Flexibility in Perpetuity

Looking at a meadow of rippling grasses, it’s natural to want the scene to stay unchanged forever. Conservation easements were developed to do exactly that: They transfer properties’ development rights from landowners who agree to preserve the parcels to a certified holder, such as a land trust. The agreements apply in perpetuity, making them a very powerful tool for land conservation. But on the topic of water rights, easements haven’t always been so effective.

Colorado’s conservation easements date back to 1976, and in the early years, most of them neglected to mention water at all, says Sarah Parmar, director of conservation for Colorado Open Lands, which holds easements on more than 500,000 acres. “As the [land trust] field developed, people realized the importance of describing water rights in easements,” Parmar explains. By the early 1990s, conservation easements typically encumbered all of a property’s water rights and declared that water should never be “severed” from the land. Furthermore, contracts dictated that irrigation must continue as it had before.

Such language offered advantages. It prevented the landowner from selling off the water that sustained the land’s agricultural or ecological value. It also protected easements’ water from being wrested away by distant urban or industrial users.

But over time, as Colorado’s population grew and drought became the state’s new normal, conservation easements’ handling of water rights seemed too rigid. The language often forbade the landowner from altering the land’s productivity, says Megan Knott, director of stewardship for the Colorado Cattlemen’s Agricultural Land Trust (CCALT), the country’s fourth-largest land trust. That prevented farmers from trying different crops that might require less water. Switching from flood irrigation to water-saving pipes and sprinklers, which improves irrigation efficiency, could run afoul of the easement’s requirement to support any wetlands that might exist on the property. And the obligation to maintain and upgrade water infrastructure could impose heavy financial burdens on the easement’s current and subsequent landowners. “A headgate can easily cost $800,000, and that’s a problem if the price of infrastructure exceeds the benefit of its use,” says Knott. (Consequently, the CCALT is trying to establish an endowment that could defray the cost of irrigation upgrades with grants to landowners.)

What’s more, easements’ requirement to continue with unabated irrigation sometimes conflicted with emerging statewide efforts to manage water for conservation rather than consumption. For example, conservation easements occasionally prohibited landowners from leasing their water to the state, as is often facilitated by the nonprofit Colorado Water Trust, to support instream flows for environmental benefits. Such leases might have achieved gains for multiple stakeholders—including landowners, aquatic species, and the surrounding communities. But the easements’ language prevented the water from being “severed” from the property, even temporarily. “Ironically, that precluded the most conservation-minded landowners from participating in instream leasing programs,” says Parmar. Conservation, it seemed, needed some wiggle room.

Flexibility with “forever”

Over the past 10 years, Parmar and members of the land and water conservation communities began to brainstorm ways to build more water-management flexibility into conservation easements without undermining the perpetuity that gave them their strength. In 2011, the Colorado Water Trust developed template language for land trusts’ use in drafting conservation easements that permitted temporary transfers of water off the land for instream flows. And in 2018, Parmar co-authored “Sharing Water to Save The Farm: A Guide to Agricultural-Municipal Water Sharing for Colorado’s Land Conservation Community,” which offered additional template language that conservation easements could use to acknowledge water leases, known as Alternative Transfer Mechanisms or ATMs, between agricultural producers and municipal utilities.

The publication was also pivotal in convincing the conservation community that flexible water management needn’t weaken perpetual protections. “Now, there is a lot more conversation happening about creative approaches to water rights that allow for new kinds of collaborations,” Parmar says. “Instead of us saying to a farmer, ‘It’s all or nothing,’ we have that diversification option for landowners to lease [water] in appropriate ways, to a municipality or even a fellow farmer,” she adds.

The first perpetual agreement to test an expanded range of water flexibility involved Larimer County and the City of Broomfield, and was finalized in summer 2017. This ATM doesn’t involve a conservation easement because Larimer County purchased the property with funds that specifically designate it as open space, a municipal status that would be incredibly difficult to change. Located on the border between Boulder and Larimer counties, the 211-acre Little Thompson Farm enjoys sweeping views of Longs Peak, which, along with the farm’s water rights—shares on two ditches plus 240 Colorado-Big Thompson Project units, the yield of which changes each year—made it a prime candidate for development. To preserve the working farm, Larimer County purchased the property for $8.2 million in August 2016, with the Town of Berthoud and the Gates Family Foundation contributing $100,000 each.

The county sold nearly half of the farm’s C-BT water but retained 125 units to keep water on the land forever. As part of the deal, Larimer County partnered with the City of Broomfield, with Broomfield paying more than $3.7 million to own 115 units of C-BT water and the option to use an additional 80 units during three of every 10 years. This ATM arrangement presents a groundbreaking alternative to the prevailing “buy and dry” transaction that municipalities have long used to acquire water rights by purchasing farms and transferring the associated water rights. Irrigation continues to produce corn and beets on the property, which is now publicly owned but leased to a farmer. And although the perpetual agreement refers to the water rather than the use of the property, its designation as open space gives it powerful protections against future development.

