1. Workshop on Future Water Supplies in Arizona June 21, 2006 1 WATER ALLOCATION Allocation of the Right to Make Beneficial Use of Public Water By Marvin S. Cohen.

2. Workshop on Future Water Supplies in Arizona June 21, 2006 2 FIRST-COME-FIRST-SERVED (Use It or Lose It) The West—prior appropriation doctrine— beneficial use of scarce water resources.The West—prior appropriation doctrine— beneficial use of scarce water resources. –Arizona, doctrine applies only to surface waters. Property right in the beneficial use of the water.Property right in the beneficial use of the water. –The right can be lost by non-use. Water right can be severed and transferred from appurtenant land.Water right can be severed and transferred from appurtenant land. –Must have approval of Director of ADWR.

3. Workshop on Future Water Supplies in Arizona June 21, 2006 3 INTERSTATE ALLOCATION Interstate stream allocation among states:Interstate stream allocation among states: –Compact, –Congress or –U.S. Supreme Court—equitable apportionment. Prior Appropriation Doctrine need not apply.Prior Appropriation Doctrine need not apply. Early 1900’s Colorado River States worried that California would appropriate all of that River’s water.Early 1900’s Colorado River States worried that California would appropriate all of that River’s water. –Compact permanently divided the River’s water by agreement between the Upper Basin and Lower Basin. Lower Basin water then permanently apportioned among the Lower Basin States by Congress without regard to who first put the water to beneficial use.Lower Basin water then permanently apportioned among the Lower Basin States by Congress without regard to who first put the water to beneficial use.

4. Workshop on Future Water Supplies in Arizona June 21, 2006 4 GROUNDWATER The Regulated Riparian Approach Landowner can make reasonable use of the groundwater extracted from his land.Landowner can make reasonable use of the groundwater extracted from his land. –But State can regulate the withdrawal and use of that water. In AMAs, groundwater withdrawals and use tightly regulated (except for exempt wells.)In AMAs, groundwater withdrawals and use tightly regulated (except for exempt wells.) –For AWS, first-come-first-served. In non-AMA’s loose regulation.In non-AMA’s loose regulation. Interbasin transfers highly restricted.Interbasin transfers highly restricted.

5. Workshop on Future Water Supplies in Arizona June 21, 2006 5 COMMAND & CONTROL Allocation of Colorado River water.Allocation of Colorado River water. Secretary of the Interior can decide who will receive Colorado River water and how much water each will receive.Secretary of the Interior can decide who will receive Colorado River water and how much water each will receive. CAP water—The Director of ADWR recommends—the Secretary allocates.CAP water—The Director of ADWR recommends—the Secretary allocates. –Transfers of CAP allocations must be approved by U.S. and CAWCD. –CAWCD consults with ADWR on the water policy implications of each requested transfer. –CAP allocations not lost for non-use.

6. Workshop on Future Water Supplies in Arizona June 21, 2006 6 CAGRD—MODIFIED FIRST- COME-FIRST-SERVED CAGRD membership—open to developers & water providers in CAWCD’s three counties that can show a 100-year physical supply of groundwater.CAGRD membership—open to developers & water providers in CAWCD’s three counties that can show a 100-year physical supply of groundwater. –Groundwater physical supply “locked up” on a first-come- first-served basis A plan of operation every ten years.A plan of operation every ten years. –If plan of operation not approved, no new member lands or member service areas. –If this happens, those who got in first get access to the replenishment water CAGRD is responsible for finding the replenishment water.CAGRD is responsible for finding the replenishment water.

7. Workshop on Future Water Supplies in Arizona June 21, 2006 7 MARKET ALLOCATION Water farms:Water farms: –Tucson—Avra Valley 1970s. –Phoenix—McMullen Valley. –Scottsdale—Planet Ranch. –Mesa—Pinal County farmland. Indian CAP water leases.Indian CAP water leases. CAGRD potential acquisition of additional water under new plan of operation.CAGRD potential acquisition of additional water under new plan of operation. Storage credits, extinguishment credits.Storage credits, extinguishment credits. Type 2 rights.Type 2 rights.

8. Workshop on Future Water Supplies in Arizona June 21, 2006 8 FUTURE ALLOCATIONS Excess CAP aqueduct capacity—command or market?Excess CAP aqueduct capacity—command or market? 90,000± af of NIA CAP to be allocated by command—Director of ADWR.90,000± af of NIA CAP to be allocated by command—Director of ADWR. Water transfers—regulated market?Water transfers—regulated market? –Colorado River water. Present Perfected Rights.Present Perfected Rights. On River Indian water.On River Indian water. On River agricultural contracts.On River agricultural contracts. Indian CAP leases.Indian CAP leases. CAP non-Indian allocations transferable but not marketable.CAP non-Indian allocations transferable but not marketable. –Other surface water. –Groundwater. –Effluent. If new rural water districts are formed as result of SWAG:If new rural water districts are formed as result of SWAG: –How will the districts acquire water? –How will a district’s water supplies be allocated among members?

9. Workshop on Future Water Supplies in Arizona June 21, 2006 9 HOW WOULD I DO IT? Markets are generally the most efficient way to allocate scarce resources.Markets are generally the most efficient way to allocate scarce resources. In the U.S we have built successful market economy by:In the U.S we have built successful market economy by: – regulating for health, safety and public policy and –allowing the market to function within those constraints. We need such a market system for water use allocation.We need such a market system for water use allocation.