Water Banking: a New Tool for Water Management
| Publication year | 1994 |
| Pages | 595 |
1994, March, Pg. 595. Water Banking: A New Tool For Water Management
Water banking offers opportunities for better water resource utilization. Peak year demands, drought contingencies and water for new economic development can be satisfied by short-term water transfers through a water bank. While existing Colorado water law accommodates water banking operations, the water bank concept has not yet been fully embraced in Colorado.
Substantial interest in water banking has resulted in recent studies by the Colorado Water Conservation Board, the Natural Resources Law Center and the Colorado River Basin States.(fn1) Water banks have operated in California, Idaho and other states with some success.(fn2)
A water bank is a mechanism for willing owners of water to lease water to the "bank" for re-lease to "renters" on a short-term basis. The bank, which may be a governmental or private entity, is responsible for facilitating the leasing and for transactional requirements such as obtaining storage, water and financial accounting, and assuring that other water users will not be injured by water bank operations.
A water bank is characterized by flexible, temporary transfers of water without change of ownership. The lists of lessors and of renters of water who participate in the bank may be different each year; however, the bank is capable of supplying water to renters on a multi-year basis.
A water bank involves traditional legal and engineering issues of change of place and type of use, water storage, exchanges, noninjury requirements and interstate river compact compliance. However, because a water bank's participants may change radically from year to year, the legal compliance becomes more focused on protective methods than on the specific legal conditions typical of permanent water transfer decrees.
A water bank meets market, societal and natural resource needs.(fn3) Municipalities (and some industrial and high crop-value agricultural users) must provide for peak year demand and drought contingencies by assuring "firm yield" of their water supplies. Economic development requires that water be available for new users on an almost immediate basis. As a result, municipalities traditionally have purchased rights to water and storage in excess of what would sufficiently supply current, average year demand. Such "excess" purchases could be avoided or postponed if cities were assured of the availability of temporary supply water.
Because of the relatively high cost of transfers of small ownerships of water and the difficulty of transfers of minority ownerships of ditch shares to new use locations, willing sellers (including economically stressed sellers) often cannot successfully arrange a permanent water sale to willing buyers. Such difficulties make the water an illiquid asset, and thus depress small owners' property values.
Historically, cities and other major water rights purchasers have needed to "take over" the control of the ditch company to assure that transfer of the shares they purchased would not be prevented by actions of nonselling shareholders, such as amending articles and bylaws. Such takeover attempts generate substantial community conflict and fear of adverse local economic...
To continue reading
Request your trial