1. Snake River - Klamath River Institutional Comparison Richard Slaughter, Ph.D. Don Reading, Ph.D. Climate Impacts Group University of Washington

2. October 9, 20032 Introduction How do alternative institutional history and structures impact adaptive capacity and resource conflict resolution? OR, Are Markets a solution? Comparison of the Snake and Klamath rivers

3. October 9, 20033

4. 4

5. 5

6. 6

7. 7

8. 8 Source: OSU study, p 366

9. October 9, 20039 Reservoir Storage (acre feet) Snake RiverKlamath River Upper Snake4,173,695Upper Klamath520,000 Boise River1,917,425Clear Lake527,000 SE Oregon1,107,407Gerber94,270 Link River873,000 Total7,198,5272,014,270

10. October 9, 200310 Water Diversions SnakeKlamath Gravity, main river9.5 MAF1.5 MAF Gravity, tributaries6.0 MAF Pumping from river1.0 MAF Total 16.5 MAF1.5 MAF Of which, storage7.0 MAF 1.3 MAF Groundwater3.5 MAF Source: Snake: IWRB, BOR Flow Augmentation Study, 1999; Klamath: ESU study, p. 46

11. October 9, 200311 Irrigated Acreage Snake River3,500,000 Twin Falls Canal Co. (natural flow, private): 1903-05 * 260,000 Minidoka Project (BOR): 1907 - 57 1,111,178 Klamath Basin509,000 Project: 1904240,000 * Water right: 3,000 cfs, about 900,000 AF over 5 months

12. October 9, 200312 Water Rights Adjudication Snake (source IDWR; BOR augmentation study ch. 2) Begun 1987 142,000 claims (62,000 entities) 121,000 recommendations to date 104,000 preliminary decrees issued Tribal claims settled in 1990; earliest right Klamath (source OSU study, p. 79) Begun 1990; federal/tribal claims 1996 700 claims, of which 400 are federal or tribal

13. October 9, 200313 Source: OSU Klamath study

14. October 9, 200314 Sources of stress Snake Irrigation growth Drought ESA related Municipal/Industrial growth Klamath Drought/ESA Municipal growth

15. October 9, 200315

16. October 9, 200316 Klamath history Klamath Project 1904, BOR Lands in the project mostly Class II and III 200,000 acres of lower valued land lie upstream from Upper Klamath Lake, are not part of the Project Before 2001, water scarcity not normally a concern for irrigators.

17. October 9, 200317 Klamath history, cont. ESA action applied only to BOR The only short-term administrative action available was to cut off BOR clients in the Project

18. October 9, 200318 Snake history Large scale private development from 1870 Federal, State assistance: Homestead Act, Carey Act, Reclamation Act Droughts a problem from 1916 Local, cooperative arrangements date from 1919 - High trust among Mormon farmers - Committee of Nine, 1919 - present Conflicts after 1978 have produced continued innovation - Revised Prior Appropriation rules, created markets - Created management tools to reduce transfer cost Recent innovation is response to threatened curtailment

19. October 9, 200319 Snake River Development History Upper Snake: 345 diversions, 41 reaches, 9 reservoirs

20. October 9, 200320 ESA Events, Snake Petitions to list, 1990 “Salmon Summit” (Hatfield), outside ESA Sockeye and Chinook listed, 1991-92 BIOP 1991 Ruled inadequate BIOP 1995 1.2 m AF from Dworshack 237,000 AF from Brownlee 427,000 AF from Res. Upstream from Brownlee

21. October 9, 200321 ESA, part II During current drought, 427,000 target has not been met No releases the past three years Suit threatened to void BIOP for Upper Snake Demands all water in-stream to meet flow target at Lower Granite

22. October 9, 200322 Gross loss from curtailment Klamath, 2001:$87 million gross receipts, $33 million net (source: OSU study p. 379 (Jaeger)) Snake gross receipts: $3.5 billion (source: Jerome workshop)

