U.S. Water News Online
PECOS RIVER BASIN, N.M. -- The unexpected passage of a water-banking bill by the New Mexico Legislature after years of failed attempts could give New Mexico a potent tool in getting water to the people who need it when supply is scarce, proponents say.
It's a cautious first step that will test the concept of water banking in the lower Pecos River Basin, where municipalities and individuals face curtailed water rights in the not unlikely event that New Mexico won't meet its contractual deliveries of water to Texas.
``I think it will work. I think we'll learn a lot and will demonstrate the value of the concepts,'' said Norman Gaume, director of the New Mexico Interstate Stream Commission, which will set the rules for water banking under legislation passed in Santa Fe. ``It's a big step forward.''
New Mexico has been a holdout against water banking among Western states, many of which have added it in some form to their water management strategies. Water banking bills introduced in the past five Legislatures faced opposition from the New Mexico Acequia Association and the powerful water conservancy and irrigation districts, which control a majority of the state's surface water.
Some fancy footwork by the Legislature's stalwart proponents of water banking, Rep. Pauline Gubbels and Sen. Sue Wilson Beffort, both Albuquerque Republicans, and their bill drafter, Gordon Meeks of the Legislative Council Service, resulted in a measure that managed to appease, if not convert, the skeptics and squeak through the 2002 session.
The acequia association had argued that the faster transfer of water rights allowed by water banks could harm other water users and the public by undermining the rural lifestyle. The association also was concerned about the effect water banking would have on the historic, cooperative function of acequias, or irrigation systems. The irrigation and conservancy districts had argued that they didn't want the interference and regulatory control from the state engineer that could accompany water banking.
The bill succeeded because it restricts water banking to a 200-mile stretch of the lower Pecos below Sumner Lake, places a three-year time limit on the experiment, lets the Interstate Stream Commission make the rules, and leaves the acequias alone.
``The earlier proposals were for a statewide process of local banks,'' Gubbels said. ``This was better. It's a pilot program in a specific area. There is time to test it. We can learn what can make it work.''
Water banking isn't much different from conventional banking, with water, instead of cash, being the commodity. It's a water management strategy that speeds up the temporary transfer of water from those willing to lease it to those willing to pay to use it.
Farmers and other water rights holders can deposit some or all of their allotted water into the bank, where users pay the going market rate to borrow it for a limited period of time. The lessor retains ownership of the water rights, and rights placed in the bank cannot be forfeited for non-use.
The hope is that the market system will help balance the supply of and demand for water and result in more efficient use of the resource.
Water rights can be leased or sold in New Mexico now, but the process can take years, and transactions must be approved by the state engineer. A notice of intention to move a water right or change the point of diversion, location or purpose must be published in a newspaper to notify the public. A person who objects can file a protest. Protests and transfer denials are dealt with in administrative hearings and can end up in court.
Water banking will allow transfers without the time-consuming approval of the state engineer. ``It's a way of moving water from one use to another in a quick process,'' said State Engineer Tom Turney.
In the case of the lower Pecos, water banking could help quickly transfer water from senior water rights holders to junior holders in the event of a ``priority call'' on the river.
State water officials fear New Mexico could fall short this year in the amount of water it is required to send downstream to Texas under the 1949 Pecos River Compact. The U.S. Supreme Court ruled in the mid-1980s that New Mexico, which spent more than $25 million in the past two decades to buy and lease water rights to meet compact requirements, has under-delivered water by about 10,000 acre-feet annually since the 1960s. An acre-foot is about 326,000 gallons. New Mexico paid Texas a $14 million penalty.
A special master determined New Mexico fell 14,000 acre-feet short of meeting the Pecos obligation in 2000. The under-delivery was offset by a 22,900 acre-foot credit, but Gaume has said the remaining credit probably will be wiped out this year, the third dry year in a row.
Turney has the authority to issue a priority call in the river basin, which means water rights holders with the most recent, or junior, rights could be shut down. Many of those junior rights are held by urban users, including municipalities. Roswell and Ruidoso, for example, have water rights that are junior to those of Carlsbad.
Turney said the junior rights affect a couple thousand holders and about 18,000 acres of land on the Pecos. He said it's possible New Mexico will under-deliver by 20,000 to 30,000 acre-feet this year.
``Judging from the snowpack now, it's a real concern. In the event of a call -- and I'm prepared to make a call -- the junior users would no longer have water available, and that would be devastating,'' Turney said. ``The intention of the water banking bill is to be able to provide those who need it with water. Instead of going without water, they would be able to acquire it from a water bank so they could continue to use water in times of a drought. If I was faced with a call, I'd sure want to know how to get the water.''
The bill passed by the Legislature limits water banking to an irrigation district, a conservancy district, an artesian conservancy district, a community ditch, an acequia or a water users' association in the lower Pecos River Basin for purposes of compliance with the Pecos River Compact. In theory, water banking works within a river system, basin or aquifer.
Potential customers of the banks will be municipalities with junior rights, industries and the state, which could lease rights to help meet compact obligations.
The market price for water will be determined by the local banks. ``That's something the grassroots stakeholders wanted,'' Gubbels said. ``They didn't want the state engineer to determine the market price.''
Prices could be set in two ways, Gaume said. The bank could function like a stock market by matching ask and bid prices, or could determine what it would pay to a lessor and charge to a lessee, with the difference meeting the operating costs of the bank.
Gubbels said she believes a water market will develop. ``I think people will be inclined to say `I'm old and tired and not making much money. I can cut my production in half and take my chances and have a guarantee of money in leasing some of my water,''' she said. ``It would be guaranteed income. That's the marketing angle we hope will develop in having a system in place.''
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