Irrigation Empire: Water could someday be treated like a commodity

Irrigation Empire: Water could someday be treated like a commodity

By David Hendee
Omaha World-Herald
July 22, 2007


Access to water is shrinking across Nebraska. As accessibility tightens, the growing value of the state’s greatest natural resource will trigger economic changes that stretch from Alliance to Omaha.

Farmers pump more underground water for crops in Nebraska than anywhere else in the country, tapping America’s biggest freshwater sea. Pressured by neighboring states and by a lingering drought, the state plans to bill farmers and other taxpayers millions of dollars to help rectify problems of overuse.

But as fresh water becomes increasingly scarce across the globe, how well is the state positioned for the future?

Interviews with two dozen scientists and environmentalists, regulators and policymakers, farmers and academics indicate Nebraska can take advantage of its water wealth – if it overcomes hefty challenges, including a lingering denial that water is finite.

Among their predictions: In 50 years, Nebraska will have fewer irrigated acres but thirstier soil.

They see the growth of water markets, in which water is sold to the highest bidder.

They see agriculture and other industries becoming less dependent on water.

And they see increased interest in taxing water, just as other states tax oil and coal.

Nebraska “will and should” tax water, said Kyle Hoagland, director of the University of Nebraska-Lincoln’s Water Center.

“Water has been virtually free,” he said. “People should be willing to pay something for it.”

Particularly farmers, he said, who use 95 percent of the groundwater pumped in the state.

Nebraska took its first steps this year toward taxing water. Under Legislative Bill 701, natural resources districts in the Republican River basin can levy special occupation taxes on irrigated land.

Significantly more money will be needed to fund statewide research, upgrade small-town water systems or retire irrigated land, and tax revenue could help fund such needs.

Across the West, taxing water is uncommon and is stiffly resisted by agricultural interests, who are highly organized and dominate the political debate.

California rejected a water tax last year. Arizona charges an annual groundwater withdrawal fee in trouble areas. Colorado repealed a law charging water users an annual fee based on pumped water because it was hard to implement.

Nebraska farm interests called this year’s tax painful but concluded it would help avoid the potentially disastrous impact of shutting down irrigation.

A water tax becomes more appealing as the resource becomes more valuable, said Kermit Brashear of Omaha, former speaker of the Legislature.

“If you have coal, you find a way to tax coal. If you have oil, you find a way to tax oil,” he said.

“You’ll do it with water, too,” Brashear said. “It’s just a question of when a tax kicks in.”

Robert Glennon, a University of Arizona water-law authority whose book “Water Follies” examines America’s use of groundwater, said taxes increase the value of water as they increase its price.

“We don’t treat water as a scarce resource,” he said. “We take it for granted.”

But water is indeed scarce in places across the Plains.

Plans to export Nebraska water to Colorado bubble up periodically, when Front Range community growth collides with limited water.

By midcentury, the sprawling Denver metropolitan area is projected to grow 40 miles north, across the Wyoming border to Cheyenne. The Wyoming capital is just 35 miles west of the Nebraska border.

Omaha’s Metropolitan Utilities District perked up a few years ago when a Colorado entrepreneur proposed buying water from Nebraska Sand Hills landowners and shipping it to Denver by rail.

The idea fizzled.

“But it got our attention,” said Tom Wurtz, MUD president.

Sand Hills water, carried by the Loup and Dismal Rivers until they merge with the Platte River, helps supply MUD well fields in the Platte Valley west of Omaha.

Out-of-state transfers face tough drawbacks.

“As we see greater and greater competition for water in Nebraska,” said Michael Jess, the UNL Water Center’s assistant director, “we’ll see greater resistance to allowing water exports.”

Pumping water uphill from Nebraska to Colorado would make such exports too expensive, said Mark Squillace, director of the Natural Resources Law Center at the University of Colorado at Boulder.

States are protective of water originating in their territory.

“While states like to fight over water with almost patriotic fervor,” Squillace said, “they also recognize that it’s better to tone down the rhetoric. . . . We’re all better off by working together and cooperating.”

Some stresses are homegrown.

Nebraska is already the nation’s No. 3 corn producer and is poised to be the No. 2 ethanol-producing state by year’s end.

Ethanol demands led Nebraska farmers to plant more acres to corn this spring than any time since 1936.

But ethanol’s boom – and its corn echo – is challenging Nebraska water policymakers.

“As long as ethanol makes money, there will be stress on the water supplies,” said Ann Bleed, the state’s natural resources director.

Some communities will need to shift their economies away from heavy reliance on irrigation.

A recent report sought by the Nebraska Game and Parks Commission and other organizations concluded the state should embrace water use for fishing, boating and other recreational activities that appeal to people attracted to areas with rich outdoor assets.

The mix generates jobs and community stability, said Oregon economist Ernie Niemi, the report’s author.

Nebraska water officials conduct an annual inventory of each river basin to determine if there is enough water to allow new uses. If not, a basin is designated “fully appropriated” and placed under irrigation restrictions.

The supply is fully appropriated or worse in much of central and western Nebraska, and the line is moving eastward.

One weapon – already in use – to deal with limited supplies is a water transfer.

“It’s a political shock in western Nebraska,” said David Aiken, a UNL agricultural economist, “but if you’re a growing community and need more water, the easiest way is to pay somebody for their pivot water.”

Central Platte Natural Resources District recently added its own twist to the era of tighter water stocks. It created the state’s first water bank in an effort to restore water to the Platte River.

The Grand Island-based NRD will pay willing landowners to retire land from irrigation permanently. The district manages a region in which underground water and surface water intermingle so much it is one resource.

The water bank will need thousands of acres for the NRD to avoid stricter regulation and pumping limits on district farmers.

The most politically charged idea came from the troubled Republican River basin.

The WaterClaim irrigation advocacy organization proposed transferring water from the Platte River and the Sand Hills to replenish the Republican basin.

The concept intrigued regulators and others but withered when some agricultural groups opposed it.

Such transfers are expected eventually.

“The question will be: Where is the water more valuable?” Bleed said.

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