Running
Y Ranch Lodge
Klamath Falls,
June 8, 2004
PURPOSE
Mark Twain said, "Whiskey is for drinkin', water is for fightin'," and the latter has certainly been true in the Klamath basin. Like nearly all disputes, those in the Klamath result from unclear property rights. If property rights could be clarified, market approaches could help resolve some of the fighting. Increasingly, markets are helping allocate water for agricultural, municipal, and environmental uses.
RESOLVING
CONFLICTS
Water
marketing can release the creative power of individuals..., enabling water users
to deal with allocation problems specific to their demands and their local
environmental constraints.
--Terry Anderson and Donald Leal
Free Market Environmentalism
"It is possible, of course, to do nothing and let things rumble along as
they have in the Klamath basin. The costs, however, will be high. Maintaining
the status quo means declining land values, loss of agricultural productivity,
broken contracts, more political interference, reduced property tax revenues and
local government services, and reduced income for the region. Instead, the
Klamath basin could be a beacon for water policy in the West. By clarifying
water claims and encouraging voluntary exchanges, policy makers have an
opportunity to avoid future crises in the Klamath even in times of drought. With
the demand for water use between competing interest groups only growing, the
improved paradigm of secure property rights and voluntary water transfers offers
the best hope for replacing confrontation with cooperation.
—Roger
Meiners and Lea-Rachel Kosnik
"Restoring Harmony in the
PERC Policy Series, PS-27
SPEAKERS
Terry
Anderson, PERC
Leslie Bach, The Nature Conservancy
Mark Campbell, Jeld-Wen Timber & Ranches
Ron Cole, Klamath Basin National Wildlife Refuges
Allen Foreman, Klamath Tribes
Jim Huffman, Lewis & Clark Law School
Steve Kandra, Klamath Water Users Association
Dan Keppen, Klamath Water Users Association
Jeff Mitchell, Klamath River Inter-Tribal Fish & Water
Fritz Paulus, Oregon Water Trust
Mark Stern, The Nature Conservancy
Douglas Whitsett, Water for Life
Joe Whitworth, Oregon Trout
AGENDA
REGISTRATION
WELCOME
AND INTRODUCTIONS
Terry Anderson, Executive
Director, PERC
Terry Anderson – PERC Executive Director
Mr. Anderson spoke about a market approach to water rights and using cooperation to resolve conflicts.
His
view of the
“Historically, the tribes didn’t use much water but when they did, they asserted the Winters Doctrine”
As cities grew, irrigation, recreation, environmental – all needed water – then the fights started over water rights. Do farmers and ranchers have to pay all the costs of environmental problems? “The Federal government isn’t going to do it, the people here on the ground are going to fix it.”
“(Just) who has what rights? Figuring it out is not going to be easy. It’s important to go through the adjudication process even though it’s not a simple process and takes time.”
“What’s the value of water? For recreation, endangered fish, urban use, and farming? Forming markets is difficult when we don’t know the values. And who sets the price?”
“How do you deal with 3rd party interests? Do they have a say? (Environmental groups have 3rd party interest.) “We’re not here to get married, we just want one dance.” “The game has changed since 1990 and property right solutions have changed.”
(Environmental groups) “Using force and persuasion on the other groups to do what we want using political cards which leads to win-lose for sure. This road is filled with potholes.” “There are cooperative ways to solve conflicting uses.”
WHO
HAS WHAT RIGHTS?
Panel Discussion:
Leslie Bach
Allen Foreman
Steve Kandra
Douglas Whitsett
Kandra – Klamath Water Users Association, Foreman – Chairman, Klamath Tribes, Whitsett – Water for Life, Bach – The Nature Conservancy
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What
has been done? |
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What
has been adjudicated? |
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What
is the baseline? |
Kandra: “The guy with the biggest hammer takes the water.” “Farmers are the true stewards of the land.” “It’s the lands water!”
The
Klamath Project farmers either use “direct diversion or recovery and reuse.”
Before the Project was built, “600,000 acre-feet of water would flow
into
“Conservation on my farm is a big experiment and some programs don’t work for me.” Concerning soil: “If you just apply enough water to make things grow, bad things happen to the soil. (If you use) deficient irrigation . . . my farm has sunk 12 inches in places and I started with level fields.”
