the PERC conference

Water Markets and Western Ideologies  

By Matthew Frank, 10-02-07

The Bozeman-based Property and Environmental Research Center (PERC), a non-profit think tank at the forefront of “free-market environmentalism,” held their annual conference for journalists this past weekend in Big Sky. Sixteen of us—folks from Maine to Seattle —convened to consider worldwide water scarcity and contamination problems and how markets can inject incentives to help solve them.

There were a dozen or so presenters, their topics ranging from big-picture issues such as global water supply, climate change, and domestic water quality to the very specific: payments-for-environmental-services schemes in Bolivia , removing dilapidated dams to turn a profit, a market to reduce agricultural nutrient pollution. It’s intriguing stuff for any conservationist, no matter your stance on the reach or limits of markets.

What piqued my interest most, and perhaps most relevant to conservation in Montana , was the discussion of water markets in the West—the idea of selling, leasing or donating water rights for instream use. It’s not a new idea, but it’s one gaining momentum.

Water markets are possible in the West because Western water law, going back a century to the prior appropriation doctrine (basically first come, first served), ties water rights to property rights. Western laws say, generally, that water can only be taken for a beneficial use, and over the past few decades states have begun to recognize that simply not diverting water is, of course, beneficial.

And leaving that water in the stream is becoming more crucial as the West suffers from a near-10-year drought and sees rapid population growth, on top of existing agricultural, industrial and municipal water needs. Plus, as PERC research fellow Brandon Scarborough pointed out in his presentation, Westerners still demand water quality, fish and wildlife habitat, and the recreation and aesthetics water provides.

So, in line with the PERC doctrine, the thought is that we ought to pay the landowner with senior water rights not to use it. It’s simple, and it seems to be working. According to Scarborough , between 1998 and 2005 $300 million was spent to acquire nearly six million acre-feet of water. Here in Montana, which in 2005 made permanent a provision allowing an individual, organization, or the government to temporarily lease water to boost instream flows, more than 300,000 acre-feet were acquired in that time. The Missoula-based Montana Water Trust, one of the handful of Western water trusts leading the way and Montana ’s only, boasts 19 agreements with landowners restoring 75 cubic feet per second to rivers and streams in six Montana watersheds.

What’s it cost to restore water to streams? Between 1998 and 2005, lease rates ranged from 28 cents to $329 per acre-foot.

There seems to be a few fairly significant barriers to water trusts really taking off. First, water leases aren’t tax deductible, like conservation easements. And, as the Clark Fork Coalition’s Brianna Randall wrote in a letter to PERC, water rights themselves are not always secure and legally defined. “Due to the ongoing adjudication process in Montana and the lack of measuring devices on most of the state’s irrigation ditches, it is often difficult to monitor and enforce instream flow transfers.”

And ideological problems exist, too. Matt Jenkins, a contributing editor for High Country News, played devil’s advocate during our round table discussion at the conference and asked whether we should be paying landowners again after they’ve been given water rights and, often, significant subsidies as it is. Is that fair? I don’t know. PERC director Terry Anderson’s retort was, in effect, “You try to tell a farmer or rancher they didn’t come about those water rights fairly.”

Terry’s point is well taken. What we don’t need is another tired feud between ranchers and environmentalists.

But, the ideological splits that develop in just these kinds of discussions showcase the larger issues at hand, including this question that continued to surface with me: Do we want to further the commodification and ownership of one of the West’s most precious resources?

The answer, like most in the evolving West, is still a little muddy.  

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Source:  http://www.newwest.net/topic/article/water_markets_and_

ideologies_of_the_west/C57/L35/