state and the Upper Colorado River Commission, which includes representatives from Colorado and other Upper Colorado River Basin states, to move forward quickly with a proposal for managing water demand in times of droughts through measures including fallowing by farmers and ranchers, without safeguards to protect local economies…

Agricultural, municipal and other water conserved under a demand management program would be stored in a separate account in Lake Powell as provided for under a drought contingency plan involving the states. It would be available to ensure adequate delivery of water to Lower Basin states as required under a 1922 interstate compact, in order to avoid a potential “compact call” under which Upper Basin water uses could be curtailed to meet delivery obligations.

The river district long has been insistent that water conserved through demand management be temporary, compensated and voluntary, concepts the Colorado Water Conservation Board has committed to as it explores the idea.

The river district also wants the impacts of conservation shared proportionally among users in a way that Western Slope agriculture and ag-based communities are protected…

Mueller also long has been concerned that some entities might push to set up individual accounts within the pool of water created through demand management, to protect water diversions for municipal utilities while Western Slope agricultural use gets shut down under a compact call.

Theoretically, water in those accounts could come from investment firms buying up Western Slope agricultural land and water rights.

Mueller believes Eklund is lobbying for such accounts, based in part on the Times article exploring the concept of a market-based approach to western water that could result in more water being moved from agriculture to municipal use.

If that’s true, it could be argued that Eklund is gaming the very system he helped set up. He served as Colorado’s representative to the Upper Colorado River Commission during the negotiations leading to the drought contingency plan agreements, including establishment of a separate storage account in Powell…

But Eklund said he isn’t pushing for private water accounts in Powell. Only sovereigns can hold water there — not special districts, private entities or individuals — he said.

“That’s always been the case. That always will be the case as far as I can see,” he said.

He said it’s also the way it should be, and he wouldn’t lobby to change something he doesn’t believe in…

Eklund said allowing only sovereigns to hold water in the reservoir is linked to the bargain Upper Basin states got from the 1922 compact. That deal assured that Upper Basin states could develop water at their own pace, as opposed to fast-growing places such as southern California getting their hands on the bulk of Colorado River water.

Mueller told The Daily Sentinel that he knows Water Asset Management has been directly in contact with several Front Range water utilities arguing for their support for individual accounts in Powell.

“James Eklund himself was in the halls of one of the water utilities while I was there, doing exactly that, meeting with them and trying to lobby them for their support on those individual accounts,” Mueller said.

“That’s an amazing accusation,” Eklund said when told of Mueller’s comments. He added that Mueller’s assertion is “flat-out false.”

[…]

Denver Water spokesman Todd Hartman said, “Mr. Eklund has not been lobbying us on the matter of private accounts, and certainly has not done so in our hallways, as they’ve been largely empty since remote work began amid COVID-19 in March of last year.”

Hartman added that “Denver Water is in opposition to the concept of private water storage pools in Powell, as is the law. Private sector entities don’t have the legal ability to manage water across state lines nor within federally owned reservoirs. This can only be done by the states and the federal government.”

Eklund said he understands the river district’s nervousness about what’s being characterized as outside investments in Colorado water. Its job is to protect West Slope water, he said…

[Mueller] said Water Asset Management views water scarcity on the Colorado River as an opportunity to make money by moving water from rural to urban areas. The district believes investment firms are angling to speculate on Colorado’s water, contrary to Colorado’s antispeculation laws when it comes to water. A state task force is looking at strengthening such laws…

The Times article was followed within days by a column in the Denver Post by Brian Richter bluntly headlined, “Western Slope needs to suspend irrigation to avert water shortage catastrophe,” in which Richter supports agriculture playing a role in helping boost Powell water levels…

Bicycling the Colorado National Monument, Grand Valley in the distance via Colorado.com

He said all he and Water Asset Management can do is “make sure we walk the talk” by the company not taking actions such as flipping water for profit and being involved in buy-and-dry schemes to move water off agricultural lands. Eklund said it hasn’t done such things during three years of being invested in the Grand Valley. Rather, he said it is investing in improvements, boosting efficiency, sequestering carbon in soils and keeping land in production.

