Measuring Cost-Effectiveness of Environmental Water Transactions

The diversion, storage and consumptive use of water in the western United States (US) has drastically altered streamflow, water quality and a raft of ecological, social and economic goods and services.

Over the last fifty years, western states have begun to address this problem through a range of approaches. Water quality regulations, endangered species protections, application of the public trust doctrine to water allocations and other regulatory approaches reflect an effort to prevent further degradation of streamflow and associated values. For example, in Oregon, minimum streamflow requirements created in the 1950s were converted into full-fledged instream water rights in the 1980s and 1990s to limit further appropriations of water for out-of-stream use.

Unfortunately, as junior (or low) priority rights, these rights do not serve to restore flow to already dewatered streams. In other cases, both large and small, regulatory enforcement has led to real improvements in water for the environment. In California, the protections afforded to Mono Lake water levels and the re-dedication of contract water to environmental uses under the Central Valley Project Improvement Act, are but two examples. However, the controversy, costs and lengthy time span of dedicating water to the environment through litigation and regulatory approaches are unappealing to some conservation groups, particularly those that prefer to collaborate and purchase water rather than litigate to achieve streamflow restoration.

An alternative approach to meet streamflow restoration needs is to proactively negotiate in the “water market” for the acquisition of existing out-of-stream rights or for changes in water use and management in order to benefit the environment. These transactions result in “environmental flows,” including the dedication or protection of water instream or the provision of water to Roughly 80% of California’s developed water supply is used for agricultural irrigation.*