Variable Irrigation District Action in Water Trading

Abstract

Irrigation districts (IDs) in the American west are highly diverse in their economic attributes and local water scarcity circumstances. This diversity may affect reallocative action via water transactions as scarcity rises. The institutional background defining and constraining IDs is described here. For a Texas study region the progress of permanent water right transfers involving IDs is documented and examined. An econometric analysis of multiple decades of ID water transfer activities in the Lower Rio Grande Valley finds that IDs with larger initial water right holdings and higher populations in nearby cities are more likely to participate in agricultural‐to‐municipal water transfer activities. The findings suggest that consolidation of smaller water right holding IDs may be an avenue for quickening the pace of reallocation, especially in more populated areas.

An overview of water reallocation and the barriers to its implementation

“…Since the agriculture sector controls the majority of water rights, many researchers have focused on how the institutional structure of irrigation organizations (IOs; including irrigation districts) has impeded water reallocation . IOs are entities that hold communal water rights and supply irrigation water to its members.…”

“…They are widely found in various forms in both developed (e.g., Ghimire and Griffin) and developing (e.g., Rosegrant and Binswanger) countries. The literature shows that IOs are less likely to transfer water rights than irrigators not in IOs primarily because of difficulties in (1) collectively deciding on transfer prices, (2) determining the distribution of water transfer gains amongst members, (3) providing equitable compensation methods for individual water conservation efforts, and (4) quantifying the incidental district impacts due to seepage reduction (which replenishes aquifers and can be used again) and the increased internal water conveyance cost . Ghimire and Griffin found IOs with larger water entitlements are more likely to participate in intersectoral water reallocation, which implies that merging IOs with smaller water right holdings could act as a catalyst for reallocation.…”

“…The literature shows that IOs are less likely to transfer water rights than irrigators not in IOs primarily because of difficulties in (1) collectively deciding on transfer prices, (2) determining the distribution of water transfer gains amongst members, (3) providing equitable compensation methods for individual water conservation efforts, and (4) quantifying the incidental district impacts due to seepage reduction (which replenishes aquifers and can be used again) and the increased internal water conveyance cost . Ghimire and Griffin found IOs with larger water entitlements are more likely to participate in intersectoral water reallocation, which implies that merging IOs with smaller water right holdings could act as a catalyst for reallocation. In addition, reallocation can be fostered by reshaping IOs ownership structure, such that members own a share of the organization's water right (opposed to exclusive possession by the IO), voting privileges are weighted by irrigated acreage to prevent small holders from exerting disproportional influence on transfer decisions, exit or termination fees assessed on IO members who sell their rights are waived or reduced, and water is priced according to its opportunity cost …”