Eklund said he doesn’t represent companies that speculate on water, and antispeculation is important to him just as it is to the river district.

#Water Talks: Quantifying Water Right Ownership and the Term ‘Buy & Dry’ — Heart of the Rockies Radio

Here’s a guest column from Terry Scanga that’s running on Heart of the Rockies Radio:

In Colorado, transfer of water from one type of use to another is a historical necessity and will continue throughout Colorado and the semi-arid West.

As economic and social needs change, water moves to new areas to satisfy changing needs.

Historically, mining utilized the majority of water in Colorado. As population increased the mining water rights moved to agricultural use. Due to improved transportation and the economies of scale in agricultural operations, much of our agricultural commodities are produced in areas with climates more conducive to large year-round production.

Many small agricultural operations that are no longer profitable have left the market and sold their operations and, in some cases, sold their water rights separately from the land to meet the changing demands. Some increase in the demand for water is now being driven by small specialty and organic farming operations. Still, in the larger farming areas of the state, there continues to be a demand for water and here these rights are not changing.

In recent years, the term “buy and dry” has become popularized by individuals intent on characterizing the purchase and transfer of an irrigation water right to other uses as an economic and environmental catastrophe. Doing so obfuscates the reason why drying up of formerly irrigated lands is necessary.

In fact, the need in water right transfers to dry up the land is to protect adjacent water rights from injury. This ensures that only the exact amount of water historically owned (used) by the irrigator is transferred to the new use. Without an exact proof of use, the amount of water moved may be much larger than was historically used and the environmental and economic damage would be large.

Of course, for many, the tedium of factual analyses does not lend itself to telling a “juicy” conspiracy story. To some others who really know the facts, there are ulterior motives. One of the motives deals with the promotion of an alternative method of moving water and not using the time-tested court process.

These promoters of the alternative wish to avoid the legal scrutiny and work of accurate analysis and quantification of historic use. They claim many reasons for advocating for alternative methods. Among these reasons are, “It takes too much time,” “It costs too much,” or “It’s too hard.”

The best but totally dishonest reason given is, “It means the land will be dried up forever,” all the while knowing their alternative would require dry-up too. From this has come another popularized term, “alternative transfer method,” or “ATM.”

Alternatives to the traditional water right transfer still require dry-up of former irrigated lands. There are actual alternatives, but these are marginally different from the traditional purchase and transfer of the water rights. These are temporary transfers, such as leasing of the water right and temporary fallowing of the formerly irrigated lands.

These temporary transfers or leasing of the historically consumed water from the irrigated land are complex transactions. To reduce the transactional costs in the engineering analysis required to accurately calculate the amount of water that could be transferred under a temporary lease without causing injury to adjacent water rights, the Upper Arkansas Water Conservancy District sponsored a study and development of a common technical platform called the “Lease Fallowing Tool.”

It is now available free of charge and is widely accepted by the water community. Except for pilot projects of limited duration, the water right still needs to undergo a legal decree change through the water court. In these temporary transfers or ATMs, the land is still dried up.

The legal requirement to prevent injury to remaining adjacent water rights becomes more difficult to ascertain and the ongoing monitoring and development of water infrastructure to maintain historic stream conditions is more daunting. One thing is clear about ATMs, to be effective in meeting future long-term needs, construction of more water storage facilities – reservoirs and recharge basins – will be required.

This really gets to the crux of the matter. Recently, articles have been written about Wall Street investors scooping up water rights in Colorado to market to out of state interests. This concern and others have triggered our legislators to promote legislation to prevent speculation.

The problem is the Colorado Water Doctrine already has anti-speculation inherently built into its water allocation system. In order to own a water right one must demonstrate beneficial use. As described above, it is this quantification of use that determines the amount of water owned that can be bought and sold.

So, unless a prospective buyer has a use in mind, in Colorado, buying a water right to simply hold without use gets him no water.