water markets at work: an idaho model don reading, ph.d. climate impacts group, university of...
TRANSCRIPT
WATER MARKETS AT WATER MARKETS AT
WORK: AN IDAHO MODELWORK: AN IDAHO MODEL
Don Reading, Ph.D.Don Reading, Ph.D.Climate Impacts Group, University of WashingtonClimate Impacts Group, University of Washington
Ben Johnson Associates, Tallahassee, FloridaBen Johnson Associates, Tallahassee, Florida
Climate Prediction Applications Science Workshop Climate Prediction Applications Science Workshop Research and Applications on Use and ImpactsResearch and Applications on Use and Impacts
March 9-11, 2004March 9-11, 2004Tallahassee, FloridaTallahassee, Florida
How Markets Work
Fee simple transfer of ownership of property or commodity
Must have a property right to transfer
Benefit to both sides – win/win situation
Market prices reflect societies value of a good
Water is NOT owned in a physical fee simple sense
Water rights are usufructuary – it is a right to divert and use
Water supply is NOT fixed
Water is a ‘necessity of life’
The nature of property rights for water
The evolving nature of water rights
►Riparian ...legal theory that owners of land abutting lakes, rivers, or streams were guaranteed the ‘natural flow without diminution or alterations’ of the water course. The idea was that property was an estate to be enjoyed for is own sake and left undisturbed. (Water Follies: Groundwater Pumping and the Fate of America’s Fresh Waters, Robert Glennon)
►Prior AppropriationThe essence of this doctrine is a queuing system based on “first-in-time first-in-right”. (Water Follies)
►Hybrid of Riparian & Prior AppropriationThere is also a relative new-comer to the water rights scheme that is being embraced by a growing number of eastern states, that of a hybridized version of the riparian and prior appropriation doctrines.(Sea Grant Law Center, University of Mississippi)
Idaho Water Idaho Water MarketMarket StructureStructure
Prior Appropriations water rights are defined by:
SourcePriority DataPoint of diversionPlace of usePurposes of useTime of useQuantity divertedConsumptive Use
Water Marketing in IdahoGeneral Parameters
Water banking considered beneficial use (1977)
No injury to third party (Pareto Optimal)
Mitigation required
Conjunctive management with groundwater
Established procedure for determining injury/mitigation
Moving party does not have to bear burden
Hydrologic modeling used to determine impact
Only consumptive use to buyer
Rental pools (1936)
Lemhi, Payette (2000)
LocationDate Start Length of Term
Water Source Administration
Recent Price - Posted Price or
Minimum (acre foot)
Activity (acre feet per year) Purchaser
Rent or Lease
Rental Pools:
District 1 Upper Snake 1930's Up to 20 years Stored Committee of 9 $2.95/$10.50 250,000 Irrigation/Power/In Stream
District 63 Boise River 1988 Annual Stored Local Dist. 63 Board $6.50/$6.93 3,000 Irrigation/Power
District 65 Payette River 1990 Annual Stored Local Dist. 65 Board $3.20/$8.50 150,000 Irrigation/Power/In Stream
Shoshone-Bannock Upper Snake 1990 Up to 5 years Stored Tribe
In-Stream Flows:
Lemhi River Lemhi River 2000 Part Year to Annual Surface Local Committee
based on net economic
benefit ($75-$100) 300 In Stream (BoR)
District 65K Payette - Lake
Fork Creek 2001 Annual Surface Local Committee $2.70 2 Conservation
Water Bank:
State State 19791 year lease to
permanent transferSurface/ Ground Water Resource Board $11+ 5,000 Irrigation/Power
Snake River 2001 AnnualIn Stream (NMFS) Water Resource Board $50 40,000 In Stream (BoR)
Permanent Transfer
State State 1900's PermanentSurface/ Ground Water Resource Director Various All
Idaho Water Markets - Recent Values
WATER BANKWATER BANK
The owner/lessor acknowledges the following:
1. Payment to the owner/lessor is contingent upon the sale or rental of the right from the bank.
2. While a right is in the bank, the owner of the right may not use the right even if the right is not rented.
3. A right accepted into the bank stays in the bank until the Board releases it or until the lease term expires.
4. While a water right is in the bank forfeiture provisions are stayed.
5. IDWR reviews validity of water right – not legally binding.
Water Bank Conditions
WATER BANK ACTIVITY
In 2003 approximately 175,000 acre feet in the Water Bank
However only approximately 5,000 acre feet annually are sold, rented or leased
Primary reason for bank is to stay the clock (use-it-or-lose-it)
Activity has been increasing in recent years
Lease activity has been increasing each year
RENTAL POOLSRENTAL POOLS
Idaho Rental Pools
Limitations• Administratively determined price• “Last to fill” penalty for water in the pool
Global Rental Pool (2003, District 1)• All storage owners must participate (abandoned)• All owners share in rental receipts• “Last to fill” is eliminated• In 2003, the driest year on record, there were no curtailments, but
“price too low”
Caveats• Three checks written: administrative fee, official price, payment
“under the table”
Considerations for Rental
• For use in Idaho only (year by year legislation for in stream)
• No injury to other water rights (Pareto Optimum)
• No enlargement in use of a right
• Water must be beneficially used
• Water must be sufficient for the intended use
• Water use must be in the local public interest
(effects on public water resource – not secondary effects)
Global Pool
• Modify rental pool procedures
• Carry over greater than 25% of the water right
• Distribution of rented storage by formulaFor Suppliers
For Rental Price
• Aimed at making mitigation available every year
• Universal participation abandoned 1st year
• Pricing formula administrated – auction preferred?
