Infrastructure Bill Seen as Way to Pay Farmers to Cut Water Use

Oct. 22, 2021, 10:00 AM

Four states in the drought-wracked West considering whether to pay farmers to cut their water use see federal infrastructure legislation as a possible revenue source.

The $550 billion bipartisan legislation approved in the Senate includes $25 million for the four states—Colorado, New Mexico, Utah, and Wyoming.

“There’s that bucket, and a lot of other buckets, in the federal infrastructure bill that could come into play for drought contingency planning implementation,” said Amy Ostdiek, interstate and federal manager in the Colorado Department of Natural Resources.

The funds would help address a major concern for states in the upper division of the Colorado River Basin that face droughts, wildfires and other climate change effects: Where to get money to pay farmers to voluntarily—and temporarily—cut water use.

The funds would not only pay people for reducing water use but would also help address secondary economic effects that result from the lower usage, Ostdiek said.

Stuck in Negotiations

The infrastructure bill has been stuck in negotiations by the White House and congressional leaders that also involve a second, larger spending package.

Congressional leaders have set an Oct. 31 deadline for votes on the infrastructure bill and the second package, which expands federal aid for social programs such as education, health care and childcare.

Agriculture uses as much as 90% of water in Western states. But environmentalists aren’t expressing resentment over that reality in the context of paying farmers.

“We need all the tools we can get” to fund climate resilience, said Bart Miller, Healthy Rivers Program director for Western Resource Advocates.

Feasibility Investigations

Paying people to cut water use is an option under a 2019 drought contingency plan the four upper division states signed with three states in the Lower Colorado River Basin — Arizona, California and Nevada.

The idea is to pay irrigators to cut back on some water they’re entitled to use. The water instead would flow down the Colorado River and add as many as 500,000 acre feet to the Lake Powell reservoir in northern Arizona and southern Utah. An acre foot of water is roughly what two average households use annually.

Water in Lake Powell eventually flows into Lake Mead in Arizona, the primary Lower Basin storage reservoir.

Because of the severe drought, both lakes are low, imperiling the water source for some 40 million people in the Southwest and the ability of the lake’s dams to generate hydropower.

Money Needed

Colorado alone would faces annual costs of between $3 million to $30 million to pay water users to cut back, Ostdiek said.

“It’s very expensive,” said Gene Shawcroft, general manager of the Central Utah Water Conservancy District. “The value of water continues to go up.”

While states generally know how much water is diverted from rivers onto agricultural land, “the challenge is to figure out how much gets used,” he said. States will need to pay for equipment so they can determine that use amount, Shawcroft said.

The Utah Division of Water Resources has engaged the University of Utah to do an assessment of how valuable a demand management program might be, he said.

“If you talk to five different people about what demand management is, you get six different answers,” he said.

California and Colorado

Water agencies in the lower basin are also funding short-term programs to cut back on agricultural water use.

The Bureau of Land Management, the Metropolitan Water District of Southern California, the Central Arizona Project, the Southern Nevada Water Authority, and the Palo Verde Irrigation District in California formed a partnership earlier this month to fund a short-term agricultural fallowing program in California.

The $38 million program will conserve up to 180,000 acre feet over the next three years, amounting to a three-foot increase in Lake Mead’s water level, the agencies said.

Colorado, which recently rolled out a demand management framework and decision-making roadmap to begin in November, is perhaps farther along than the other upper division states.

Still, some are voicing frustrating with the slow pace of the demand management feasibility investigations.

“It’s a pony race with the upper basin states, all four of them racing along, and then one will stop and eat grass for a little while, or turn around and run backwards,” said Taylor Hawes, Colorado River program director for the Nature Conservancy.

‘Strong Distrust’

The Colorado River Water Conservation District, which represents the interest of water users in western Colorado, presented its own demand management framework — separate from the one the state is developing — at a meeting Tuesday and Wednesday.

The district released the report of a stakeholder group in August saying several Western Colorado users have a “strong distrust” of decision-making and programs driven by state government, and that more must be done in the state to deal with water scarcity than demand management.

“Many do not view the state as representing the best interest of agriculture on the West Slope and instead, are making decisions that are driven by East Slope and municipal interests,” the report said. “The pain has to be shared across sectors and the state.”

Without that, the program will not be viewed as fair, according to the report, “and instead, viewed as agriculture bearing the full burden of a statewide problem.”

Andy Mueller, general manager of the district, said the plan is to help the state move forward, not compete with it.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bloomberglaw.com

To contact the editors responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com; John Hughes at jhughes@bloombergindustry.com

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