Terry Stokka has lived in Black Forest for 29 years. He is president of the Friends of Black Forest, chairman of the Black Forest Land Use Committee and chairman of the Black Forest Water & Wells Committee.
Disclaimer: This column does not necessarily represent the views of The New Falcon Herald.
A piggybank full of water?
By Terry Stokka
Piggybanks are supposed to hold coins. Why on earth would you ever want a piggybank full of water? A piggybank of water would never be as valuable as coins unless you were dying of thirst, but in today’s world, water is increasing in value in unusual ways while the coin values stay the same.
Beginning in the 1970s, water providers like Colorado Springs and Aurora began purchasing water rights from farmers along the Arkansas River for their thirsty cities. Known as “buy and dry,” it meant that farmers could no longer grow those famous melons because they didn’t own the water to irrigate them. They still owned the land, their farmstead and a small amount of water rights for their farmstead, but the land became idle. Given the uncertainties of farming and all the hard work involved, it is not hard to empathize with farmers who could get millions of dollars for their water rights and still keep their land.
Thousands of acres of farmland along the Arkansas River are now idle. Why along that river? First, the farmers often represented many generations of families who had the original water rights. Colorado water law states “first in time, first in right,” meaning that by virtue of the original owners being the first to use the water for irrigating, they had senior rights to use as much water as they needed for farming. Every other use for the water came after the senior rights were satisfied. Second, the land along the Arkansas River holds a lot of water so each acre of land could produce more water for these cities.
A new concept is emerging where corporations are purchasing water rights as an investment. They have no plan to use that water; instead, they will hold on to it and let the value of the water appreciate and sell it later at a profit. Between 2017 and 2020, Water Asset Management (WAM) purchased $16.6 million of farmland in the Grand Valley near Grand Junction. WAM now owns vast amounts of water under that farmland but their business has nothing to do with water. In another case, Renewable Water Resources (RWR) purchased farmland with water rights in the San Luis Valley near Alamosa and proposed piping the water to Douglas County for new developments south of Denver. Unfortunately for them, Douglas County said no to the idea so RWR has no buyers for their water right now. That could certainly change in the future.
This raises the question: Is it ethical for investors to buy water rights and hold them for appreciation in value when a drought comes? It’s one thing to buy wheat or coal or timbered land and hold it for increased value because those commodities don’t affect other people in the same way, but water is clearly in a different category since its impact is far more widespread. I remember clearly when one of our former county commissioners said that he believed water was a commodity that the owner could sell or hold as he saw fit.
The state of Colorado also has a policy that water must be put to a “beneficial use,” which means the water must be used in a way that is beneficial to the state and not wasted or not used at all. If a water right is not used, it can be negated and granted to someone else. It is not hard to argue that buying water rights and holding them is not a beneficial use of the water.
One creative idea is for a water provider to buy water rights and then sell water back to the landowner in wet years when a water provider like Colorado Springs doesn’t need it. This idea has some positive qualities and allows landowners to grow and irrigate crops in wet years. That would mean more of those Rocky Ford melons for the market.
Some have suggested that state and federal legislation should control water ownership, but the powerful water lobby and landowners have vested interests and want to remain free and uncontrolled so the issue is out there but not likely to change. Without legislation, corporations will continue to buy water rights and hold them until some water user is desperate enough to pay the price.
So this is yet another story in the history of Colorado water rights. As the saying goes, “Whiskey is for drinkin’ and water is for fightin.’”