IN STREAMIN STREAM
Lemhi
• Instream flows (HB 385)
• Less than full season allowed (now other basins)
• No effect on existing permanent water right
• Junior right holders cannot divert (not specific to Lemhi)
• Priority of water right is maintained
• BoR rent on a per acre basis
Payette – Lake Fork Creek
• Irrigation districts invest in conservation measurescontrol structuresremote water monitoring gaugesdam modification
• Restore habitat for native fish
• Leased water (small amount) to supplement project
PRIVATE TRANSFERSPRIVATE TRANSFERS
Private Transfers
• For use in Idaho only (additional tests on supply and “reasonably anticipated” demands for water)
• No injury to other water rights (Pareto Optimum)
• No enlargement of a right – only consumptive use transferred to buyer
• Water must be beneficially used
• Consistent with “conservation of water resources”
• Basin of origin local economy not “adversely affected”
• Water use must be in the local public interest
(effects on public water resource – not secondary effects)
Number of Water Rights Transfers - Idaho
0
50
100
150
200
250
300
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Fiscal Year
Num
ber o
f per
mits
Snake River Moratorium after 1992 ( no new water rights)
Recent transfers are a high percent 'change of use' (dairies)
This is the number of permits not volume of water
LocationDate Start Length of Term
Water Source Administration
Recent Price - Posted Price or
Minimum (acre foot)
Activity (acre feet per year) Purchaser
Rent or Lease
Rental Pools:
District 1 Upper Snake 1930's Up to 20 years Stored Committee of 9 $2.95/$10.50 250,000 Irrigation/Power/In Stream
District 63 Boise River 1988 Annual Stored Local Dist. 63 Board $6.50/$6.93 3,000 Irrigation/Power
District 65 Payette River 1990 Annual Stored Local Dist. 65 Board $3.20/$8.50 150,000 Irrigation/Power/In Stream
Shoshone-Bannock Upper Snake 1990 Up to 5 years Stored Tribe
In-Stream Flows:
Lemhi River Lemhi River 2000 Part Year to Annual Surface Local Committee
based on net economic
benefit ($75-$100) 300 In Stream (BoR)
District 65K Payette - Lake
Fork Creek 2001 Annual Surface Local Committee $2.70 2 Conservation
Water Bank:
State State 19791 year lease to
permanent transferSurface/ Ground Water Resource Board $11+ 5,000 Irrigation/Power
Snake River 2001 AnnualIn Stream (NMFS) Water Resource Board $50 40,000 In Stream (BoR)
Permanent Transfer
State State 1900's PermanentSurface/ Ground Water Resource Director Various All
Idaho Water Markets - Recent Values
FLORIDA WATER MANGEMENTFLORIDA WATER MANGEMENT
Consumptive Use Permit (CUP)—Allows a user to withdraw a specified amount of water, either from the groundwater or from a lake or river. The water can be used to irrigate crops, nursery plants or golf courses; manufacture various products, including citrus; operate industrial plants; and provide drinking water for domestic consumption. CUPs were created as the key mechanism by which the water management districts and the state can regulate the consumption of water from the most beneficial uses and in the best interest of the public.
Because water is a public resource benefiting the entire state, Florida law requires waters in the state to be managed on a state and regional basis. Water is a statewide resource that is permitted and managed by districts for the benefit of all within the state. While it is politically important to look to local sources first, it may be in the best interest of the environment, and the potential sending and receiving regions, to revisit the impacts of allowing transfers, both economically and environmentally. One of the unintended consequences of Florida’s “local sources first” policy is that districts and localities think they “own their water,” and must prevent access by any other district or locality. (Improving Florida’s Water Supply Management Structure, A Report form the Florida Council of 100, p. 14.)
Florida law states water is a ‘public resource’
Recommendation 4. Find ways to encourage public-private partnerships and public-public
partnerships.
Allowing market-driven forces to play a role in water management would enhance water supply,
conservation, distribution efficiency and the environment. Creating a structure and atmosphere
that better supports creative solutions to Florida’s water storage and distribution problem
would help to ensure that we are using water in a sustainable manner. Establishing more wholesale
water agencies that can make multiyear contracts to private enterprise would enable partnerships
to develop.
Furthermore, creating incentives for private companies and public entities to develop water
resources and build new water supplies and infrastructure are innovative ways to address future
water needs. If we are able to lease public lands for tree farming and other ventures, why not lease
lands for water supply development to public water suppliers? Excess water (i.e., excess to minimum
flows and levels and local consumption needs now and for the future) on and within state
land could become an income generator for the state and the locals from which water is supplied.
Improving Florida’s Water Supply Management Structure
A Report from the Florida Council of 100
Don Reading, Ph.D.Don Reading, Ph.D.
Climate Impacts GroupClimate Impacts Group
University of WashingtonUniversity of WashingtonKing BuildingKing Building4909 25th Avenue NE4909 25th Avenue NESeattle, WA 98195 Seattle, WA 98195
Ph: 206.616.5350Ph: 206.616.5350Fax: 206.616.5775Fax: [email protected]@u.washington.edu
Ben Johnson AssociatesBen Johnson Associates
Tallahassee Office: Tallahassee Office: 2252 Killearn Center Blvd. - Suite 2D 2252 Killearn Center Blvd. - Suite 2D Tallahassee, Florida 32309 Tallahassee, Florida 32309 Ph: (850) 893-8600 Ph: (850) 893-8600 Fax: (850) 668-2731 Fax: (850) 668-2731 email: [email protected]: [email protected]
Boise Office:Boise Office: 6070 Hill Road 6070 Hill Road Boise, Idaho 83703 Boise, Idaho 83703 Ph: (208) 342-1700 Ph: (208) 342-1700 Fax: (208) 384-1511 Fax: (208) 384-1511 email: [email protected]: [email protected]