Buying and Selling Water in Montana
Chris Corbin
water resource
management
montana water trust
chairmanbitterroot
water forum
MBAwr
specialist
consultant, freelance marketer, entrepreneur
Chris Corbin
moose drool
business acumen
water ingenuity
Differentiation
Working and Not Working
What is…
Every shovel has two sides.
1. Clearly defined water rights
Not Working
dynamic
surface and groundwater
simultaneous
interdependencie
s
Physical Challenges
Water is Complex
Never trust a water right.
Adjudication decrees flow rates and themarket trades volumes.
Historical water user has passed away or…
moved away or..
aren’t measuring their water use.
Market opportunities will lead to greater water stewardship.
Standards will create market efficiency.
2. Physical supply and demand
Working
“The West is the fastest growing part of the country. It is also the driest.”
- National Geographic Magazine
Steve Running (2009)
Steve Running (2009)
water market demand
Agricultural
Urban & IndustrialEnvironmental
Ravalli County
Agricultural
Environmental
Urban
Gallatin County
Agricultural
Environmental
Urban
Missoula County
Agricultural
Environmental
Urban
169,886 irrigated acres
USDA, Economic Research Service (2009)
297 miles of blue and red ribbon streams226 miles of dewatered streams
Montana FWP, 2009
59% growth since 1990
Montana Cenus” US Census Montana Census. (2009) 6 April 2009 http://www.census.gov/
Agricultural
Urban & IndustrialEnvironmental
3. Regulatory Structure
Working
last best place market
private leasing law
21
Brokered over 25,000 acre-feet
Basin Closure and Mitigation
more valid water right claims than water is available . . .
over appropriated
Mitigation and Aquifer recharge
Future water demand will be met or mitigated by existing water rights.
private water marketing law?
Instream flow transactions 1987-2007
Scarborough, Brandon. Environmental Water Markets Restoring Streams Through Trade. Publication. Vol. 46. Bozeman, MT: PERC, 2010. Print. PERC Policy Ser.
Private involvement drive water markets.
4. Transferability of rights
Not Working
Transferability is critical to reallocate water rights to meet new and growing demands.
regulatory uncertainty
Barriers to trade
costly transfer process
3 of 45 applications approved HB831 applications approved as of 01/14/10.
Data provided by Terri McLaughlin, DNRC
22 approvals
2-10 month turn
14 correct and complete upon receipt
HB 40 applications 7/09 - 7/10
Data provided by Terri McLaughlin, DNRC
Transparency is good.
5. Enforcement of rights
Not Working
6.Easy flow of information
Not Working
Average Lease Prices 2003-2008
0
5
10
15
20
25
30
35
40
45
2002 2003 2004 2005 2006 2007 2008 2009
Year
Price ($/AF)
All prices based on Lotic LLC’s comparable sales database.
Lease Prices 2008
$0.41
$64.16
All prices based on Lotic LLC’s comparable sales database.
Sale Prices 2003-2008
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2002 2003 2004 2005 2006 2007 2008 2009
Year
Price ($/AF)
All prices based on Lotic LLC’s comparable sales database.
Sale Prices 2008
$133
$7,000
All prices based on Lotic LLC’s comparable sales database.
7. Market Expertise (Education)
Not Working
Water runs with the land?
First documented Montana Water Rights Transfer: 1895
8. Water Market
Working
Big Sky Brewing Company
water restoration certificates
Photo courtesy of the Montana Water Trust
Dewatered stream
Photo courtesy of the Montana Water Trust
Restored stream flow
Water in Beer = Water in Stream
4 million gallons of water restored
Grass Valley French Ditch CompanyRoots
Missoula: 1901
Missoula: Now
Missoula
Urban
Grass Valley French Ditch Co.
Grass Valley French Ditch Co.
20% reduction in revenue
A SharesB Shares
Restructured Shares
20%
80%
A SharesB Shares
Current Purpose of Use
irrigation and stock
?
A SharesB Shares
Current Purpose of Use: Irrigation and Stock
irrigation and stock
?
A SharesB Shares
Future Purpose of Use: Marketing
irrigation and stock
mitigation
Reinvest in irrigation infrastructure
Grass Valley French Ditch CompanyRoots