“Rural communities and their culture are worth preserving.”
“Get the most use you can out of a bucket of water.”
Foreman: (Mr. Foreman provided his statement for inclusion in my notes. BH)
Statement of Allen Foreman for PERC conference
I appreciate the opportunity to present the Tribes views on
the water problems in the
The
For the past four decades we have seen those same resources
diminished greatly. So greatly in
fact that it has become impossible to provide for the basic needs of our people.
Once rich marshlands that contained thousands of acres of wocus as well
as waterfowl which blackened the skies over the Klamath Basin, provided food for
our people; both are now nearly gone.
Salmon, which once used the headwaters of the
All of these things are a commodity to us, not unlike
the commodities produced by the agricultural community.
The difference is that our commodities are consumed directly.
When I hear of the problems facing the agricultural community and the loss of your livelihood, I sympathize with you. Our people can identify with your concerns, we have been there for decades.
It is not the desire of the Klamath Tribes to shut down
agriculture nor is it our desire to infringe upon the rights of others.
What we ask is that you recognize that our right to a livelihood is as
great as your own. That our
commodities and resources are as valuable as yours.
In order to understand the
*In the Treaty of 1864 the Tribes were guaranteed the water
needed to support our fisheries and other resources. We gave up twenty million
acres of land for this guarantee.
*In the early 1900’s the government began the Klamath irrigation
project which involved the removal of two large lakes,
*For nearly a century Oregon has been issuing water permits without
regard for Tribal water rights or the promises made to the Klamath Project, and
until recently without regard for the natural health of the rivers, lakes and
marshes.
*Then the government allowed their agencies, the Forest Service, National
Park, and the US Fish and Wildlife to claim the same water, again without regard
to the earlier promises.
The Tribes had to go to court several times to reaffirm our
rights; the courts have upheld those rights.
There are basically two questions here today.
Who has what rights? And
second, what is the potential for marketing water?
I submit to you that for the Klamath Tribes the problem and
or solutions are a bit more complex.
A major goal in any solution must be restoring and
sustaining a healthy and functioning system to support multiple uses.
*We need to repair damaged riparian corridors, so water quality and
habitat can improve for fisheries.
*We need to reduce demand on the system through a program that fairly
rewards the agricultural community for retiring land, so the remaining lands can
be sustainably farmed.
The Basin will not regain its health by treating symptoms
while avoiding the causes of our water problems.
We need to restore nature’s productive capacity in the
Not surprisingly the current crises is a predictable result
of the federal government making more promises than it can keep.
Those of us who must face the consequences of those empty
promises cannot build a future by turning on each other.
The fisheries, the farming communities, the Klamath Tribes culture and
economy are all at risk.
We need all parties to work together so that all of us who
live in the
As to who has what rights.
That eventually will be determined by the legal system, unless we can
arrive at a stipulated agreement beforehand.
Through the adjudication process the courts will only decide as to the
quanity based on a seniority system. We
will still have a broken system with poor water quality with little means to fix
the problem. This will not relieve
the ESA requirements and most certainly will do nothing for tribal trust
responsibilities by the government. Our
fisheries must be returned to harvestable levels.
“The federal court in
Again I remind you that we have lost the subsistence use of
our succor fisheries for nearly two decades.
The pinch of poverty and hunger are none the less severe
because the person who has taken your means of subsistence has done so under
cover of law and appearance of legal right.
Our fish still represent meaning and relationships so old
and tenacious that even while we can no longer fish today, we will fight to
preserve our rights in the rivers and streams with which they are traditionally
connected. Our fishing is the
heritage of hundreds of years of use and development.
It is a stronghold of who we are as Indians.
The importance of fishing for us today is as real as it was for the
treaty signers, and for those before them.
There exists a misconception that the tribes are in an
“era of environmental conscience”. In
actuality, there exists a conscience toward the reestablishment of a spiritual
covenant with the earth by the tribes. One
other aspect of the moral issue, which even concerned non-Indians tend to
ignore, is the spiritual meaning of fishing among Indians today.
This is an integral part of our whole artistic, religious, economic and
social life.
In conclusion it is not about dollars and cents to us but
about a livelihood, the basic ability to feed and sustain our families.
Subsistence harvest is not only a right but also a way of life with us,
no less important than a crop to agriculture.
