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When the seven states within the Colorado River Basin initially allocated water rights in the 1920s, they distributed more than the river could consistently supply, particularly during drought phases. Currently, the basin offers drinking water to 40 million individuals and irrigates 5 million acres of agricultural land in the southwestern United States, 30 tribal nations, and portions of Mexico.

Climate change has intensified shortages, with research suggesting that recent flow levels of the Colorado River are at their lowest in at least two millennia. This situation has grave consequences for aquatic life: Out of the 49 fish species indigenous to the Colorado River Basin, 44 have already been classified as threatened, endangered, or extinct.

Existing agreements regulating Colorado River management among states and between the U.S. and Mexico are set to expire after 2026. New studies spearheaded by University of Washington water policy authority Philip Womble reveal that a market-oriented approach to water management could yield more dependable supplies for farmers, communities, and industries. An appropriate market structure and some extra investment could also benefit at-risk fish species.

The research, published on June 20 in Nature Sustainability, outlines a novel framework for leasing water rights from the basin while reallocating some of that water to endangered habitats. One of the paper’s significant findings suggests that intentionally investing 8% more than the most economical water conservation initiative could nearly triple ecological advantages.

“Substantial funds are already channeled into water conservation agreements. A slightly higher investment, particularly in headwaters, could yield substantial ecological benefits,” stated Womble, who initiated this research as a graduate scholar and postdoctoral fellow at Stanford University and is currently a UW assistant professor in the Evans School of Public Policy & Governance.

Rights to the river’s water have been divided by a complicated and contentious array of agreements. According to the 1922 Colorado River Compact, states in the river’s Upper Basin (Colorado, New Mexico, Utah, and Wyoming) concurred that they would not cause the river’s flow towards the Lower Basin (Arizona, California, and Nevada) – right below the nation’s second-largest reservoir, Lake Powell – to be reduced below a rolling average of 7.5 million acre-feet annually over a 10-year period.

As the climate crisis escalates and a record megadrought diminishes the river’s yield, a legal confrontation has emerged regarding how much water the Upper Basin states can utilize and how much they are obliged to conserve for the Lower Basin states. The prospect of litigation before the U.S. Supreme Court is imminent.

To mitigate the danger of abrupt cutbacks, water users in the Lower Basin states have instituted systems for voluntary water market dealings. Some Upper Basin states, on the other hand, have investigated a water market aimed at reducing consumption and ensuring the flow of water to Lake Powell. However, current programs typically do not prioritize water for vital fish habitats.

To assess the cost of strategically enhancing fish habitats, scientists developed a model to simulate transactions and ecological impacts in Colorado’s headwaters, which contribute nearly a quarter of the river’s natural average annual flow into Lake Powell.

In the suggested market framework, water vendors — including farmers, irrigation entities, and municipalities — would lease senior water rights to governments and non-governmental environmental organizations to safeguard endangered fish habitats. These senior water rights are crucial for ecological conservation as they are fully allocated before any water is assigned to newer, junior rights.

“A fundamental aspect of water law throughout the western U.S. is our ‘use it or lose it’ principle,” Womble remarked. “This could deter water conservation efforts.”

The team scrutinized six scenarios to comprehend potential results in an upcoming drought year. They compared a “protected” market — where newer water users are legally restricted from diverting restored flows — to one without legal protections for water flows.

Simulations indicated that in the absence of reductions in water consumption, fish populations might encounter dire circumstances for at least one month during the irrigation season along almost the entirety of the river. Conversely, strategic transactions designed to decrease water…
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Utilizing this approach would enhance more than 380 miles of rejuvenable river sections. This encompasses numerous ecologically vital miles, which could experience at least partial revival of aquatic habitats. 

“Rather than solely lowering water usage, tactical environmental water transactions would concurrently minimize water use and safeguard aquatic environments at the least expense to the purchaser,” the researchers state. 

Further modeling outcomes propose that moderate reductions in water use could be realized with an investment of $29 million in a safeguarded market. More drastic cuts may require around $120 million. Equivalent reductions would incur about 12% more in an unprotected market. 

The model reveals that the strictest market framework — with significant reductions in water use and legal safeguards for conserved water — is 29% more economical than a less structured alternative. 

“By carefully directing river water to appropriate areas, even amidst drought conditions, we can safeguard fish through targeted restoration at minimal additional expense,” stated Steven Gorelick, a Stanford professor specializing in Earth system science and a senior author of the research.  

Contributing authors comprise Barton “Buzz” Thompson, a Stanford professor in natural resources law and environmental social sciences, along with J. Sebastian Hernandez-Suarez, who served as a postdoctoral scholar at Stanford.  

Gorelick and Thompson are also senior fellows at the Stanford Woods Institute for the Environment. Gorelick oversees the Global Freshwater Initiative while Thompson serves as the faculty leader for the Water in the West program. 

This study received funding from the Stanford Woods Institute for the Environment, the Walton Family Foundation, the Stanford Doerr School of Sustainability’s Emmett Interdisciplinary Program in Environment and Resources (E-IPER), a Stanford Interdisciplinary Graduate Fellowship, the Ishiyama Family Foundation, the Babbitt Center for Land and Water Policy, the Robert and Patricia Switzer Foundation, a Landreth Family Grant, and a McGee/Levorsen grant from the Stanford School of Earth, Energy & Environmental Sciences. 

Adapted from a press release from Stanford University.