Water transfers are an important way to share a limited resource, especially to help fish and habitats that were historically left with scraps when water rights were parceled out around the West.

The water for such transfers usually comes from farmers, who free up water through some kind of conservation measure. By transferring the saved water, a farmer can help imperiled fish and make some money. Such arrangements are especially important on the Colorado River, which is oversubscribed to serve human demands and also feeds a vast international ecosystem.

These water transfers are difficult to pull off. For starters, many state laws require that water rights be put to a “beneficial use” or be lost. And historically, most state laws did not include environmental functions on the list of beneficial uses.

Because the Colorado River flows through seven states, water transfers can be affected by seven different sets of laws. To help sort through this quagmire, Stanford University’s Water in the West program recently studied and ranked all state laws in the Colorado Basin governing water transfers. The resulting report ranks states on the effectiveness on their water transfer programs, and recommends improvements where necessary.

For a rundown on the report, Water Deeply recently spoke with Leon Szeptycki, an expert on water law and executive director of Water in the West.

Water Deeply: Why are water transfers important to the Colorado River environment?

 Leon Szeptycki: I would say they are important to the environment everywhere in the West. It’s just another tool in the toolbox for people who are trying to restore flows and improve the environment. In specific locations, it’s a really powerful tool because it gives landowners, ranchers, farmers and other irrigators the option to voluntarily leave water in the stream and have it legally protected like any other water right.

The other reason is it can fit into water markets more broadly. These environmental transfers have the potential to serve and enhance not just the environment, but also water supplies and water flexibility in a broader context.

Water Deeply: How often do these kinds of transfers happen?

Szeptycki: It really varies a lot from state to state, in part, because there are different levels of funding in different parts of the West. There are different needs for the water, and the state laws vary a lot in terms of the ease with which you can accomplish these transfers. Some states barely recognize them. In other states, the law is really well tuned to provide the level of review for particular transfer needs.

Every change of water right typically requires some review by a state agency. That review can be very time consuming. Some states just have not had that many of these transfers go through the pipeline. The Colorado Basin states vary. States like Colorado and California have had more than 30 transfers, some states have had only a handful and some have had zero or one transfer.

If you go to the Pacific Northwest, there are very flexible laws that provide lots of options, including really short-term leases and long-term transfers. Both Washington and Oregon have had more than 1,000 environmental water rights transfers.

These environmental transfers represent a fundamental change in western water law. In classic prior appropriations law, you don’t have a water right unless you divert the water from a stream and put it to beneficial use. So it was complicated to think of a water right that would leave water in the stream. About 30 to 40 years ago, some states made their laws more flexible and said you can have a water right under the prior-appropriations system, and that water stays in-stream.

Water Deeply: Given that the Colorado River flows through numerous states that have a patchwork of rules, is there a need for federal legislation to make water transfers easier?

Szeptycki: That’s a good question. I don’t know that federal legislation is necessary. I think the states have to make more progress first. The current standard use of these environmental water transfers is very place-focused. It’s to improve flows at a particular place for a particular reason, like passage into a tributary so fish can spawn.

The next step is to see whether these states can use these transfers as part of a broader program, like agricultural efficiency, to keep water in the stream longer and send the water downstream to enhance the water security of the Colorado Basin as a whole.

Water Deeply: All seven states in the Colorado Basin are a long way from your “perfect” score on water transfers. Some are very far away. What does this tell us?

Szeptycki: I’m pretty hopeful and optimistic. There are some great examples that the Colorado River Basin states can follow. They don’t necessarily have to model what they’re doing overnight on Oregon or Washington. Each state has to have the legal system that works for its water resources, the rest of its legal system and the way that irrigators use water. The critical thing is to keep making progress and learning from experience. Do the deals that are possible under current law and then improve the law to make the transfers work better.

The key thing is to look at each state and focus on what the next step is. I think trying to do a comprehensive reform in one step would be a potential mistake.

Water Deeply: How are these environmental transfers connected to the future of farming?

Szeptycki: Farmers can change their irrigation practices to include more efficient irrigation. It can also include irrigation over less of the season and changing where you take your water out of the system and where your return flows go. All those have potential to improve streamflows in one place or another. This has worked out really well for a lot of irrigators, because sometimes there is government funding available for irrigation improvements. But then they also can augment their revenue through environmental water right sales. So they end up with a more efficient irrigation system, plus an additional source of revenue. That’s happened in Montana, Washington and Oregon, and to some extent in California.

Water Deeply: You looked at Oregon as a benchmark, since it’s considered a leader in water transfers. What are other states lacking in comparison?

Szeptycki: There are some important differences other than the law. There’s some money available in Oregon, for example, under the Endangered Species Act and other programs.

The real strength of Oregon law is it has a real diversity of tools. So whatever an irrigator’s situation is, you can structure a deal and you have enough tools on the table in Oregon to tailor a deal to fit that irrigator’s needs.

Oregon also has a very established process for conserved water. So what happens to water saved when a farmer decreases water use through irrigation efficiency? It’s called a conserved water statute. It provides a really set form for how that saved water is allocated. In many other states, what happens to that saved water is really a complicated issue.

Water Deeply: You found that Colorado and California have good legal frameworks, but few actual transfers. Why?

Szeptycki: There are slightly different reasons, and it’s interesting and complicated in both states.

In Colorado, there are two big reasons. The Colorado process is very clear, but long-term deals have to go through the state Water Court, which is very time consuming and more expensive.

Then the leasing statute that Colorado has, where short-term leases do not have to go through Water Court, is not as useful as a more straightforward short-term water statute.

In California, there was a perception among proponents of these deals that some of the environmental review statutes were very time consuming. Lots of transfers require review under the California Environmental Quality Act (CEQA) and that’s very time consuming. The other thing about California, like Colorado, is it doesn’t have a very good process for short-term leases. What we recommend in California is that the state have a more flexible process for leases that last three years or less, or five years or less.

Water Deeply: Your survey ranked Arizona dead last among the Basin states. So, what’s wrong with Arizona?

Szeptycki: The law is not very well evolved in Arizona. There’s not a lot of guidance or regulations for state agencies about how to make environmental deals happen. So every deal that people want to push has to be built from scratch.

There have been places, like the Verde River, where they’ve done irrigation efficiency and made some efforts to leave water in the stream, and it’s had benefits. But that water doesn’t have the same legal protection as if there was an environmental water lease or some type of water rights transfer.

So what Arizona can benefit from is just a clear set of regulations or guidance or other official framework about what type of information you need. Right now, there’s a statute that doesn’t have a lot of detail, which has produced a lot of uncertainty about how to make deals happen.

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