Alternative Water Transfer Methods: Review of Colorado Experiences

Transfers of the right to use water can provide flexibility in regions where cities and farms compete for supplies. For example, the state of Colorado’s prior appropriation water law allows purchase and transfer of water among water users. During the last half century many cities have used this mechanism to buy water from agricultural water holders to satisfy their growing water demands. However, the transfer of water from rural to urban areas has left agricultural lands fallow and had negative effects on the economies and societies of rural communities. Colorado’s Water Plan addresses this problem by seeking alternative methods of transferring water so that the ownership of water rights stays in the agricultural sector but water saved on farms can be shared with urban areas. This paper reviews the alternative methods suggested in Colorado’s Water Plan, determines their capacities and shortcomings, and summarizes the efforts in the state to implement these methods. Lessons learned have important implications for improving the efficiency of water allocation in other dry regions.