The
Water marketing can be a useful tool in solving the basins
water shortfalls, but must be kept in context as part of an overall solution.
I am optimistic that if we work together, we can assemble the tools to make this work for everyone.
Whitsett:
(Whitsett provided his entire
speech for inclusion in my notes, BH)
Western
Water Law
According
to assessor records in
From
a lay perspective, a water right is somewhat analogous to both an easement and
to a mineral right.
Like
an easement, it confers the right to use a certain amount of water, for a
specified beneficial purpose, from a specific source, at a specific site, at a
specified maximum rate of use, at a specified time, without waste, and without
injury to other priority water right holders.
Like
a mineral right, it allows for the partial or total consumptive use of the water
up to the duty of the water right. Further, if the water right is separated from
the land, the water, like oil or like gold, may be exported from the land for a
profit. However, like the consumptive use of a mineral right, the land is
devalued for that purpose forever.
The
first people to put water to beneficial use developed ownership in a right to
use the water for that purpose. A priority date of that ownership of use was
established by the first such beneficial use.
The
priority date was dependent upon continuous use of the water for the same
purpose.
A
change in beneficial use required either a change in date of priority, or a
legal certification of the change in use.
When
an irrigation water right is transferred to beneficial in-stream use, the State
owns that increased flow of water in the stream. In essence, the water is
returned to the commons.
In
the past, lack of water distribution infrastructure often prevented the most
efficient use of the water for irrigation.
Enter
the Reclamation Act
Both
the State and landowners ceded water rights to be held in trust by the Bureau of
Reclamation for more efficient irrigation use, but significantly, not to a
different use. In purpose, the water rights were pooled to promote more
efficient distribution and application of irrigation water.
The
Federal government then built irrigation projects to efficiently distribute
available water for irrigation purposes. In the case of the Klamath Project,
this efficiency is near 95%.
Water
rights were redistributed to be appurtenant to the expanded acreages made
possible to irrigate by the federal project. The federal government neither
owned the water or the water right. The state owned the water and the owner of
the land owned the water right.
This
concept was affirmed by the U.S. Supreme Court in
This
Congressional Act did not change the beneficial use nor the concept of water
right ownership being appurtenant to the irrigated land: rather, it only
facilitated the more beneficial distribution of the water for irrigation.
These
landowners were then responsible to pay the Federal government back for the
construction costs of the project. This repayment was completed by the Klamath
project irrigators.
Regarding
Tribal Trust
When
the Tribes of the
The
federal courts have determined that those reserved rights include an in-stream
water right with a priority date of “time immemorial” sufficient to support
the retained rights to hunt, fish, and gather as they were being exercised at
the time of final termination.
The
federal courts have further ruled that when the federal government purchased the
Tribal lands, the Tribes retained ownership of the water rights that support
their reserved rights to hunt, fish and gather.
The
state of
Regarding
the Clean Water Act and Endangered Species Act
These
Congressional Acts have been interpreted by the courts to allow the Federal
government authority to change the beneficial use of water for the greater good
of the public, or to support Tribal trust obligations.
This
interpretation allows the federal government to reallocate the use of water
stored for irrigation to a different beneficial purpose by regulatory fiat.
Biological
Opinions that require maintaining elevated
Additional
biological opinions that require elevated down stream
These
changes of beneficial use are denying owners of irrigated land delivery of the
water that is legally appurtenant to that irrigated land, thereby abrogating
their water rights.
Creating
uncertainty about future water deliveries for irrigation also negatively impacts
the value of the land. Both potential buyers and potential lenders are concerned
about unstable land values.
Potential
operation-loan lenders are also concerned about water delivery certainty from
season to season.
This
uncertainty tends to limit potential buyers to government and Non Government
Organizations that do not intend to use the lands for agricultural production.
This
set of government created circumstances effectively produces a pool of willing
sellers to a restricted pool of buyers effectively destroying the free market
value of that land by artificially limiting the value of the land.
The
federal government undoubtedly possesses the authority to reallocate the water
for the greater public benefit. However, with that authority comes the
obligation to pay the rightful owners of the water rights fair compensation for
the water use that was confiscated.
This
obligation for compensation is currently being tested in the U.S. Federal Court
of Claims.
