09 June 2008

Western Water Wisdom

Dan Whipple is making the right observations about Colorado water law:

Another reason I’ve been skeptical about the value of Western water is that the people who have it don’t treat it like it’s very valuable.

Western water use does seem divided between high cost/high return urban water users, and low cost/low return irrigated farmers (most of whom wouldn't even make any profit without a combinations of crop subsidies, cheap water and off season jobs in the city). Fishing and boating are worth more to Colorado's economy than all of its horticulture combined (farming and ranching combined account for just 0.6% of the state's personal income). It seems like a classic case of market failure, although the precise source of this disparity is elusive.

Unlike Mr. Whipple, however, I have encountered sitations where water is limiting real estate development. It is the principal force that is starting to limit development in Douglas County, Colorado where tap fees are sky high and not available at any price in some places. In Grand Junction, the water bureacrats have more practical control over urban land development than the planning commission, which is limited by municipal boundaries and taste, rather than hard supply limitations. I've personally seen property development plans crater in the face of five digit per house tap fees.

Landscaping and golf course regulations, at least in new developments, seem more likely than outright restrictions on growth. Indoor residential and commercial water use in modern construction (including the dreaded low flow toilets) is pretty modest. And, I don't doubt that when push comes to shove, that a lot of irrigated agriculture water rights will be bought out to allow for more urban development as it has been in greater Pueblo. The water markets may be inefficient, but they do exist and do function at some level.

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