A Need for More Regional Water Management Organizations

Here is a reprint of a memorandum to the then IBCC members of the Metro Basin Roundtable Chips Barry and Doug Scott (with copies to Harris Sherman and Eric Hecox) from one of the Metro Roundtable members, Tracy Bouvette, dated March 5, 2008

I applaud Executive Director Sherman’s request that those in the Colorado Water Community step back from the current focus on water projects, and articulate their vision of Colorado in the future. It is entirely appropriate to have our State’s leaders frame any discussions regarding the cooperative expenditures of billions of taxpayer dollars in terms of where Colorado is and where it is going. This is not to say that without a collective vision we cannot pursue new water development projects, but it is vital that we collectively identify what is important to us as a State as we continue to share the most precious resources that drive our future economic and social well-being.

One key driver in Colorado’s future economy is obviously home sales: not just homes for our working families, but second homes for those that enjoy our State’s natural beauty and want to live part-time in Colorado. We put a great deal of value in having more homes built in Colorado, based on the ongoing and explosive growth supported in many geographies of the State, including the Front Range and headwater areas alike. We also should expect to see substantial growth in areas that will likely foster increasingly larger retirement communities like the Durango and Grand Junction areas. Growth is a mantra for many of our local economies, and that is generally associated with the growth of housing units and related services.

Does housing alone provide for the State’s economic needs of the future? Of course not. Jobs that survive in the long-term will need to be tied to other industries to keep Colorado vibrant and healthy – jobs that bring money into the State from those individuals that benefit from our natural resources and food stock; as well as jobs that compliment and support the needs of the local community.

Current jobs in tourism, manufacturing, professional services, agriculture and exploration of our natural resources (e.g., fossil fuels and minerals) will clearly be the linch-pin of our State’s future – particularly in those regions where natural and existing resources are available to support these jobs. Which of these areas of employment will grow in the future is not clear; however, each category has its own opportunity for growth. For example, we have become increasingly dependant on tourism to provide for seasonal and year-round jobs, create sale tax revenue to support local economies, and bring full-time residents and businesses to our State. We are blessed with breathtaking scenery in nearly every corner of the State, with increasing demands on us to deliver natural wonders to the world’s ever increasing population. To this point, we saw tourist trips (as domestic overnight trips) increase by 8% from 2005 to 2006 as the world came to enjoy our State’s natural wonders, parks, and other attractions. This is a trend that will continue as the State and our local governments continue to spend money advertising nationwide and abroad, luring tourists to our mountains and cities.

However, tourism is only a $14 billion industry in Colorado, making up about 6% of the State’s gross domestic product (GDP). On the other hand, seven of the top ten private employers in the State provide either goods (i.e., Walmart, Target, Safeway and Kroger) or health services (i.e., Exempla, Centura Health, and HCA – Health Services) (based on 2006 data). We are, in fact, very dependant on small businesses that support the local, regional and national service industry. To this point, information services (including telecom, internet services, software development and advertising) and professional services (including legal and engineering) represent nearly 32% of the State’s GDP. People move to Colorado to live and work in our magnificent State because of our natural resources and vast public lands, and presumably our moderate climate . Our ability to maintain, and where possible enhance, our public lands and provide enjoyable outdoor recreation opportunities will go hand in glove with our ability to continue to attract service industry jobs to our State. It would, therefore appear that the protection of the State’s environment including the appropriate maintenance, and where possible enhancement, of instream environmental and recreational flows will become increasingly important to draw these jobs to Colorado.

There is a great deal of optimisms regarding the potential for expanded oil and gas exploration in Colorado as a means to drive growth. Exploration of fossil fuels on the Roan Plateau and in the Piceance Basin, exploration and production in the southwestern portions of the State, as well in various other locations is expected to drive substantial growth of communities especially along the middle and lower Colorado River. Although mining and oil and gas exploration produced about $13 million toward the State’s GDP (about 5.6%), this economic sector is expected to grow to such proportions as to rival the information and professional services industries. However, development of the oil and gas resources will require a substantial amount of water to support drilling and exploration activities, for example. Produced water disposal, impacting stream flow quantities and qualities, will also create challenges for future water resources management. Therefore, the expected growth of this economic sector will need to be balanced with the values and needs of the information and professional services community, the agricultural community, as well as with second home owners - to name a few - such that the economic well-being of those impacted regions are not compromised.