23. October 9, 200323 Loss Estimates (source OSU p. 379) Calculated Gross loss 2001: $87 million Ground water substitution: $13 million Adjusted gross impact: $74 million Estimated loss if a water market had been in place: $6 million

24. October 9, 200324 Source: OSU study, p. 240 (Burke) Water trade-off and Market Opportunity: Klamath

25. October 9, 200325

26. October 9, 200326

27. October 9, 200327 Objections to Water Market (Klamath Basin) “Won’t work; will never happen” Fears that displacement of water from irrigation to other uses will destroy local farm economies (OSU p. 382)

28. October 9, 200328 Oregon Market Structure

29. October 9, 200329 Oregon not fully appropriated New water rights may be obtained Groundwater appropriation is encouraged in some situations - mitigate surface use State authorized to appropriate for instream use (1987)

30. October 9, 200330 Effect of new technology Oregon: Water Duty is that required to serve the intended purpose New technology can result in loss of right “Conservation proposals” may recover a portion of the saved water for another use; part must go to instream Idaho: Water Duty is that required to serve the intended purpose using the technology in existence at the time of the right Excess can be banked or rented to preserve the right Effectively circumvents “no expansion of use”

31. October 9, 200331 Water transfers in Oregon Authorized transfers for instream use 1987 Instream a “beneficial use” Oregon Water Trust Transfers between users (ORS 540.510 - 540.520) Department determines no injury Only entire right may be transferred Portion not transferred is lost Temporary transfers are allowed Mitigation concept not well developed Critical to a market; transaction cost reduction

32. October 9, 200332 Water Mitigation Bank Fund: The Department will propose that the 2001 Legislature create the authority for the Department to establish a water mitigation bank. The water bank would create a supply or "bank" of water that would be available for withdrawal by new water users to mitigate against injury to existing water rights and to protect and maintain streamflows to benefit fish and wildlife habitat. The concept promises to improve cooperative efforts among private, nonprofit and public entities for the management of surface and ground water resources. Moreover, a water mitigation bank may offer a reliable and effective regulatory framework for environmentally acceptable development of water resources. Oregon Proposal for Mitigation Water Bank

33. October 9, 200333

34. October 9, 200334 After completion of the Eady transfer, three other water right holders (Frank and Marie Conklin, Denny and Marilyn Ebner, and Richard Mittry) sold their Smith- Barclay ditch rights to OWT. All three agreed to sell their rights to OWT in exchange for $1,000 to $1,500 an acre. One of the landowners has converted to a groundwater source, and OWT helped to facilitate this process. The application to transfer these water rights to an instream right has been approved by the Oregon Water Resources Department. Deschutes County, the Deschutes Resources Conservancy and OWT funded the purchase of these rights. OREGON WATER TRUST SMITH-BARCLAY DITCH PROJECT Squaw Creek, Deschutes Basin of Central Oregon No conjunctive management

35. October 9, 200335 DESCHUTES WATER EXCHANGE The DWE is an innovative, non-profit water brokerage dedicated to the restoration of streamflow in the Deschutes River. The Deschutes Water Exchange was founded to establish market infrastructure for water rights, so that both environmental and agricultural water needs can be met. The Exchange encourages a full range of water transactions because the development of a broad market for water should result in a more efficient (and therefore less costly) means of acquiring water for instream uses. In practice, the DWE provides water-related fee-for- service assistance to private clients, investing all proceeds in the DRC mission of restoring streamflows and water quality in Deschutes Basin streams. The DWE also contributes directly to restoration initiatives, whether through its own inititative (such as the annual water leasing program or the 2003 Ochoco Irrigation District Leasing Auction) or through in-kind water rights assistance provided to the DRC or other conservation partners.assistanceannual water leasing program2003 Ochoco Irrigation District Leasing Auction

36. October 9, 200336 Bureau of Reclamation In 2001, set up own internal water transfer process for the Klamath Basin: Accepted bids for 150 parcels, up to $300 per acre Covered 25% of entire Project : 16,525 acres Average $75 per AF Also, took bids for groundwater conversion Paid average of $33 per AF

