In recent years irrigation
districts and canal companies have been forced to examine their operating procedures more
carefully. In large part, environmental concerns precipitated this examination, although
pressure from urbanization has also caused examination
of traditional canal water management practices.
In addition, many of these systems are 50 years
old or more. They need new sources of revenue to upgrade their irrigation systems. Operating costs have increased too. At the same time, farm income has been relatively static in the
intermountain region for many years. This has forced irrigation enterprises to become more
innovative and cost conscious in their management.
There appear to be many untapped opportunities
for irrigation enterprises to improve their business operations, and to address some of
the water reallocation and environmental needs in selected river basins. For instance,
many irrigation enterprises have practiced the renting of water to other entities over the
years. Water rental markets have great potential in the region as an institutional means
of facilitating some reallocation of water out of agriculture into other uses. However,
there are important drawbacks to water rental markets. They may not be good for everyone.
In this brief report, developed from IEMPS
investigations, we will see how one enterprise has been very innovative in working with
environmental groups to manage in-stream flows in a particular reach of the Cache La
Poudre River in Colorado. Another similar innovation involves an enterprise working
cooperatively with an environmental group to improve the quality of return flows into the
Snake River in Idaho.
Finally, we will look at the business
innovation represented by canal consolidation. This may be an important business option
for irrigation enterprises in the future. These innovations represent hidden risks to each
enterprise. These risks often appear to be the major stumbling block to the more
widespread use of such business innovations.
WATER RENTAL MARKETS
Many irrigation enterprises have a
long-standing tradition of renting water. In many canal companies, stockholders rent water
to each other when the allotment per share allocated by the canal company during the
irrigation season is generally more than is needed by a particular farmer. The renting of
water is generally restricted to the irrigation enterprise service area. This practice
typically does not threaten the nonprofit status of the enterprise, since these rentals
tend to occur between stockholders. The canal company may only charge a nominal fee for
administering these rental exchanges. However, the situation might well be different if
blocks of water were rented to specific entities outside of the irrigation enterprise
service area. Legal issues need to be clarified in each state when discussions are raised
about the potential use of local rental markets to satisfy urban, environmental and
recreational demands.
In addition, irrigation enterprises express
concern that such practices might be taken as evidence that the enterprise does not need
its water, resulting in a challenge from federal or state agencies that permanent
reallocation to other uses is therefore warranted an should be pursued aggressively. Other
observers express concern that the practice might lead to the establishment of public use
through long-term evidential non-use. Nevertheless, water rentals to non-agricultural
entities is a real option to meet growing water demands associated with urbanization and
environmental needs, as well as being an alternative source of much needed revenue for
these enterprises.
In passing, it should be noted that internal
rental markets, those occurring or restricted to an irrigation enterprise service area, do
not appear to be affected by appurtenancy. That is to say, if an irrigation district has
traditionally operated under the rule that water cannot be separated from the land, this
generally presents no problem for water rental markets. What is being rented out is the
obligation to pay the assessment on the water that is attached to a specific piece of land
for a specific period, say for an irrigation season. The water is moved from the renter to
the person(s) renting during the term of rental only. No permanent transfer in ownership
occurs in the types of rental markets being alluded to here. Local rental markets are
administered by irrigation enterprises, and rules and regulations for this administration
are governed by their bylaws. Where they have been found, these rental markets work well,
and they are highly valued by irrigators. Water rental markets help move water to its most
beneficial use. They may encourage solutions to environmental issues as well.
PARTNERSHIPS
As the polarization between the environmental
community and irrigated agriculture has intensified, an important business innovation that
has taken place is the development of partnerships to resolve joint problems over water
management. As these efforts have increased throughout the West, it has become apparent
that there are many more opportunities for partnerships such as the one to be discussed
here.
The larger business community of irrigation
enterprises generally tends to exhibit a robust and flexible approach to management
changes that meet a variety of new water user interests, and it is usually in their best
interest to do so. However, they are reluctant to engage in new management ideas if they
are approached with insincerity and tactlessness in a way that does not recognize them as
businesses, or if they are needlessly threatened.
Attempts by both federal and state agencies,
and non-governmental organizations or similar nonprofits in the environmental area, to
work out water management programs to provide stream flow maintenance, or to address
wildlife and wetlands issues, have succeeded where many observers thought they could not
succeed. Those that have succeeded have done so through carefully crafted partnerships.
Those that have failed appear to have experienced the entry of new members to the
negotiation table at the last minute, or involved little understanding of the nature of
the local water culture or the historical development of the area. Attention to the latter
is believed to be particularly vital to any environmental program's success. Irrigation
enterprises must be treated as any other business when it comes to changing the use of
their assets, of which water is their most important.
The approach used by the The Nature Conservancy in a number of instances throughout
the West appears to express a philosophy of working within the existing legal framework
and management regime of irrigated agriculture. This often involves directly participating
as a shareholder in companies, or in other words, taking the role of another water
customer, rather than entering the partnership as some organizational entity believing it
possesses an intrinsically more worthwhile value system.
Attempts by organizations or other entities to
be partners with irrigation enterprises, with the idea that somehow they are more
important to the public good than irrigated agriculture, are generally doomed to failure.
On the other hand, organizations or entities that express a desire to cooperate and forge
new kinds of water uses that enable the irrigation enterprise to improve its financial
position and operating efficiency, while at the same time meeting new environmental needs,
represent efforts that truly improve the use of water resources in the West.
Partnerships between Federal and state
agencies, or non-governmental organizations, and irrigation enterprises tend to be
successful when efforts are made by both parties to seek win-win solutions, rather than
seeking leveraged solutions implying forceful change or threatening lawsuit action.
Win-win partnerships tend to occur when non-agricultural interest groups explore
opportunities first with local irrigation enterprise governing boards. In turn, these
governing boards make an attempt to keep in tune with changes occurring around them, and
attempt to anticipate these changes.
Case Study #1 - The North Poudre Irrigation Company
Case Study #2 - The North Side Canal Company
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