Manufacturing is also important to our State’s economy providing about $15 million to our GDP. We provide manufacturing to a broad range of buyers creating products that include industrial and electrical machinery, medical and surgical instruments, aircraft and spacecraft and related parts, organic chemicals and plastics, etc. We should expect that these jobs, while they may change with respect to specific products, will always be needed to support our local and regional economy. Additional manufacturing jobs may also be created as renewable energy opportunities are explored.

More people coming to Colorado, of course, means that we need more fuel and food to support the population. This shines a bright light on the importance of agriculture, mining, and renewable energy to our State’s regional and local economies. All of these three industries are vital to the future sustainable health of Colorado. We are blessed with fertile lands, rich oil and gas deposits, and renewable energy sources. Reaping the benefits of these riches will be a required component of any durable vision of Colorado.

Therefore, future water development will need to provide the reliable, safe, high quality water needed to support all of our needs, including:

Tourism and the natural environment to continue to bring money into the State from beyond our borders and to draw more permanent residents to our growing residential areas;
Municipal and industrial water supply for our working and service industry communities, our headwaters communities, and our retirement communities;
Agriculture such that food for our citizens can be grown and consumed without substantial implications on our carbon production, while at the same time creating jobs and supporting local economies (noting that agriculture also has an important role in State tourism as agritourism grows); and
Mining and oil and gas exploration to support ongoing and future mineral exploration in various locations across the State.

Clearly, future water development will require that a complex balance be struck between these vital, yet competing demands.

What is unclear is whether or not the parochial nature of Colorado’s water provider community can effectively meet the challenge of balancing these various and oft times competing water demands. Perhaps the greater question that needs to be clarified is not how can we work more collaboratively to balance the future water needs of these competing demands, but rather, do we have a system of governments and special districts that can effectively share and manage our resources to the benefit of all our diverse needs? It may be that the best solution for appropriately managing and allocating Colorado’s water given the competing demands and the need to preserve and protect all the key elements of the State’s economic resources will require some structural changes to how we build and operate large water projects.

With respect to those key issues raised in Executive Director Sherman’s January 15th Memo regarding the “economic base in each region” and how the “business as usual” scenario will impact our future water supply needs, it is likely that unless the status quo changes, water supply development (and even substantial amounts of saved water from water conservation efforts) will be used to support new homes in Colorado’s various geographies without appropriately balancing other vital consumptive and non-consumptive water needs – needs that support robust, resilient communities with diversified local and regional economies buoyed by long-term jobs that match the locally available resources and the related demand for goods and services. We see the majority of water development occurring at this time is to support growth, and there is no reason to expect that fact to substantially change without some degree of intervention or structural revision.

Municipal water providers, after all, are simply doing their job. It is no fault of these organizations that certain water uses are not necessarily equally represented in future water supply development and related financing discussions. Water projects require water sales to support debt service payments. These organizations are limited by their charters, by-laws and other organizational constraints, such that water resources management on a regional and/or statewide scale can become a patch work of intergovernmental agreements and memorandums of understanding, or worse, be regulatory driven.

What appears to be needed, therefore, are organizations with the authority and fiduciary responsibility to manage and allocate water resources to support a broader and more diversified set of uses such that some balance can be ascertained to support long-term economic needs beyond simply providing water for growth and/or municipal and industrial supplies - without creating “winners” and “losers.” Regional water management organizations, such as exist in Nevada, Arizona and California, may therefore be a vital component of our future water supply vision allowing for more representative and holistic management of our State’s water resources.

[1] America’s Best States, 2nd (National Policy Research Council); Most Preferred State to Live in, 4th (Harris Poll); Best Places to Live, various rankings for different cities (Money Magazine); Parks and Recreation, 6th (National Association of Parks Directors)