Water Banking – Panel Discussion 2019 Utah Water Users Conference March 18, 2019

1. Water Banking – Panel Discussion2019 Utah Water Users Conference March 18, 2019

2. Why We Are Here?Voluntary – Temporary – Local To better support Utah’s agricultural needs and meet increased social, environmental, and economic water demands, water banking is a market tool to facilitate low cost, voluntary, and temporary transactions that may provide both income to water right owners and greater access to water.

3. Discussion 1) Need and Context 2) Recent History and Background 3) Next Steps 4) Questions for Panel 5) Continued Dialogue

4. Water BankingVoluntary – Temporary – LocalThe Need and Context

5. Case Study: Lower Arkansas Valley, CO • Population expected to increase 78% from 2008 to 2050 • “Buy-and-dry” transfers have fallowed ¼ of the area’s agricultural lands -100,000 acre-feet • If population trends continue, 50% of farmland could be fallowed by 2050 to supply urban growth

6. Case Study: Lower Arkansas Valley, CO

7. Impacts of Buy-and-Dry: Crowley County, CO • 70,000 acre-feet transferred to municipal use, particularly in Pueblo and Colorado Springs • 50,000 irrigated acres reduced to 5,000 today • Poverty rate for 2013 – 2017: 47.4% (U.S. Census Bureau) • M&I uses now own 90% of water in Twin Lakes, the main reservoir in the county • Noxious weeds and dust storms Photo by Jennifer Goodland

8. Available at: http://westgov.org/reports/water-transfers-in-the-west

9. “On one hand, water transfers can be an efficient way of reallocating water: they allow buyers and sellers to work together towards a voluntary and mutually beneficial outcome, rather than forcing compliance through regulation. However, since farmers own a large portion of water rights in the West, much of the water transferred to satisfy new urban or other uses often comes from agriculture. This can impact agriculturally-based rural communities and economies in a number of ways.”

10. “Water Transfers in the West:” Findings • Transfers are happening around the West and will continue • In many parts of the West, “buy-and-dry” transfers are the primary (and sometimes only) means of satisfying urban growth • ½ of transfers in the West from 2005 to 2008 converted agricultural water rights to urban and industrial use • Loss of agriculture raises serious concerns • Statewide and local economic impacts • Food security • Cultural heritage • Impacts to the environment

11. “Water Transfers in the West:” Findings • Voluntary Mechanisms are Better – “non-voluntary water conservation or reallocation through regulation would be time and resource intensive [and] mandates seldom produce the most efficient or effective resource management outcomes.” • More Alternatives are Needed – alternative transfer mechanisms like leases, rotational fallowing, split-season uses, and water banks can help “avoid the permanent dry-up of agricultural land, and the many economic and environmental impacts that can occur when land goes out of irrigated agriculture forever.”

12. Observations – Current Path • Utah has relatively little viable farmland compared to other states • Idaho has 5x more viable farmland • “Replacement-in-place” will eventually end • “Buy-and-dry” is the current means of supplying urban growth • Urban growth will require transfers from more distant locations • Utah is continuing to lose farm acreage • What happened in Crowley County, CO could happen here without changes

13. Observations – Current Challenges • Limited Options for Agriculture • Keep farming; or • Cash out • Permanent “Buy-and-Dry” is the Default Option for Urban Growth • Certainty of supply is critical for future demands • It’s hard to find water • Where is, who has it, and how much? • Transfers are expensive! • It can take a long time to secure approval • Building the infrastructure to use the water is costly • Figuring out the technical details can take a lot of time and is also costly • Limited Options for the Environment Prompts Regulation and/or Litigation

14. Observations - Solutions Effective market alternatives to “buy-and-dry” transfers must: • Ensure that ag. keeps ownership of the water rights (most important) • Incentivize ag. participation (“dollars”) • Protect ag. rights against abandonment and forfeiture (“certainty”) • Be locally created and managed (local control) • Be voluntary (effective solutions aren’t forced) • Provide mechanisms in which urban and environmental needs can acquire water to address their demands (provide a “relief valve”) • Low transaction costs (easy and cheap to use)

15. Case Study – “Lower Arkansas Valley Super Ditch Co.” • Represents 7 irrigation companies with 8 ditches and 2 reservoirs • Negotiates on behalf of farmers to make water available for other uses through banking, leases, or interruptible supply agreements • Began with a pilot program in 2015 but has potential to lease 24,000 AF (dry year)/50,000 (avg. year)/80,000 AF (wet year) • No “buy-and-dry” allowed • Farmers voluntarily participate in program – they can fallow up to 1/3 of their fields every 3 out of 10 years La Junta, CO Photo by Carla Quezada

16. Water BankingVoluntary – Temporary – LocalRecent History

17. Governor’s 2017 Recommended State Water Strategy Report Year 1: Town Hall Meetings - Gang of 6 - 8 town hall meetings - 800 online comments received • - Summarized in white papers Year 2: Water Strategy Advisory Committee • - Objective: Develop 50-year water plan - Solicited and evaluated potential water management strategies • - Provided frame for public feedback • - Developed set of strategies and ideas • Your Utah, Your Future Survey (assumptions) • - Utah's population will double by 2060 • - Existing water infrastructure wearing out • - Water is a finite and variable resource that is affected by climate • - Utah values agriculture • - Utah values a vibrant economy • - Water quality is important • - Utahnsvalue water as part of the natural environment • - Need will drive technology and change • - Wise and efficient use of water will be necessary (conservation) • - The cost of water will continue to increase

