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Water Marketing in Texas

Water Marketing in Texas. Texas Rural Land Market Conference. Ronald Kaiser, Texas A&M University May 4 th , 2001. Texas Water Uses and Sources. Drivers & Benefits of Water Marketing. Marketing Model & Transactions. Marketing Texas Style. Issues, Concerns & Opportunities. Texas. Water.

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Water Marketing in Texas

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  1. Water Marketing in Texas Texas Rural Land Market Conference Ronald Kaiser, Texas A&M University May 4th, 2001

  2. Texas Water Uses and Sources • Drivers & Benefits of Water Marketing • Marketing Model & Transactions Marketing Texas Style • Issues, Concerns & Opportunities

  3. Texas Water Uses

  4. 1994 Texas Water Uses and Sources Users by Source Groundwater (9.4 maf) capture rule Agriculture 80% Municipal 15% Other 5% • Surface Water (7.1 maf) State permits • Agriculture 50% • Municipal 26% • Industrial 24%

  5. WATER USE BY AQUIFER • AQUIFER 1995 Annual • Pumping Recharge Ogallala 6,200,000 AF 300,000 AF Edwards 730,000 AF 1,200,000 AF Carrizo 500,000 AF 645,000 AF Trinity 200,000 AF 100,000 AF Gulf Coast 1,150,000 AF 1,230,000 AF Bolsum 400,000 AF 430,000 AF All Others 220,000 AF 200,000 AF TOTAL 9,400,000 AF 4,100,000 AF

  6. Drivers for Change to Marketing • Increasing population growth • 9 million (1950) 20 million (today) 40 million (2040) Limited water supplies 12/15 rivers appropriated Fewer reservoirs to be built Aquifer mining • Water shortages by 2010 • Environmental Water Needs • Groundwater supporting agriculture

  7. Drivers for Change to Marketing • Drought Management • Negotiating for water Nonstructural Approaches Conservation—15% of needs Using Sewage—5% of needs Marketing—10 % of needs • Declining Irrigation Use • 13.5 maf (1974) 10 maf (2000) 9.5 maf (2010) • Economic Efficiency—highest/best use

  8. BENEFITS OF MARKETING • Provides Water to Growing Cities • Drought Management Tool Reallocation of lower valued water • Alternative to reservoir construction

  9. BENEFITS OF MARKETING • Incentives to conserve—sell the water • Revenue source for agriculture Minimizes water bureaucracy • Requires negotiation with impact parties

  10. MARKET MODEL • ECONOMIC FACTORS • LEGAL CONSIDERATIONS • TECHNICAL CONDITIONS • INSTITUTIONAL/POLITICAL FACTORS

  11. MARKET MODEL • ECONOMIC FACTORS • Increasing Demand • Limited Supply Options • Low Valued Uses • Buyer and Seller Base • Market Data Base • Transaction Cost Consideration

  12. MARKET MODEL • LEGAL CONSIDERATION • Property Rights • Transfer Authorizations • Transfer Barriers • Third Party Impacts • Interbasin/Aquifer Transfers

  13. MARKET MODEL • TECHNICAL CONSIDERATIONS • Conveyance Systems • Pipelines • Natural Watercourses • Statewide Plumbing Systems • Urban Growth

  14. MARKET MODEL • INSTITUTIONAL/POLITICAL SUPPORT • Agency Promotion • Planning support • Regulatory approval • Public Agency Water Ownership—River Authorities • Clearing House for Transactions

  15. TRANSACTION TYPES • Public Nature of Surface Water • Shapes Process • Affects Parties • Impacts transactions • Legal Rules—Surface & Groundwater Law • Shapes Process • Affects Parties • Impacts transactions

  16. TRANSACTION TYPES • Sale of Water Right • Legal entitlement • Priority date—Appropriation doctrine • Sale or Lease of Water • Contractually based • Term Limits • Opportunities to renegotiate

  17. Transaction Examples • Sale of right • Water Ranching • Water Banking • Contractual Sale • Term contracts • Dry year options • Conservation measures—Calif. Tx • Exchanges—ground for surface • **creativity of parties guides transaction form**

  18. Marketing—Texas Style • Agric. to Urban • Where • Lower Rio Grande Valley • West Texas—El Paso • San Antonio, Corpus Christi, Austin • Mid sized & smaller cities • Transactions—Surface v. Groundwater • Sale/lease of water • Few sale of right • Transaction format • Surface water—multi-party involvement • Groundwater—two party but changing

  19. Marketing—Texas Style • Parties • Public • TPWD, TNRCC, TWDB • River Authorities 10/20% • Cities • Water districts • Private • Landowners • Corporations • Co-Operatives • Examples • Garwood Irrigation Sale • El Paso Water Ranch • San Antonio/ Alcoa/Edwards Aquifer • West Texas Groundwater—Boone Pickens

  20. UNRESOLVED ISSUES • Surface Water • Interbasin transfers • Third party impacts & involvement • Junior rights & impact on bargaining • Sale of treated effluent • Sale of conserved water • Environment water needs • Role for Water Banks • Cancellation of unused water rights

  21. STILLMORE UNRESOLVED ISSUES • Groundwater • Changing the Capture Rule • Impact on Rural Texas • Two party transactions • Type and Level of Management/Groundwater districts • Regional • Local • Exporting water—Boone Pickens Proposal • Conjunctive Management– Surface Water • River Authority Role • Integration with Regional Planning

  22. MORE UNRESOLVED ISSUES • Groundwater Districts & Rural Texas

  23. Issues with Districts • LIMITED REGULATORY AUTHORITY • Well Spacing/Waste Prevention • Overdrafting & Mining • Pumping Limitations???—High Plains Case • COUNTY & POLITCAL BOUNDARIES • NO UNIFORM AQUIFER STANDARDS • Ogallala & Hueco Bolson—no recharge • Sustainability standards • Surface & groundwater linkage

  24. Management Options • Sustainability of aquifers • Limiting overdrafting--drought • Uniform rules • Depletion Allowances • Time (25—50 years) • Amount Remaining (50—25 Percent) Domestic Wells Pre-existing Reasonable Use

  25. End of Show but Not the Story Stay Tuned for Political/Legal Changes

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