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Colorado provides a good illustration of the complexities surrounding already scarce water supplies in the West. Many climate models predict drying in the central parts of North America. With growing urban demands for water, increasing environmental concerns related to instream flows, and less water to go around, future conflicts over water seem likely to increase in intensity. An examination of existing conflicts related to water transfers in Colorado illustrates some important social impacts that need to be considered when climate change policy is formulated.
Water transfers in Colorado are gradually moving water from irrigated agricultural to urban use. Over the past two decades, cities have purchased water rights on some 60,000 acres (24,300 hectares)[1] of agricultural land (our of some 3 million acres total irrigated land). The transfers are driven by economics. As costs for developing new municipal water supplies have increased, Colorado's cities have hound it cheaper to purchase water rights from nearby agricultural areas. For farmers or ranchers, the sale of water rights has provided a desperately needed financial windfall at a time when the agricultural economy has been severely strained by high debt, poor weather, and low commodity prices. Faced with a sagging rural economy, the farmer who is offered by a city two to five times more than the value of water in agriculture sees a deal that is too good to refuse. For example, landowners in the Arkansas River Basin, who might lease a 40-acre field to a farmer for a profit of $2,500 per year, were able to sell the water rights to that land for $200,000 to the city of Aurora.
It would seem that such water transfers are a win-win situation. With farmers accounting for only 2 percent of the population and contributing 3 percent of economic output, yet consuming 92 percent of Colorado's water, small transfers of water from agriculture seem to offer the right solution to urban water shortages. The acre-foot of water that allows production of about $90 of wheat or $250 of beef will provide 4 years of water for a typical urban family of four. The farmer makes money be selling, and the city gets more than enough water to support a growing population. However, there are losers in almost every water transfer. The losers in Colorado have been the already poor counties and communities left with no future economic base after water sales to cities.
In the seven counties of the Arkansas River Basin in southeastern Colorado (see figure), large amounts of water have already been transferred to urban use. Prolonged droughts in the 1950s devastated the farm economy and triggered the first water sales to the city of Pueblo. In the 1970s and 1980s, there were major sales of water to the cities of Pueblo, Colorado Springs, and Aurora, spurred first by speculatively high water prices and later by economic troubles in the farm economy. By 1985, about 14 percent of the water rights in the seven-country basin had been sold for urban use. The dry climate of this area offers little opportunity for profitable farming unless land is irrigated. The decline in farm production has meant local suffering.
Particularly hard hit is Crowley County, which has seen 85 percent of its water rights transferred to cities. Little of the money received by farmers was reinvested in the local area. Rather, about 60 to 75 percent of the money went to pay taxes and debts of farmers who were already on the verge of bankruptcy. Crowley County already has the lowest assessed value of any Colorado county. Within the next few years, all land that has lost irrigation will be reassessed and the tax base will decline further. The burden of funding schools, local government, and other public services has shifted to the remaining few residents and farmers who chose not to sell their water. Colorado water law allows the transfer of water without regard to secondary consequences within the community. Despite attempts to jump-start the local economy with construction of a new prison, most employees have chosen not to live in the country, and many local businesses display "going-out-of-business" signs. Most of the farms that were once irrigated are now weed-covered and unsuitable even for grazing. The cities of Aurora and Colorado Springs have pledged to revegetate some fields with prairie grasses by providing temporary irrigation and seeding. It is not yet clear how intensively these lands can be grazed. Tens of thousands of other acres may remain weed-covered. Despite the rather bleak outlook, some residents are optimistic and look for opportunities to bring new businesses into the country.
Some workable solutions to conflicts over water between cities and farms are on the horizon. Ever since the Federal veto of the Two Forks Dam in 1990, Denver has been looking for new water supplies to support its growing population. Regional representatives have formed a plan outside "the traditional water development atmosphere." A combination of local utilities, cities, suburbs, farmers, environmental advocates, and the State have formulated a plan that may be appealing to all groups. Denver would purchase water from the South Platte River (currently used only by irrigators and off-limits to Denver), run the waste through an upgraded treatment plant, and then let the farmers use the cleaned-up wastewater for irrigation. This plan could make 50,000 to 100,000 acre-feet available to the City of Denver at much less than the cost of a new dam, although construction of an expensive water treatment facility would be required. Most interest groups are treating the plan as a serious alternative that minimizes losses on all sides. Other proposed solutions include the signing of "dry-year" option contracts between cities and farmers; in drought years, the city pays the farmer to forego planting crops and water is temporally transferred to cities. These arrangements protect urban areas against drought shortages while maintaining long-term agricultural viability.
Climate change could add to stresses on farmers across the western Plains. With the possibility of growing farm problems under a harsher future climate, more and more agricultural water is likely to be sold for urban use. In the past, extended droughts and poor financial returns have triggered abandonment of farming, the sale of water rights, and economic decline in rural communities. The prospect of climate change, raising the possibility that farming may have to be abandoned in large areas of the semiarid West, adds another layer of concern to these third-party effects.
SOURCES: Office of Technology Assessment, 1993; C.W. Howe, J.K. Lazo, and K.R. Weber, "The Economic Impacts of Agriculture-to-Urban Water Transfers on the Area of Origin: A Case Study of the Arkansas River Valley in Colorado, "American Journal of Agricultural Economics, vol. 72, No. 5, December 1990, pp 1200-1204; National Research Council, Water Transfers in the West: Efficiency, Equity, and the Environment (Washington, DC: National Academy Press, 1992); M. Obmascik and P. O'Driscoll, "Colorado Water: The New Harvest," The Denver Post, July 19-22, 1992.