Water Banking for a Resilient
Mexico Economy
New
Utton Center Workshop on Water Resilience in a Time of Uncertainty
University of New Mexico College of Law
Professor Bonnie Colby (bcolby@email.arizona.edu)
Agricultural & Resource Economics, University of Arizona
October, 2014
The organizations indicated below are acknowledged for providing support for
the research summarized in this presentation.
Water Banking - Why Bother?
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Reduce drought economic losses
Manage shortage risks – avert costly crises
Added statewide problem-solving capacity
Spread financial benefits across participating
sectors: ag, urban, environmental, recreation
Issues Water Bank Can Address
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$$ to upgrade aging irrigation district infrastructure
$$ to support new generation of farmers
Reliable water for high value crops
Improved M&I supply reliability
Improved water quality
Interstate compact compliance
To Succeed
• Water bank MUST reduce costs and delays in
meeting intermittent water needs
• Provide real-time flexibility through menu of
“pre-approved” types of transfers
• Water bank is especially suited for arranging
seasonal, temporary trades which are easily
dampened by high costs and delays
Types of Water Bank Transfer
Arrangements
• Contingent transfer agreements
• Transfers of conserved water
• Seasonal leases
Water bank: contingent transfer agreements
- multi-year contracts negotiated in advance of need
- rapid response when water needed
- contract can limit frequency of ag land idling
Example: no more than 3 years in 10.
Contingent contract examples
- 4 summer weeks, cease pasture irrigation,
triggered by low flows, high temperatures for fish
- Field crop irrigation forbearance to sustain orchards
through fall harvest, triggered by shortage for junior
orchards
- Compact compliance in dry periods, triggered by
low reservoir levels
Banking “conserved water”
- Good incentive for stretching state’s supplies
through water conservation
- BUT challenging to define, measure and monitor
water “conserved”
- Typical allowable methods for conserving water :
- land fallowing
- change in crop rotation
- change in irrig technology & practices
- regulated deficit irrigation
Western U.S. Water Bank Examples
Nebraska Platte Basin Natural Resource
Districts (NRDs)
• NRDs must meet streamflow targets for compacts
and ESA requirements
• Farmers paid for reduced acre-feet of depletion
to the river (calculated using basin models)
• Twin Platte NRD: Online trading platform
calculates transferrable quantities, matches
buyers and sellers
• Central Platte NRD: paying $8,000 per acre-foot
of depletion to the river, up from $3,750
North-central Oregon
• Banking motivated by city growth, salmon flows
• USDA, Reclamation funds share costs of
irrigation system improvements
• “Banked” water created by canal lining, ditchesto-pipes, improved on-farm technology and
precision irrig scheduling
• Farmers experiencing increases in crop yields
and in farm profits
Idaho Snake River Basin
• Banking motivated by salmon recovery and
hydropower needs
• Use remote sensing to facilitate and monitor
changes in ag CU
• Large benefits in ag sector from banking
- drought losses in farm profits reduced by 80%
- 75% of water bank trades are ag-to-ag
Colorado Upper Rio Grande - San Luis Valley
• Offering incentives on top of USDA-CREP
payments to temporarily idle irrigated land
• Seek to balance aquifer, comply w compact
• Seeking 20% reduction in ag consumptive use
for multiple years to stabilize aquifer
• Have enrolled substantial acreage for idling in
2014
Water Bank Design Principles
- Use federal money to improve irrigation technologies
and practices (USDA, Reclamation)
- Pay per unit reduced consumptive use – NOT per
acre idled or per acre foot reduced diversions
- Specify protocols for quantifying reduced
consumptive use
- advanced remote sensing tools
- regional crop consumptive use coefficients
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Water Banking Legislative
Recommendations
• provide budget for water bank pilot projects
• emphasize advantages to communities and to
state economy
• temporary, intermittent, seasonal transfers
give valuable flexibility - but full change in
water right process is too costly
Guidebooks: Innovative Water Trading