Chapter 9B PRIVATE INVESTMENT OR SPECULATION? ARE THEY THE SAME AND DOES IT MATTER?
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PRIVATE INVESTMENT OR SPECULATION? ARE THEY THE SAME AND DOES IT MATTER?
ALEXANDRA L. DAVIS has almost 25 years of water resources law, management and policy experience focused mostly in Colorado. Alex joined Aurora Water in June 2015 to lead the Water Resources Division of the Water Department. The Water Resources Division is responsible for the acquisition, maintenance and protection of Aurora's water supply, the creation and implementation of water supply and storage projects, water rights operations and watershed health. Prior to coming to Aurora Water, Alex spent some time in private practice at the firm of Vranesh & Raisch and the Denver-based strategic services and communications firm, GBSM. Before that, she spent many years with the State of Colorado where she served in multiple leadership capacities in different agencies including the Department of Natural Resources, the Attorney General's Office, the Governor's Office, and Colorado Parks and Wildlife. She has also served on numerous boards and committees including the Colorado Work Group to Explore Ways to Strengthen Current Water Anti-Speculation Law, the Colorado Water Center Advisory Board, Colorado Water Trust Board, InterBasin Compact Committee, Colorado Ground Water Commission, Colorado Water Conservation Board, Western States Water Council, Governor Ritter's South Platte Task Force, Colorado Foundation for Water Education Board and the Colorado Supreme Court Water Rules Committee. All of which is a complicated way of saying she is very into water issues and has been around for a while (which is much better than saying "getting old"). She is a graduate of Pitzer College in California and the University of Colorado, School of Law. Alexandra loves being with her family and being outside. While she does love river trips, oddly enough, for living in a landlocked state, her favorite place is on the seashore.
Much of this paper is pulled from the SB 20-048 - Report of the Work Group to Explore Ways to Strengthen Current Water Anti-Speculation Law submitted by that Work Group on August 13, 2021 to the Interim Water Resources Review Committee of the Colorado General Assembly. I was a member of the Work Group and participated in the creation and drafting of the report. The Work Group did an excellent job reviewing the historical context of anti-speculation law in Colorado and whether it would apply to what we termed Investment Water Speculation. Rather than try to paraphrase or redo work already done, I choose to reuse the excellent work done and give credit to all the members of that group,2 with special credit to the legal subcommittee of the Work Group who produced the section on anti-speculation history and law used herein. Those authors are Scott Steinbrecher, Steve Leonhardt, Peter Fleming, Peggy Montano, Adam Reeves, Drew Peternell and Justice Greg Hobbes.
The General Assembly has become increasingly concerned that private investors were and are seeking to acquire water rights solely to realize significant profit. Thus, in 2020, the General Assembly passed SB 20-048 establishing a group of water experts charged with exploring ways to strengthen existing water anti-speculation law.3 Some may question the need for such exploration finding that there is no harm in seeking to profit from water rights. Others are concerned for a variety of reasons including the fact that water is a critical resource. In the West, it is a scarce critical resource. You, I, all life must have it every day. And there is no substitute. As such, there is an inherent unease with the idea that water could be controlled by a few wealthy people. Good governance requires that such a resource be accessible to everyone on as equal terms as possible.
Moreover, utilities that provide drinking water are what economists call natural monopolies. Water treatment and distribution systems are expensive. Start-up costs associated with establishing utilities are substantial and thus a strong deterrent for potential competitors.4 Unlike other consumer goods, any particular business or home can be served by only one water provider. And the consumer does not have choice in who their water provider is. Thus, whether the profit is realized through the sale of water to a water provider or by being a water provider, the money creating the profit margin the private investor seeks comes from the citizens of the communities, who end up paying a higher price for their drinking water.5 The concerns may be summed up as, "should citizens pay an increased cost for a critical resource that is owned by the State, by the public, solely to allow a small group or individual to profit?"
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Colorado Courts and the Colorado General Assembly have time and again determined that citizens should not pay that increased cost. The history of Colorado's Anti-Speculation Doctrine demonstrates that in Colorado the idea of acquiring water rights solely to profit from the further sale of the water...
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