Kathryn Sorensen & Sarah Porter, Kyl Center for Water Policy, Morrison Institute for
Public Policy, Arizona State University; John Fleck, Utton Transboundary Resources
Center, University of New Mexico School of Law
Colorado River Basin governance is increasingly struggling with a deep question in water management: When we reduce our use of water, who gets the savings?
If I install more efficient irrigation equipment, should I get credit for the saved water to expand my acreage, or save the water in an upstream reservoir as a hedge against next year’s drought? If I tear out lawns, can I use the saved water to help build the next subdivision, or save the water in an upstream reservoir as a hedge against that next year of drought?
Or should the savings contribute, not to my own resilience and well-being, but to the resilience and the well-being of the system as a whole by simply reducing overall water use?
In a deeply insightful 2013 book, British scholar Bruce Lankford bestowed the unfortunately wonky name of “the paracommons” to this question, and it dogs water policy management around the world.
This issue has been lurking in Colorado River management for a long time. Should we create legal structures that allow users to bank the savings for their own use later? Or should the reductions benefit the health of the system as a whole? There are advantages and disadvantages to both approaches, and we need to design new rules for managing the Colorado River with our eyes open on this question.
Assigned Water
In a new paper, we explore the implications of the two paths for the management of a post-2026 Colorado River.
One is to incentivize conservation by giving water users the chance to bank saved water for later use. Known most commonly as Intentionally Created Surplus (ICS), and more broadly in a series of increasingly creative implementations as “Assigned Water,” this creates short term savings.
The other involves permanent reductions – “System Water.” Water use is reduced for the benefit of the Colorado River as a whole.
In more than a decade of experimentation with these policy tools, we have seen the results. Investment in Assigned Water, attractive to water managers because of the allure of getting their water back, has crowded out investment in the more durable System Water reductions that will be needed to bring the Colorado River into balance.
As we develop new operating rules for the river, we need to be mindful of the differences involved.
Assigned Water does not solve the problem of overallocation because when it is deployed we are borrowing against our own bank. Enduring solutions on the river can only be found by addressing overallocation.
- Assigned Water creates critically important operational flexibility; it allows its owner to either forgo water deliveries in one year—or pay someone else to—and take delivery of that water during another potentially desperate time.
- Assigned Water is generally insulated from shortage, forfeiture and abandonment.
- Protection from shortage and forfeiture has value; Assigned Water creates individual resilience for its owner. Because of this, the availability of Assigned Water appears to crowd out investment in collective resilience in the form of System Water.
- In conversations about post-2026 operations negotiators are contemplating extending, enlarging and/or enhancing Assigned Water and/or creating an operationally neutral form called Top Water. In any form, Assigned Water lives outside of the existing priority system. In this regard, the conversation involves the reallocation of water in Lakes Powell and Mead.
Critics of the West’s priority system of water delivery can rejoice—nearly 40% of the water in Mead in 2023 was Assigned Water, meaning that Assigned Water is replacing priority to a significant degree. But is the priority system like capitalism in that it has its warts but the alternatives are far worse? As the expansion of the rights of municipal water providers, irrigation districts, foreign nations and tribes to own even more and different kinds of Assigned Water is contemplated for a post-2026 world, consideration should also be given to how these changes may also inure to the benefit of environmental non-governmental organizations, hedge funds and water speculators. Those who share John Wesley Powell’s fears will understand the implications because the expansion of Assigned Water in Lakes Powell and Mead may bring about the ultimate divorce of priority-based water rights from arid lands in the Colorado River Basin.
There are important elements of transparency and fairness at play. The large, powerful players on the River received Assigned Water through negotiations not available to others—meaning, there was no open bidding process or invitation to smaller entities to acquire this valuable water. Apparently, there still isn’t. Thought ought to be given to those other stakeholders—smaller cities, farmers, tribes and others—who have made investments and built economies based on the priority system. Imagine a restaurant that operates on a first-come-first-serve basis and a hungry patron who waits patiently in line for the doors to open only to be told that the rules changed while he was waiting and all of the reservations have been claimed through a process from which he was excluded.
It is helpful to continue to deploy a tool as flexible and alluring as Assigned Water, particularly in the form of operationally neutral Top Storage, so there’s no need to throw the baby out with the bath water. A reasonable path forward may be to allow the creation of Top Storage with appropriate guardrails while including a 50% cut for System Water. Post 2026, Assigned Water will be so valuable that entities likely will be willing to take a big haircut to get it, and such a required contribution solves the problem of developing enduring funding for System Water to a significant degree. Maybe ultimately environmental non-governmental organizations, hedge funds and water speculators get a piece, but if so, it will be at the price of protecting and respecting the priority system upon which so many depend.
Thoughtful, as always. Top Storage is a logical addition to the solutions. It would at the least create some water to use for the water deals that were made in the past. Water for Tribal, Mexico, (treaty uses) and other post compact users.
The unspoken, but important, part of the conversation is stating priorities to HOW the water (assigned and priority) is used. Food production, Urban water, Eco-benefits, treaty water for tribes and Mexico, etc.
If water is treated as a commodity, or sold to highest bidder, we will end up with cities and urban developers with the bulk of the water, instead of in the current priority systems giving much of of the water to food production. We need water for the “new” uses outside of the Priority water such as Treaty use, and Ecological Use.
Top Storage could be the source for these uses.
They say areas that are increasingly hot, are increasing at an ever faster rate. That includes the Col Riv Basin and surrounds. When I ask what is the biggest problem we all face, it is global warming. Not the river. More development, both communities and ag, speeds up GW. In the meantime, it makes sense to reduce use as much as possible. There is a concept called “degrowth” that goes back to the 60s.
In a study I just saw they determined that AC use in the southwest was almost everyone. Which increases air temps. That uses a lot of electricity. The authors pointed out the danger of a grid shut down right when the temps are the hottest. People begin to die in very large numbers. More than hospitals can take.
It strikes me that an ultimatum is needed. Much less water use. And have people leave the SW to the greatest extent possible before the situation is desperate.
We should be planning these moves now on the national level. Not something we have ever done. Probably not in the 2025 plan.
Thank you for this posting.
Reading prompts a question: Have strategies in the CRB, as internationally, to promote private-sector investment in and leadership of water policy opened the door to 1) unregulated, unethical speculation in water, and 2) consensus that public participation in decision-making about dwindling water is increasingly unnecessary?
There seems to be two main ways of converting Assigned water into System water :
– upfront taxation, described in the post
– negative interest rates, which would convert X% of assigned water to system water periodically, and could be justified by evaporation and seepage : storing water has a cost, and some of cost is that some of the water disappears
The two mechanisms could be combined to create a range of assigned waters from “short term assigned water” (low upfront taxation, high negative interest rate : useful to hedge against a drought next year) to “long term assigned water” (high upfront taxation, low negative interest rate : useful to bank savings for a future long drought).
And current ICS holder would get to choose how to convert their existing portfolio, but would be taxed one way or another.
Surely not the first to think to any of this…