18. State Water Strategy Report Cont.Process and Content Water Strategy Report Process Water Strategy Report = 1) Executive Summary 2) Background 3) 11 Key Policy Questions a) Issues b) Recommendations

19. State Water Strategy Report Cont. 11 Key Policy Questions • What is the role of water conservation & efficiency in Utah? • How will diverted water supplies be developed to meet competing and ever increasing demands? • What should we do to preserve natural systems in the face of increasing water demands? • How do we protect and sustain the quality of Utah’s water? • In what ways will weather and a changing climate impact future water supply and demand? • What is the role of policymakers, both elected and appointed, at all levels of government? • What roles will science, technology, and innovation play in addressing Utah's future water needs? • What is the framework for Utah water law and policy, and how will stakeholders modernize it? • How do we optimize our water resources to sustain the economy and quality of life for Utah residents? • How will Utah plan for, adequately fund, and use innovative solutions to maintain, replace, and redesign existing water infrastructure and build new water infrastructure over the next 40 -50 years? • How does Utah provide water for agricultural lands and food production in the face of competing water demands?

20. State Water Strategy Report Cont. Example References to Water Banking • 3. How does Utah provide water for agricultural lands and food production in the face of competing water demands? • 3.5 Create mechanisms that help agricultural water users contribute to improving water quantity and quality management – including water banking. • 4. What should we do to preserve natural systems in the face of increasing water demands? • 4.5. Facilitate development of environmental water markets. • 9. What is the framework for Utah water law and policy, and how will stakeholders modernize it? • 9.5. Facilitate temporary transfers of water.

21. SB214 (2017) – Public Water Supplier Amendments - Adopt Strategy Report’s Recommendations to enhance instream flows • Holders of instream flow water rights currently limited to: • Division of Wildlife Resources • Division of Parks and Recreation • Specific fishing groups • Added Public Water Suppler to address water quality concerns • Stirred healthy debate about role of instream flows • Amended and passed as a “study group” Bill : • “study the application process for an instream flow and to present their findings, conclusions, and conceptual outline for any suggested legislation to the Legislature before the 2018 General Session.”

22. SB 214 – Public Water Supplier Amendments Cont.Instream Flow Study Group • Summer 2017 Stakeholder group meetings begin - Diverse group of interests: • Farm Bureau • Trout Unlimited • Utah Department of Agriculture (participating agency) • Conservancy Districts • The Nature Conservancy • Municipal water suppliers • Studied instream flow programs in various Western States • Group consensus → water banking and instream flow programs are related • Water banking could also address a number of related water issues

23. Water Banking: Consensus Guidelines - Voluntary: only those who want to participate • Local: keep decision making and organization at local level • Temporary: maintain ownership of underlying water right • Prior Appropriation: retain value of underlying water right • Low Transaction Costs: not be expensive or burdensome • Efficient Transactions: easy to understand and execute • Access: promote equal access to banked water • Complimentary: not impede current efforts

24. Water Banking: Consensus Goal To better support Utah’s agricultural needs and meet increased social, environmental, and economic water demands, water banking is a market tool to facilitate low cost, voluntary, and temporary transactions that may provide both income to water right owners and greater access to water.

25. Water BankingVoluntary – Temporary – LocalWhere We Are Today

26. Where We Are Today Senate Joint Resolution 1: Continued Study of Water Banking • Update to SB214 (2017) • Set priorities • Legislative Education • Roadmap for Next Steps (2020 Leg.) Appropriation $400,000 – non-lapsing • Fund start of pilot projects • Continued Study BOR WaterSMART Water Marketing Grant • 3 year Grant Continued Study - Stakeholder Study Group continues to meet

27. Where We Are Today (Cont.) • Objective 1: Water banks that fit Utah • Design a Utah focused water banking concept that allows local water users to share information and facilitate voluntary willing lessor and willing lessee water transactions. • Strategy A: Conduct public outreach and education to inform local water user needs and concerns (ongoing) • Strategy B: DRAFT water banking legislation (2020; amendments ongoing) • Strategy C: Obtain funding for water banking activities (ongoing as needed) • Strategy D: Conduct scoping and study to assess water banking needs and barriers (ongoing) • Strategy E: Complete Water Marketing Strategy Report focusing on effectiveness of water banking as water marketing tool to meet stated objectives of overall goal. (2022; Update 2025; Update 2030)

28. Where We Are Today (Cont.) • Objective 2: Pilot Projects (kicking the tires) • Implement water banking concept to facilitate local water users in completing temporary, voluntary, and low cost water transactions. • Strategy A: Employ a Project Manager to oversee first stage of water bank scoping (2019) • Strategy B: implementation of pilot projects (2019-2022) • Strategy C: Implement Pilot Projects to test draft water banking concept (2020 – 2030) • Strategy D: Administrative/Legal Process • Strategy E:Outreach/Education

29. Where We Are Today (Cont.) • Objective 3: Slow and Steady • Evaluate whether water transactions facilitated by local water banks allow local water users to preserve agriculture and meet increased social, environmental, and economic water needs. • Strategy A: Create a review process (ongoing) • Strategy B: Amend and adapt water banking concepts (ongoing)

30. Thoughts for Moving Forward VOLUNTARY – TEMPORARY – LOCAL Not a panacea: Water banking just one tool we will need to preserve agriculture and create greater access to water Slow and Steady: Taking our time to get this right – term legislation; pilot projects; built in assessment Consensus: Designing a concept that is based on input and needs of the broader water community Exciting: Opportunity to be innovative and impactful

31. Next Steps: We want to hear from you! info@utahwaterbank.org