Irrigation Water: Use it or trade it because you can't save it!
March 27, 2007
"He who controls the past, commands the future." George Orwell
Large dams reduce water supply variability and provide access to water when we need it. Surprisingly there has been little research on when to release water and when to store it.
In most rural systems, water users accept all the water that is given to them. The old adage was “use it or lose it.” With trading, the adage has changed to “use it or trade it as the government won’t let you save it!”
Would Australia be better off if all irrigators were allowed to decide when to use water; when to trade water; and when to leave unused water on their account and carry it forward to the next season?
In the River Murray system and as a once-off drought response measure, this year Victorian irrigators are being allowed to carry forward any unused water. For many years, NSW general security irrigators have been allowed to carry forward water. For the first time ever and as an emergency response measure, NSW high security entitlement holders have been allowed to carry forward unused water.
Should any irrigator be allowed save water for the future by leaving it on their account and have it automatically carried forward and made available to them in the next season? We think the answer is “yes”.
Should carry forward accounting rules be consistent among states and among entitlements? We think that the answer is “yes.”
In the past, storage management and inter-temporal decisions have been taken in the public arena. In the Murray Darling Basin, via a process that allows quite a large amount of flexibility, States first agree on how much water to keep in an unallocated reserve and how much to allocate to each State’s account. Each State then decides how much water to keep on their account and how much to allocate.
Recently several States made seasonal allocation announcements that they could not honour. One of those not honoured was water that some NSW irrigators had carried forward from the previous irrigation season. We recognise that it has now been announced that, as soon as feasible, water accounts will be re-credited with this water but this decision has significantly reduced irrigator interest in carry forward.
In this droplet, provided there is storage space in the system, we assume that policy will be changed to define any seasonal allocation carried forward to be of the highest security. Bank water and after adjustment for storage losses you can use it whenever you like. If irrigators are to be encouraged to make astute water saving decisions, they need to be confident that their storage decisions will not be undermined by government.
The economics of carry forward
The community impacts of not allowing irrigators to carry forward water are considerable. Donna Brennan has estimated that lack of carry forward in the 2002/3 drought year cost Victoria’s Goulburn Valley over $100 million. She also found that the maximum price paid for a seasonal water allocation was three times higher than it would otherwise have been if irrigators had been allowed to carry forward water in previous years.
With less price volatility, an economist might predict that the value of water entitlements would rise.
Expanded trade versus supply reliability
In another paper, Brennan points out that expansion of interstate trade into NSW where some carry forward is possible will mean that less water will remain in Victoria’s storage account. Pressing alarm bells, she observes that the expansion of interstate trade without the introduction of carry forward arrangements will make the Goulburn Valley worse off. Water previously left in the system and shared among Victorian irrigators will now be transferred to another account. This means that subsequent allocations to Goulburn Valley irrigators will be less than they otherwise would have been.
The solution, Brennan argues, is to give each individual irrigator the opportunity to choose between using, carrying forward or trading water. If irrigators are allowed to trade water across space and, with adjustment for losses, store water both irrigators and the community should be better off.
We believe that all water users in all States should be given the opportunity to optimise all water management decisions including those about how much water is carried forward from year to year.
Who owns the air space?
Just as it makes sense for irrigators to carry forward water, it also makes sense for an environmental manager to carry forward water. Given this observation, one can imagine a situation where a dam is full. In such a situation, it is critical to work out whose water gets spilled first.
One simple way of providing access to airspace is to allow carry forward or, as some states prefer to call it, carry over on a first-up, best dressed basis. This is fine while there is a lot of space in the dam but when it gets close to full, there may not be enough space to give everyone their full allocation.
When a dam is nearly full, and if one thinks that storage priority should be issued in proportion to entitlement, it is possible to have a rule that ‘carry-forward’ water is always the first to spill. This means that when storages approach full capacity irrigators have an incentive to use or trade water rather than to save it.
Another way of allocating access to storage space in a dam is to set a limit on the maximum amount of water that may be carried forward. While it would be possible to unbundle this maximum storage right from an entitlement and make it tradeable, the benefits of doing this are likely to be minimal. In a free trading environment, irrigators can be expected to sell their water to someone who has access to unused storage in order to avoid losing an opportunity to profit from saving it.
One of Australia’s most sophisticated carry forward systems can be found in Queensland. Following trials in the Queensland’s St. George System, a continuous sharing approach has been developed. Each entitlement holder is allocated a maximum storage right and daily adjustments for evaporation losses are made to all unused allocations irrespective of the time when they were issued. To prevent carry forward causing delivery problems, the right to have water delivered within a season is capped.