Water
will be the limiting factor in population growth in the arid
Economic
factors will force incremental change in the beneficial use of this scarce
commodity. Those who own the use of the water will be positioned to make
substantial profits in water marketing.
The
unfairness in this process is that the current owners of the use of the water
are being manipulated to give up that ownership preventing them from
participating in these future profits.
Our
preferred solution is to devise the processes necessary to allow for the
marketing of water, but not for the sale of the water right. Any change in
beneficial use must be carefully crafted to avoid injury to all other holders of
water rights.
As
long as the water right remains appurtenant to the land, the value of that land
will increase incrementally with the value of the water, regardless of where the
water is actually put to beneficial use.
The
current requirement for the water to be put to beneficial use on the land each
five years will prevent long term leasing, thus allowing for an adjustment to
market value each five years. The beneficial use clause only requires that the
infrastructure for water delivery be maintained, and that a portion of the water
be used at least once each five years.
Income
derived from marketing a portion of the water right duty may be sufficient to
finance the more efficient application of the remaining water to the land,
thereby preserving our farming communities.
In
our mind, separating a water right from the land and selling it is somewhat
analogous to clear cutting a forest without replanting---only much worse. Once
the water right is sold, both the productivity and the value of the land are
effectively diminished for all future generations.
How
dare we assume that right!
Actions
initiated with good intentions too often result in unintended consequences. For
example:
The
removal of stream meanders was used extensively as a means to make streams flow
faster thereby preventing them from heating, and it worked. Unfortunately, it
also caused increased rates of streambed erosion that led to down-cutting of the
stream bed with a concurrent lowering of the soil water profile adjacent to the
stream which in turn caused the riparian vegetation to die for lack of water.
Suppression
of “normal” decadal fire cycles has led to juniper encroachment, which has
resulted in virtually fireproof
juniper forests. This unchecked juniper growth is a major cause of the
measurable reduction in surface water flows in the basin.
Setting
aside wilderness areas specifically to be left unmanaged has resulted in
unmanageable wildfires that have incinerated the forests set aside for our
progeny.
Re-establishing
wetlands for wildlife and fishery habitat has caused a huge increase in basin
wide evapo-transpiration that has resulted in measurable reductions in in-stream
flow.
Replacing
flood irrigation in river valleys with more efficient sprinkler irrigation has
resulted in measurable decreases in river flow. The increased production from
more efficient irrigation results in significant increases in
evapo-transpiration. The “more efficient” application of irrigation water
also significantly decreases recharge of soil water profiles.
These
examples of unintended consequences of good intentioned action underscores the
need to adopt change incrementally and to carefully monitor the results of that
change both for efficacy and for unwanted responses.
Bach: “A water market can’t solve all the problems.” “Water markets will be used to reallocate water.” “Because of the adjudication, it’s unclear if the water marketing techniques will work – and property rights are not clear.”
“The public has the right to water; instream for habitat for wildlife, recreation, and water quality.” “There is a right to water that goes beyond private water rights, beyond moral rights.” “It’s the land and the streams water.”
“New water rights will include instream flows, view shed, and ESA.”
“Some of our problems are conflicting values. How to allocate the water, deciding where it goes – how much and when.” “(The debate continues over) how much water is available now and how much was there historically. There is a lack of clear knowledge.”
“Limited
information on groundwater; how does groundwater affect surface water?
Groundwater is not regulated in
“Solving the conflicts? We need consideration of all needs, just and fair compensation, and new market based tools.
Q
& A:
Question about downstream flows and fish die-off – Kandra answered: “Stored water has created steady late summer flows that historically wasn’t available. And now that water is demanded by downstream users at our expense.”
Question:
“50,000 acre-feet of water has been lost from the
BREAK
POTENTIAL
FOR MARKET TOOLS
Panel
Discussion:
Mark Campbell
Ron Cole
Fritz Paulus
Campbell
–Jeld-Wen Timber & Ranches, Cole –
Partners
Program
Water Auctions
Private Fishing/Hunting
Water Banks
Habitat
Fund
Leasing
Paulus:
Mr. Paulus used a PowerPoint presentation to help explain the Oregon
Water Trust (OWT), which is not working in the
Why they do what they do? Passage and nurseries for salmon in small streams.
