Water Leasing - New Tool for Conserving the Environment

Farms have long swapped water rights among themselves, but new research reveals conservationists are now leveraging these tools for environmental purposes.

Nebraska farms

These purposes include leasing irrigation rights but using the water to replenish the watershed to restore habitat for endangered species and help secure clean water for communities.

The US state of Nebraska irrigates more farmland than any other state in the country, and much of that water comes from underground sources. In 2015, the Central Platte Natural Resources District launched the Central Platte Groundwater Exchange Program, making it possible for farmers with certified groundwater rights to either lease them out for a year or buy more if they’re interested in higher crop yields.

Lyndon Vogt, the General Manager of the Central Platte Natural Resources District, said that the program could help drive efficiency as producers practicing flood irrigation may see opportunity in selling their water to farmers that use more efficient sprinkler irrigation.

But farmers aren’t the only ones bidding: a conservation group called the Platte River Recovery Implementation Program hopes to leave the water in the watershed to help endangered species. They leased the right to a small amount – roughly 40 acre feet (enough to cover 40 acres of land in one foot of water) – to do so.

“The groundwater exchange program will allow farmers to increase their own individual profits finally un-tapping their full water wealth while also boosting overall agricultural productivity and protecting the river and all the birds and other wildlife that depend on it for their survival,” explained David McAdams, a Professor of Economics at Duke University involved in the exchange’s development, in an introductory video.

Growth in groundwater mitigation

Groundwater mitigation programs in the western US, which essentially requires property owners seeking new or additional groundwater use to offset their impact by purchasing water rights, transacted some $1.2 million.

These programs are generally driven by basin-wide caps or rules establishing minimum flow requirements for a river or stream. As administrator of the Groundwater Exchange Program in Nebraska, the Central Platte Natural Resources District ensures the trades don’t have a negative effect on streamflow.

Water markets in action

A few months ago, The Nature Conservancy announced a new investment model that essentially diverts water rights allocations back to nature. Called Water Sharing Investment Partnerships, they solicit investor capital to acquire a portfolio of water rights.

Most of these rights are either leased or sold back on the market, giving investors a financial return and ensuring farmers and cities have access to enough water, though a portion of them are left in waterways to restore streamflow. A WSIP can acquire water rights by outright purchases, but also by collaborating with farmers to implement water saving measures in irrigation.

Source: The Nature Conservancy

When water carries a monetary value, those who have the rights to water supplies are motivated to conserve because they can sell the surplus for a profit, TNC explained last year in its report on WSIPs.

Report authors count 37 water-scarce nations with allocation systems based on distributing water rights, which with the right policy drivers, could harness the powers of impact investing for conservation and water efficiency.

TNC launched the first WSIP in Australia. Essentially, this WSIP consists of two parts, the Murray-Darling Balanced Water Fund and the Environmental Water Trust. Investments from wealthy well-known Australian families, corporates and other entities helped put $20 million into the Murray-Darling Balanced Water Fund.

Much of that is funneled back into the agricultural community, though a portion of the water rights allocations is donated to the Environmental Water Trust to be used to restore some of the basin’s water-starved wetlands. The trust targets wetlands with high ecological and indigenous value, according to TNC’s report.

Within the next four years, the Murray-Darling Basin Balanced Water Fund aims to scale up funding to $76 million.

Embracing potential

As Alliances for Green Infrastructure identifies a growing interest in using water rights trading to benefit nature, researchers note that these trades don’t have to come at the expense of economic growth.

Since buyers and sellers will only trade where there is economic opportunity in doing so, the mechanism allows agricultural economies to grow while protecting freshwater ecosystems, Bennett writes.

Read more at: Ecosystem Marketplace

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Taxonomy

• Irrigation
• Water Resources
• Funding Partnerships
• Irrigation Management
• Business Development
• Business Analysis
• Trade and commerce
• Farms