Water Banks in the West

274 Pages·2014·13.96 MB·English

University of Colorado Law School
Colorado Law Scholarly Commons
Getches-Wilkinson Center for Natural Resources,
Books, Reports, and Studies
Energy, and the Environment
1994
Water Banks in the West
Lawrence J. MacDonnell
Charles W. Howe
Kathleen A. Miller
Teresa A. Rice
Sarah F. Bates
See next page for additional authors
Authors
Lawrence J. MacDonnell, Charles W. Howe, Kathleen A. Miller, Teresa A. Rice, Sarah F. Bates, and University
of Colorado Boulder. Natural Resources Law Center
Tis book is available at Colorado Law Scholarly Commons: htp://scholar.law.colorado.edu/books_reports_studies/58
LAWRENCE J. MACDONNELL, CHARLES W. HOWE, KATHLEEN A.
MILLER, TERESA A. RICE & SARAH F. BATES, WATER BANKS IN
THE WEST (Natural Res. Law Ctr., Univ. of Colo. Sch. of
Law 1994).

Reproduced with permission of the Getches-Wilkinson
Center for Natural Resources, Energy, and the
Environment (formerly the Natural Resources Law
Center) at the University of Colorado Law School.
WATER BANKS IN THE WEST
1 Lawrence J. MacDonnell
-. Charles W. Howe
[ Kathleen A- Miller
Teresa A. Rice
0* Sarah F. Bates
Natural Resources Law Center
University of Colorado
School of Law
August 31, 1994
FOREWORD
This report is the collaborative product of a group of researchers. Dr. Charles W.
Howe provided the conceptual analysis relating to water bank design in chapter 4. Dr.
Kathleen A. Miller, of the National Center for Atmospheric Research, contributed the
California Water Bank analysis and most of the discussion related to third-party effects of
water banking. Teresa A. Rice prepared the sections on water banks in Idaho and
Texas, and the proposed Lower Colorado River Interstate Water Bank and she also
contributed to the section on third-party effects. Sarah F. Bates, now with the Grand
Canyon Trust, drafted most of the material related to groundwater recharge. The project
benefitted greatly from the work of a number of students at the University of Colorado
School of Law: Roberta Hoy, class of 1994; Ellen Cadette, class of 1996; Beth Doherty,
class of 1996; Sharyl Kammerzell, class of 1996; Dan Reimer, class of 1996; and Mary
Beth Searles, class of 1997.
We received the cooperation and assistance of water managers from around the
West. At the outset we surveyed state water agencies and the Western States Water
Council to determine the extent of water banking activity in the West. In connection
with our detailed analysis of water banks in Idaho we were greatly aided by Ron Carlson,
Phil Rassier, and Glen Saxton. Steve Macaulay provided substantial assistance regarding
the California banks, as did Richard Howitt, Ray Hoagland, and Dave Marty. Daniel
Beckett provided valuable assistance regarding the Texas bank. Gerry Zimmerman made
important contributions to our discussion of the proposed Lower Colorado River bank as
did Walt Muir and Bob Johnson. Professors Tom Rutherford and Mark Cronshaw
commented on the analysis of water bank design, and Dr. Michael Walsh provided
valuable insights based on his work for the Chicago Board of Trade. The authors, of
course, remain responsible for any errors in the report itself.
The research is sponsored by the U.S. Geological Survey (USGS), Department of
the Interior, under USGS award number 1434-92-G-2253. The views and conclusions
contained in this document are those of the authors and should not be interpreted as
necessarily representing the official policies, either expressed or implied, of the U.S.
Government.
This publication is a product of the Natural Resources Law Center, a research
and public education center at the University of Colorado School of Law. The Center
maintains its position of neutrality on issues of public policy in order to safeguard the
intellectual freedom of its staff and those with whom it associates. Thus, interpretations
or conclusions in Natural Resources Law Center publications should be understood to be
solely those of the authors and should not be attributed to the Center, the University of
Colorado, the State of Colorado, or any of the organizations that support Natural I
Resources Law Center research.
i
Larry MacDonnell
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USING WATER BANKS TO PROMOTE MORE FLEXIBLE WATER USE
Chapter 1 Water Banks: An Introduction
Chapter 2 Water Bank Experience In The West
2.1 Water Banks in Idaho
2.1.1 History of Water Rentals in the Upper Snake Basin
2.1.2 Current Water Banking Program in Idaho
2.1.2.1 Local rental pools
2.1.2.2 Storage vs. natural flow water rights in Idaho
2.1.2.3 Special status of water assigned to the bank
2.1.2.4 Limitation on out-of-state or out-of-basin transfers
2.1.2.5 Irrigation use preference
2.1.2.6 Deposits into the bank
2.1.2.7 Rentals from the bank
2.1.2.8 Water bank pricing
2.1.2.9 Lease terms and cany over
2.1.2.10 Addressing water rights and third party injury issues
2.1.2.11 Bank administration