Customers who ‘cap out’ within a season but who still have water available within their storage share are able to purchase seasonal delivery rights from others.
Where to from here?
Failure to optimise storage management and water supply decisions is costing Australia a lot of money. Just as it makes sense to allow water trade within a season, it also makes sense to allow trade from one season to the next.
Obviously, all would benefit from more research on the question of how to optimise the storage and release of water recognising the complexity of connected multiple storages and tributary inflow systems. To us, however, it seems obvious that the costs of not allowing individual participation in the process of deciding how to optimise the amount of water that is carried forward from year to year and how much is used are very high – too high.
Once the opportunity for private carry forward is introduced then it will be necessary to review Government storage and allocation policies. In particular, it may be necessary to ensure that the introduction of carry forward does not increase the total amount of water used. In particular, some entitlement reliabilities and some allocation rules may have to be redefined.
From a Murray Darling Basin perspective, this droplet raises an important question: “Should the proposed new Murray Darling Basin Agreement be drafted in a manner that allows permanently for carry forward of unused allocations or should this privilege remain limited to the few?”
Finally, under the current Murray Darling Basin Agreement it is possible for South Australia to request access to Victorian and NSW dams. With the new commitment to managing the Murray Darling Basin System as one, all irrigators – including those in South Australia – could be given an immediate opportunity to carry forward water.
Hyperlinks to further information (Click on the entry)
- Brennan, Donna (2007) Missing markets for storage and their implications for spatial water markets. Paper presented to AARES Conference, Queenstown, NZ, 14th February 2007.
- Brennan, Donna (2007) Managing Water resource reliability through water storage markets.
- Vanderbyl, Tom (2007) Implementation of continuous sharing in Queensland. SunWater, Brisbane.
This droplet benefited significantly from comments made by our ever diligent Steering Committee, Donna Brennan, Tom Vanderbyl, Al Watson, Bob Douglas, Trevor Jacobs, David Dole, and Peter Hoey.
Copyright © 2006 The University of Adelaide
A look back at Colorado Water in 2006 (Part III)
March 13, 2007
Here's the third and final part of the Colorado Water Year in review. This is cross-posted at Coyote Gulch.
Most Coloradoans have forgotten the serious drought that the state faced through most of 2006. Water watchers and farmers haven't, to their credit. Some even started wondering if a return to the dust bowl days of the 1930s was imminent. The snowpack looked pretty good until it disappeared during a warm and dry late spring. Most of the snowpack was gone by the middle of June. Huerfano County issued a drought emergency.
By July 59 of Colorado's 64 counties had been designated federal disaster areas. Many reservoirs did not fill from the weak runoff. John Martin reservoir, down in the southeastern corner of Colorado, was pretty much dry come July. The South Platte River Valley was especially hard hit by the drought and the depletion of moisture in the subsoil. Aurora kept up the pressure on the Arkansas River Basin looking for short-term leases for 2007.
In May farmers along the South Platte River received a shock from the State Engineer. 400 wells in the alluvial aquifer were shut down pursuant to a 2003 law that required them to provide permanent augmentation water before pumping. Governor Owens hoped to help with a disaster declaration. The Northern Water Conservancy, Aurora and Fort Collins pledged some transmountain, Wind Gap water to the farmers.
That water was of no help when the effected farmers could not get a deal in court with Boulder, Centennial and Sterling, despite taking it to the Colorado Supreme Court. Millions of dollars of crops withered and died. Water attorney, Veronica Sperling, drew accolades and criticism for her role in defending Centnnial and Boulder in the shutdown. Water spies found farmers irrigating despite the shutdown order leading to some farmers being fined. Farmers around the state wondered if they'd be next.
We all received a glimpse of the future of development in Colorado early in the year when the Cherokee Municipal Water District was ordered to stop pumping water out of the Black Squirrel Basin, except in emergencies. Judge Maes' order had ramifications for developments across the state. Developers better have a sustainable water supply lined up long before construction starts. By the end of the year Cherokee had told customers that there could be no lawn watering. The Colorado Supreme Court took up the case in September and upheld Judge Maes' ruling. The Upper Black Squirrel Creek Management District felt like they had dodged a bullet.
