Rio Rancho, New Mexico, has a dilemma.

My colleague Rosalie Rayburn has been writing about the trials and tribulations of the privately owned Chamisa Hills Golf and Country Club, which has had a lot of both.

In her latest story, Rosalie describes

… a recent request by potential Chamisa Hills buyers Bob Gallagher and Jhett Browne to consider a proposal to set the rate at 20 percent of the potable irrigation rate, or $1.09 per 1,000 gallons, effective July 1.

They asked that the rate remain at 20 percent of the potable rate as those rates increase.

At present, Chamisa pays 47 cents per 1,000 gallons and faces an increase to $3.28 per 1,000 on July 1 when its contract expires, under a rate schedule councilors approved last year.

Gallagher and Browne say they can’t operate the golf course economically at that rate.

By way of background, Rio Rancho currently faces a long term need to buy agricultural water rights as offsets for the groundwater it pumps, because of the way groundwater pumping (which is a junior right) impacts flows in the river (which provide water to senior rights holders).

The opportunity cost associated with the golf course water is therefore the loss of the chance to use the golf course water as an offset, either through aquifer storage and recovery or direct discharge to the Rio Grande.

How should Rio Rancho determine what price to charge the golf course for its water?