OWT’s cooperative solutions:
Modified land management
Point of diversion change – from tributaries to main stem rivers
Change the source of water – from diversion to a well or stored water
Split season leasing – lease for part of the growing season and pay the farmer what he would have made
Allocation of conserved water – from flood irrigation to sprinklers
Rotation pooling agreements – having farmers rotate years of farming
“The right tool at the right location and the right landowners.
The Running Y Ranch hasn’t found any water conservation programs that are profitable to the ranch. Hunting leases, water bank – the dollars just aren’t there to make conservation profitable.
The
Running Y is in favor of more storage and backs the
Cole: “The refuge wants to help find solutions in the basin.” “There are 200,00 acres in the 6 Federal Refuges in the basin and we are part of the community and the neighborhood.”
Cole explained a bit about the “Partners Program” that is new to the basin. He worked with them at other refuges before coming back to Klamath.
“We need incentives to do things different.”
“Tule is joined with farming by the 1964 Kuchel Act and it has been a good relationship over the years.”
A new program introduced about 4 years ago uses rotating wetlands with farmlands on the lease lands. Even some farmers off the refuges are joining the program. Example: A farmer has 1,000 acres. Each year he floods 200 of those acres for wetlands; the next year he floods a different 200 acres. What this does is allows him to farm organic crops off those previously flooded acres. They use less fertilizer and pesticides.
Looking for solutions? “Less toxic chemicals are going into the refuges – no problems – no smoking gun on the refuges caused by the lease farming.” “On the Tulelake Refuge last year, more birds were counted than have been counted in a century.”
“Can’t fix this whole thing at one time; it’s going to take small steps.”
Q
& A:
Paulus was asked how many acre-feet of water did OWT save last year? Answer: 125 cfs was saved instream, leased all but 12 cfs that they bought.
Question for Paulus: What was the average cost per cfs? Answer: $74.00/acre for 4 acre-feet or approximately $20/acre-feet averaged over 10 years, (Audience: An awful low price.) depending on the stream and how important the fish habitat is surrounded by marginal land. OWT paid the farmers not to divert but to leave water instream.
Question
for Paulus: Where do you get your
money? Answer:
Start up funds of $1 million came from 3-Mile Farm in Hermiston.
They get mitigation funds from BPA ratepayers, federal funds, and
donations. Their budget has $500,000
overhead, $440,000 worth of donated water, and $317,000 in purchased water
rights.
Noon
LUNCH
Private
Property and the Public Interest
in
the Klamath Basin
Jim Huffman, Dean and Professor
of Law
Lewis and 
Jim
Huffman – Lewis and
(Overview
talk on private property rights) Strong
public interest in the
“What
water use is most critical? Who gets
to vote? Just the people in the
“Votes and public surveys are useless in resource issues.”
Four general solutions to water allocation:
Water is available for all to use – the common approach – to use when or where needed. This approach only works when there is never a scarcity of water
Private ownership of resource. Central object was to pass government land into private hands by homestead, mining, etc with the state owning only small portions
Treat as a public resource (have the government own the resource) and government decides who gets what
Resource mixed public/private ownership
“Some believe that private property ownership leads to elitism”
“Politics is the point of public ownership.”
“Bureaucrats and scientists controlling public lands adds distance and layers between the land and the resource users.” “Administrative rules and regulations are slow to make adjustments for the public interest.”
“Having
private property rights is being able to enjoy the fruits of your labors.”
Quote from Supreme Court Judge Stewart:
“Property doesn’t have rights, people do.”
“Per our Constitution, private interest trumps public interest.
This is an important aspect that the
“Simple solutions are top down – somebody gets hurt. Market solutions are from the bottom up – local solutions.”
“Water is migratory, it crosses state and county lines. Western Water Allocations with mandated instream flows, limit transfers of water rights and leads to market and legal system failure.”
“Bring all the stakeholders together to start working on local solutions and have difficult water allocation discussions.” “No one will be comfortable with market solutions but there will always be someone who won’t be happy with any solution.”
“Using a water market, water is allocated to the highest value use. Rights have to be transferable, rights have to be universal instream and groundwater.”