37. October 9, 200337 Washington Market Structure

38. October 9, 200338 A Water Resources Vision A preferred future for water resource management in Washington State A water market exists which replaces the need for and process of water allocation – All water transactions are registered and data systems ensure full accountability. True costs of water are identified in the system -- the market defines value, and value drives efficiency and maximum net benefits for use of water. The doctrine of prior appropriation and attendant principles (beneficial use, abandonment/relinquishment) remain and are utilized within the market. There are simple rules to ensure fair economic practices and to provide procedures for evaluating and avoiding impairment to other water rights. Funds to support the market and to manage the natural resource base are derived from a market transaction fee, a fee for water use, and/or through state funding. A portion of the funds go to the local governance system, and a portion to the state for management of the natural resource base. Water for basic family and small business needs is subsidized in the market through reinvestment of a portion of the fees. The local governance system man ages the subsidized water consistent with their land use authorities. WASHINGTON STATE

39. October 9, 200339 Idaho Market Structure

40. October 9, 200340 Water transfers in Idaho Authorized transfers Water banking a beneficial use (1977) No injury to third party Mitigation required Conjunctive management with groundwater Established procedure for determining injury/mitigation Transferring party does not have to bear burden Hydrologic modeling used to determine mitigation Rental pools and water bank (1936 - 78) Global rental pool on upper Snake 2003

41. October 9, 200341 WATER BANK

42. October 9, 200342 The owner/lessor acknowledges the following: 1. Payment to the owner/lessor is contingent upon the sale or rental of the right from the bank. 2 While a right is in the bank, the owner of the right may not use the right even if the right is not rented. 3. A right accepted into the bank stays in the bank until the Board releases it or until the lease term expires. 4. While a water right is in the bank, forfeiture provisions are stayed. 5. Acceptance of a right into the bank does not, in itself, confirm the validity of the right or any elements of the water right. Water Bank Conditions

43. October 9, 200343 In 2003 approximately 175,000 acre feet in the Water Bank. However only approximately 5,000 acre feet annually are sold, rented or leased. Activity has been increasing in recent years.

44. October 9, 200344 RENTAL POOLS

45. October 9, 200345 Idaho Rental Pools Limitations Administratively determined price “Last to fill” penalty for water in the pool Global Rental Pool (2003) All storage owners must participate All owners share in rental receipts “Last to fill” is eliminated In 2003, the driest year on record, there were no curtailments, but “price too low” Caveats Three checks written: administrative fee, official price, payment “under the table”

46. October 9, 200346 Considerations for Rental For use in Idaho only For use in Idaho only No injury to other water rights No injury to other water rights No enlargement in use of a right No enlargement in use of a right Water must be beneficially used Water must be beneficially used Water must be sufficient for the intended use Water must be sufficient for the intended use Water use must be in the local public interest Water use must be in the local public interest (.e., not injure other water users) (i.e., not injure other water users)

47. October 9, 200347

48. October 9, 200348

49. October 9, 200349 Summary Idaho: Long history of innovation under stress Driven by irrigation; Environmental claims are recent System continues to accommodate new uses State developing tools to reduce transfer costs, increase transparency Oregon: Beginning to develop market structure Driven primarily by environmental issues Driven by state/federal policy; some contradictions Washington: Statement of vision

50. Key Elements of Difference in Adaptive Capacity DimensionHighMidLow Federal allocative roleKS No. of discrete actorsSK Culturally-based trust levelSK History of innovationSK Existing market structureSK ESA vulnerabilityKS Size of potential $ impactSK Role in state economy/politicsSK Mechanisms to reduce transfer costSK

51. October 9, 200351 Next Steps How to transfer the cultural and historic aspects of Idaho development to Oregon and Washington Oregon and Washington (West side) have until recently lived in a riparian doctrine world: enough water for all uses Learning curve aspects Institutional aspects Geographic differences

52. October 9, 200352 - 30 -