TM sent me this interesting article on the Lower Arkansas Valley Super Ditch Company (SDC), which — despite its name — is located in southeastern Colorado. The SDC is a project that allows agricultural irrigators to join together as a cartel in making deals to lease water to cities. The SDC has taken inspiration from PVID, an irrigation district that has been successful in negotiating high prices ($340/af for a one-year lease) to cities.

TM provides this background:

This is a water market that I think you should follow. It hasn’t started yet, because of legal stuff, but is moving very fast. Basically they are consolidating almost all of the irrigation ditches in the Arkansas Valley to pool their water, do rotational fallowing, and then auction the water.

Sounds good to me:

• Short-term transfers? Check.
• Limited transfers? Check.
• Rotating costs and benefits? Check.
• Maximum price? Check.

Bottom Line: Farmers should make as much as possible when selling/leasing their water. If they do not, everyone gets upset, and transfers stop (cf. Owens Valley)