Because of the drought conditions across Southwestern U.S. Lake Powell and Lake Mead didn't come close to filling and many were worried that there would be a call on the river from the Lower Basin states. Backpacker magazine floated the idea of a Glen Canyon Nation Park and the draining of Lake Powell. Following a study of tree ring data we learned that the Colorado River Basin has experienced many prolonged droughts over the years. At the end of the summer stream flow above the Blue River on the Colorado River was dangerously low.
It was not all gloom and doom though. Dillon reservoir (operated by Denver Water) filled and spilled for the second year in a row and other Summit County reservoirs benefitted from the rainy summer. Denver Water also entered into an agreement with Xcel that will allow the water utility to fill reservoirs upstream of the electrical utility's Shoshone power plant, with Xcel water, during drought years. The Colorado River basin in the state was not part of the general drought conditions in some of the other basins. The Colorado River Compact states sent the Department of Interior a plan to share the river during drought. Arkansas River flows surprised water managers expecting them to drop off quickly. Towards the end of the year reservoirs were filling nicely across the state and snowpack was off to a good start for 2007.
North American MonsoonThe early start to 2006's North American Monsoon, coupled with a very wet season brought some relief to Colorado, along with a good deal of flooding and management headaches. Many bans on open fires were lifted in July. One farmer in southeastern Colorado, talking about the rain's effect on his vegetable crop, remarked, "It just perks them up."
Colorado is well known as a whitewater sports mecca. The Upper Arkansas Valley has leveraged the river's potential and now water sports are a booming segment of the economy. New whitewater parks are being planned across the state including Palisasde, Glenwood Springs and Fort Collins. Glenwood Springs hopes to feature a wave maker in their park. Palisade is hoping to piggyback on a fish ladder project for cost sharing. Chaffee County received a Recreation In Channel Diversion right during the year. Pueblo applied for an RICD. Durango's application for an RICD encouraged the Southwestern Water Conservancy District and La Plata County to apply for water on the Animas, for protection of upstream interests. Pagosa Springs hoped to expand their park.
State Senator Jim Isgar introduced SB06-37 in 2006. The bill sought to limit the amount of water that entities could apply for in a Recreation In Channel Diversion for whitewater parks. Governor Owens signed the bill in May.
Troubled WatersDuring 2006 several scientists sought to raise awareness about effluent dominated streams. Boulder Creek was highlighted and the city of Boulder recommended that water utility customers avoid dumping old prescriptions in the sanitary sewer system. Early in the year scientists and others met up in Billings to discuss what was the cause in an upswing of Didymo alga.
The water in most Colorado streams, and certainly all of the major streams, is over-appropriated. The South Platte poses many problems for water managers including re-charging the aquifer. The Ogalla Aquifer was in the news as the fastest disappearing aquifer in the world.
President Eisenhower used to love to fish the Fraser river. In 2006 that experience was under pressure from the diversions and drought. Water temperatures and low flow were behind the move by the Evergreen Trout Unlimited and others asked the EPA to list Bear Creek as impaired. Mercury levels in several Southwestern Colorado reservoirs made the news last summer as did two lakes in Denver.
The San Miguel River received Cs and C+s on its ecological health report card. Colorado State University and farmers down on the Arkansas River got together to study the river with an eye towards improving water quality. In October the Roaring Fork Conservancy rated the Roaring Fork's overall quality as high. They were worried about some of it's tributaries. The Eagle River is a success story in many ways but this fall Eagle County floated the idea of requiring that augmentation water for the Eagle be replaced in the Eagle.
In May Colorado Springs was hoping to get U.S. District Judge Walker Miller to drop the Fountain Creek lawsuit brought by Pueblo and the Sierra Club. Later that month the Springs tried to show that Pueblo didn't have the legal right to sue. At the end of the year there had been very little movement in the courts and it looked link the lawsuit would end up with a trial. Colorado provided some dough for a study of DNA in E. coli in the creek.
A plan was floated from Ray Petros that would combine flood control, recreation and water reuse on Fountain Creek. The plan included a new dam that was shot down by the Bureau of Reclamation in August. Colorado Springs came up with a plan to divert all of the water in the creek if there was a spill. The Sierra club mobilized volunteers to monitor the creek dubbed Water Sentinels. Officials tried to gauge the future problems that unbridled growth in Colorado Springs and environs might cause.
Stream flow and Wildlife
Stream flow in the Black Canyon of the Gunnison was at the heart of one of the most interesting stories of the year as Trout Unlimited and other groups filed a lawsuit against the National Park Service. Judge Clarence Brimmer's ruling, throwing out the deal between Colorado and the National Park Service, was closely watched all over the state. Some called it the largest water rights case in the history of Colorado. The story touches on transmountain diversions, protection of endangered species, management of a fishery (albeit with mostly non-native species), backroom deals between government agencies, local water interests and criticism of the National Park Service.