2.1.3 Shoshone-Bannock Tribal Water Supply Bank
12 Emergency Drought Water Banks in California: 1991, 1992 and 1994
2.2.1 Introduction
2.2^ The 1991 Bank
2.23 The 1992 Bank
2.2.4 The 1994 Bank
2.2.5 Assessment of the Emergency Drought Water Banks
Appendix. Fallowing Contracts
2.3 The Texas Water Bank
23.1 Bank Administrator
23.2 Bank Deposits
2.33 Withdrawal and Use of Bank Water
23.4 Consideration of Impacts
23.5 Bank Finances
2.3.6 Public Concerns
23.7 Conclusion
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2.4 Lower Colorado River Interstate Water Bank
2.4.1 Background i
2.4.2 Proposed 1991 Colorado River Agreement
2.4.3 1991 Proposed Interstate Water Bank ,
2AA 1994 Lower Basin State Bank Discussions \
2.4.5 Bureau of Reclamation's Draft Regulations for the Lower Colorado -1
River Basin ^
2.5 Survey of Other Banks in the West i
2J5.1 Introduction _
2.5.2 State Controlled Storage in Kansas
2.5.2.1 State Water Marketing Program
2.5.2.2 Water Assurance Program ~
2.5.3 Water District Banks i
2.5.3.1 The Dolores Project Bank
2.5.3.2 District banks in Washington State ^
Chapter 3 GROUNDWATER RECHARGE AS A WATER STORAGE AND SUPPLY OPTION i
3.1 Introduction to Groundwater Recharge ^
3.2 Western State Programs Concerning Groundwater Recharge
3.2.1 Alaska
3.2.2 Arizona
3.2.3 California
3.2.4 Colorado
3.2.5 Hawaii
3.2.6 Idaho
3.2.7 Kansas
3.2.8 Montana
3.2.9 Nebraska
3.2.10 Nevada
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3.2.11 New Mexico
3.2.12 North Dakota
3.2.13 Oklahoma
3.2.14 Oregon
3.2.15 South Dakota
3.116 Texas 1
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3.2.17 Utah
3.2.18 Washington
3.2.19 Wyoming i
3.3 Examples of Groundwater Recharge Arrangements
3.3.1 Groundwater Recharge in the San Joaquin Valley: Kern Water Bank
and Arvin-Edison/Metropolitan Water District Arrangements
3.3.1.1 Description of the basin „
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3.3.1.2 The Kern Water Bank
33.1.2.1 Terms of the agreement
3.3.1.2.2 Status
33.1.23 Unresolved issues
33.13 Arvin Edison/Metropolitan Water District arrangement
33.13.1 Terms of the agreement
33.13.2 Status
3.3.133 Unresolved issues
3.3.1.4 Orange County Water District, California
33.1.4.1 Description of the basin
33.1.4.2 Nature of the agreement
33.1.43 Parties involved
33.1.4.4 Terms of the assessments
33.1.4.5 Physical requirements
33.1.4.6 Status
33.1.4.7 Unresolved issues
33.1.5 Las Vegas Valley Groundwater Recharge, Nevada
33.1.5.1 Description of the basin
33.1.5.2 Nature of the arrangement
33.1.53 Physical requirements
33.1.5.4 Status
33.1.5.5 Unresolved issues
33.1.6 Arizona-California Colorado River Water Storage Agreement
33.1.6.1 Characterizing the agreement
33.1.6.2 Establishment of the account
33.1.63 Operation of the account
33.1.6.4 Credits to the account
33.1.6.5 Withdrawals from the account
33.1.6.6 Participation by other parties
Chapter 4 ISSUES IN THE DESIGN AND OPERATION OF A WATER BANK
4.1 Fundamental Issues in Designing a Water Bank
4.1.1 General Issues
4.1.2 Issues Specific to Water Allocation Mechanisms
4.1.3 Detailed Issues Relevant to the Design'of Water Banks
4.2 Issues Underiying"Supply (Offers to the Bank to Sell) and Demand (Offers
to Buy)
4.2.1 Behavior of the Agricultural Seller of Water
4.2.2 Factors Underlying the Demand for Water
43 Alternative Methods of Water Bank Organization
4.3.1 The "Bulletin Board Bank"
4.3.2 Standing Offers to Buy and Sell at Fixed Prices
4.33 Sealed-Bid Double Auctions
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4.3.4 Repeated Sealed-Bid Auctions Through the Season
4.3.5 Auctions for Water Rights
4.3.6 "Contingent" Water Markets
4.3.7 Future Markets
4.3.8 Other Market-Making Activities n
43.9 Guaranteeing Performance on Trading Contracts I
4.4 Conclusions Regarding Practical Water Bank Design
Appendix 4A. Variability of Water Supply and the Farmer's Willingness-to-Sell
Appendix 4B. Model of Urban Water Demands
4.5 Third Party Effects of Water Banking i
4.5.1 Types of Third Party Effects
4.5.1.1 Impacts on other water users
4.5.1.2 Local economic impacts
4.5.1.3 Impacts on environmental values ^
4.5.2 The Problem of Measurability j
4.5.3 Options for Addressing Impacts
4.5.3.1 Impacts on other water uses -^
4.5.3.2 Local economic impacts * j
4.533 Impact on environmental values
4.5.4 Generalizations and Implications <--j
4.5.4.1 Cross-cutting generalizations
4.5.4.2 Impacts on other water rights
4.5.43 Local economic impacts
4.5.4.4 Environmental impacts
Appendix 4C. Rand Study Tables
4.6 Creating Water Banks: Some Recommendations
4.6.1 State Authorization
4.6.2 Bank Design and Operation
4.6.3 A State Bank
Chapter 5 APPLYING OUR PROPOSED FRAMEWORK
5.1 Interstate Lower Colorado River Water Bank
5.2 The Texas Water Bank
5.3 The Fort Lyon Water Bank
5.3.1 Summary of Proposed Bank
53.2 Comparing the Proposal and the Framework
Chapter 6 SUMMARY AND CONCLUSIONS
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