Q
& A:
Question:
Never mentioned the Trinity, Central Valley Project, or the diversions to
the
GETTING
SPECIFIC
Panel
Discussion:
Dan Keppen
Jeff Mitchell
Mark Stern
Joe Whitworth
Mitchell
–
Whitworth
–
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What
are the hurdles? |
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Are
Market tools feasible? |
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How
can harmony best be restored in the |
Mitchell:
“The tribes have been dealing with declining resources in the
“For the Klamath people, we deal with these issues day in and day out. We need a stipulated water solution.” “But we haven’t gotten to where we need to be yet to come to that kind of a solution.”
“There’s
a fear that surrounds the final settlement, a settlement that can meet the needs
of the community as a whole.” “This
impacts all the stakeholders in the Basin and the fears that we’re not all
going to get what we want.” “Not
one party in this Basin is going to get everything they want.
Should that stop us from moving forward towards a solution?
No. The solution needs to
come from this Basin. It has to
start with Keppen, John Crawford, Mark Stern, Gary Wright, Bill Kennedy and the
other farmers and businessmen, Rangeland Trust, and the Tribes.”
“It’s going to take the assistance of the people in
“Our door is open for people to come in and talk. Sit down with us at the table and open discussions to find a solution that will work for all of us. A solution that’s community based; that’s part of all of us. If we wait for adjudication to conclude, no one is going to be happy with the results.”
Keppen: Started with a short update on the lawsuit concerning the fish die-off in September, 2002: Has met with the lower river Indian Tribes and it looks like we will be going to trial this September.
“Klamath Water Users Association (KWUA) has spent approximately $2 million over the past ten years in legal costs.” Don’t want the courts deciding our destiny because the results come out “gray.”
Seven ingredients for a recipe for success:
Science - How science is used, peer review, brainstorming between scientists, new biological opinions
Water
– Make the water supply go around, pre-project hydrology, stored water for
ag/environmental/tribal trust (
Coordinated restoration – Credit for what we’ve done over the past 10 years. (What did we get? Our water curtailed in 2001.) More coordination between NMFS and USF&WS on BiOps. Coordination between Klamath and Trinity River management (This spring, 200,000 acre-feet of water was sent down the Trinity to scour the river; sent at the wrong time for the health of the fish.)
Equity
and Patience – Equity: Can’t
focus totally on the
Money
– 500 million to one billion to set up a CALFED program for the
Leadership
– The Federal Working Group in
Whitworth: “In the Western states, efficiency is penalized to get you to use less water.” “We’re either going to have to do things ourselves or they’re going to it for us.”
“The ‘Get out of Jail’ card is ‘functional habitat’.”
“Conservation has to add money to a farmer’s wallet.”
“USF&WS fees from hunting and fishing should be returned to farmers like Kandra who manages his land so that it helps the Service with wildlife.”
Stern: (A wildlife biologist at Sycan Marsh since 1981)
Talked about the 2004 Water Bank: “Can’t mine groundwater indefinitely.” Doesn’t think $60/acre-feet and a water bank market is a viable solution to the water shortage. Thinks that water marketing is just like the water bank.
Says
there are 33,000 acres owned by willing sellers in the Klamath Project.
The community was not in favor of selling ag land and taking it out of
production. There are also some
upper basin willing sellers for water storage and some even around the
Restoration
and financial incentives to restore wetlands up around
On the Williamson River Delta, 5,000 acres have been restored to wetlands since 1996. “Larva and juvenile suckers are now using this new habitat but we’re not getting credit for what we’ve done.”
Q & A:
Question
was asked of Keppen about the
Question asked of Jeff Mitchell: How do you get rid of the “fear” that you mentioned? Answer: “Sitting down at the table, start using common science and it will prevail. Never really answered the question but admitted that he didn’t know the answer.
General
ending comments:
“Don’t try to max out your production, max out your profit.”
“Hard to waste water in our system.”
“Organic crops are being grown here now; strawberries, onions, horseradish, etc.
“Our
water should not be sold to the highest bidder.
All will go to
“Those 50,000 acres in the upper Basin that were lost to wetlands? 4 pounds of beef per day per unit used to be grown on that irrigated pasture.” “In exchange for 4 pounds of mosquitoes per acre!”
BREAK
DISCUSSION
SUMMARY AND
FUTURE
VISION
Terry Anderson
For more information on The Property & Environmental Research Center, their website address is http://www.perc.org/
Barbara Hall
The Klamath Bucket Brigade
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