In Nebraska, the North and South Platte rivers come together. Demands on the Platte have created problems for four endangered species, whooping cranes, piping plover, least tern and pallid sturgeon. During 2006 a new agreement was reached to protect the endangered species. The U.S. Fish and Wildlife Service signed on in June, Nebraska approved it in November, Colorado followed suit and Wyoming signed off at the end of the month. The Department of Interior finalized the agreement with their approval in December and whooping cranes were seen dancing in the streets.
The Upper Arkansas Water Conservancy District was instrumental in getting a conservation easement on Trout Creek. The easement was the first for the district. In September the Upper South Platte and the Center of Colorado Water Conservancy Districts bought 30 acre feet of water rights for augmentation.
The Colorado Water Conservation Board started the ball rolling for a in-stream right for the Arkansas to help with habitat.
Water managers in the Upper Colorado River Basin turned the valves to enhance the spring snowmelt peak and provide habitat for the native fish such as the Colorado Pikeminnow. The Colorado Division of Wildlife hoped to resolve the problem of non-native species along with the U.S. Department of Wildlife. In September a court overturned the Bush administration's decision to not seek endangered species protection for the Colorado River Cutthroat Trout. The Roan Plateau, in the news due to oil and gas leases, is home to a genetically pure strain of cutthroats and a successful program to protect them. In December, New Mexico, Colorado, four tribes and the Interior Department extended a program to recover endangered fish in the San Juan River
Legislation in 2005 set up Water Roundtables for each major river basin in Colorado. During 2006 the members started working on issues after the state ponied up $40 million. Governor Owens appointed several members of the Interbasin Compact Committee in January. The first meeting was held in February. Towards the end of the year American Whitewater put out a call for paddlers to join Roundtables to represent the interests of kayakers and rafters. The Colorado River Roundtable declined the opportunity to partner with the people trying to build a whitewater park in Palisade since the project wouldn't generate any wet water. HB06-1400, signed by Governor Owens in May, set up the state's first charter for interbasin water compacts.
A Bureau of Reclamation employee sent a shock wave through the Gunnision Roundtable when he suggested that the Endangered Species Act could trump Colorado water law.
Local Regulation of Watersheds
One interesting trend, that gained some visibility 2006, were moves by local governments to regulate their watersheds. Counties and municipalities looked at controlling the storage of chemicals and the regulation of oil and gas activities. Grand Junction tried a strategy of bidding against oil companies for leases in their watersheds.
Tamarisk and other invasive species
Colorado stepped up the pace of the fight against Tamarisk during 2006. West of Grand Junction the BLM and the Palisade Insectary, operated by the Colorado Department of Agriculture, released Tamarisk beetles to help with control. The invasive plant was removed at John Martin Reservoir while several organizations along the Arkansas River hoped to coordinate efforts for effectiveness. In the fall federal legislation was winding it's way through Congress. President Bush signed the bill in October. In November we heard about success on the San Miguel River. NASA stepped up with satellite imagery for tracking invasive plant species.
Big Thompson Flood 30th Anniversary
2006 was the 30th anniversary of the Big Thompson Flood. There were many stories of the community and bravery around the tragedy. Coyote Gulch remembers the storms across Northern Colorado that day. We had been fighting the rains for an entire week up in the Flat Tops Wilderness. The night of the flood we were holed up in Steamboat.
Predicting the Weather and Climate Change
Is there enough science around climate change to predict the future? Some warn that there is and that water dependent businesses in the state should be making plans now to deal with supply variability that is different from historical experience. Up in Craig they're teaching water management in the schools. Good idea.
Thanks for another great year
Coyote Gulch sends out a heartfelt thanks to all of the readers and commenters. We also want to thank the movers and shakers behind water issues in Colorado. You keep it interesting.
We apologize for the links that have gone dead. News organizations are in trouble here in the first part of the 21st century. Some require registration for the online services, some expire links in favor of selling copies of articles at a later date. They're all looking to bolster revenue from declining classified advertising and ad revenue in general. They do a great job reporting on water issues across the state and getting at the heart of the problems and opportunites. Why not resolve to help them out in some way in 2007? Without the various news sources there would not be a Coyote Gulch in it's present form.
Here's the link to Coyote Gulch's 2005 Colorado Water Year in Review.