Thus, says Western Water Partnerships’ Todd Doherty, who facilitated the agreement and co-authored “Sharing Water to Save The Farm,” the agreement saved the property as an irrigated farm while granting Broomfield forever access to valuable water rights. “Its permanency is the big thing. It’s not just a one- or two-year [water] lease, which isn’t attractive to municipalities that need more certainty in their water planning. It’s perpetual,” he explains.

The Little Thompson Farm agreement has served as an inspiring model for new negotiations in progress. Doherty is working on a conservation easement and ATM pairing involving some 500 acres near Fort Morgan, and the City of Greeley is also considering water-sharing deals via conservation easements and ATMs. “Agriculture is Greeley’s heritage, and they want it to continue to be part of the community in the future,” says Doherty. “They also want to be an example of responsible governance in their region.” Meaning that Greeley would prefer to avoid the buy-and-dry scenarios that put farms and related industries out of business.

On the Western Slope, negotiations with Cold Mountain Ranch on the Crystal River have created a new paradigm allowing water associated with conservation easements to be used to support healthy river flows. Bill Fales and Marj Perry, the landowners, wanted to participate in leasing options offered by the Colorado Water Trust, which sought ways to boost Crystal River flows to sustainable levels. But Pitkin County rules stymied the landowners’ participation: Under the terms of their conservation easement, entered into in 2009 with Pitkin County and CCALT, Fales and Perry had to irrigate as they always had—the water couldn’t be “severed from” the land.

So the Colorado Water Trust worked with the county and with the landowners to develop an alternate approach. Instead of reducing their water use, Fales and Perry could adjust the timing of their diversions and irrigation to reduce their impact during periods when the Crystal was flowing critically low. Finalized in January 2018, the diversion coordination agreement didn’t reduce the property’s productivity or cut back on its consumptive use. Instead, it factors the river’s needs into the ranch management calendar. And all timing adjustments are strictly voluntary: CWT only compensates Fales and Perry if they coordinate their diversions under the agreement. “It gives a lot of options and flexibility to Cold Mountain Ranch,” says Mickey O’Hara, director of programs at CWT.

Still, the deal’s efficacy remains to be proven. Now, in the third and final year of the pilot term for the diversion coordination agreement, CWT has not yet enjoyed an opportunity to capitalize on the terms. Dry conditions in 2018 and 2020 prevented Fales and Perry from delaying or coordinating their diversions, and in 2019, the Crystal River flowed so strongly that adjustments weren’t necessary. “If we have no chance to implement [the agreement] before its term expires this year, we will go back to the drawing board to see if the agreement’s constraints are appropriate, given climate factors,” O’Hara explains. “We’ll take stock and make the adjustments we need to get creative, with a slightly different approach.”

Beyond the Surface

Cleave Simpson, general manager of the Rio Grande Water Conservation District, walks through a groundwater-irrigated field in the San Luis Valley. To combat the unsustainable decline of valley aquifers and encourage irrigators to use less groundwater, Simpson is working with Colorado Open Lands and the Rio Grande Headwaters Land Trust to develop conservation easements that restrict groundwater pumping. Photo by Christi Bode

Some of the most visionary work with conservation easements is underway in the San Luis Valley. There Colorado Open Lands and the Rio Grande Headwaters Land Trust are working with irrigators within the Rio Grande Water Conservation District (RGWCD) to envision a new species of conservation easement that would protect and replenish the region’s aquifer system, which is shrinking to alarmingly low levels given irrigator’s dependence on well-drawn groundwater. The valley’s unconfined aquifer, which is fed by the Rio Grande River, has decreased by about 1 million acre-feet since the drought of 2002—that’s more water than Blue Mesa Reservoir, Colorado’s largest above-ground body of water, can hold.

“Traditionally, conservation easements have focused on properties with valuable surface water rights,” says Parmar. “But in the San Luis Valley, the biggest challenge to agriculture is the potential shutdown of agricultural wells because of groundwater depletion.” And in the valley, home to the nation’s second-largest potato economy, agriculture is paramount.

One irrigator—who also happens to be general manager of the RGWCD—proposed this new model of using conservation easements to protect groundwater. A fourth-generation farmer and rancher, Cleave Simpson grew up in Alamosa, then worked as an engineer in the coal industry before returning home to work for the RGWCD. Water difficulties on his property forced him to set limits on his own groundwater withdrawals. “Every year, I have to make management decisions that will keep me from going over my limit of 250 acre-feet every five years,” he explains. “That got me to wondering, ‘How could we incentivize people to do something similar?’”

His neighboring irrigators may need better incentives to reduce pumping than they’ve had so far. In 2004, after the 2002 drought, state lawmakers passed a bill requiring the state to regulate the aquifer to make it more sustainable. A few years later, in 2011, the state approved irrigators’ management plan to self-regulate their aquifer withdrawals. As a result, irrigators have dried up thousands of acres of land, with farmers paying a fee for the water they pump—that fee goes toward compensating producers who agree to fallow their land. While those in the valley have worked hard and fallowed land, drought struck again in 2018, wiping away 70 percent of the groundwater gains the region had achieved in recent years. Even though irrigators have through 2031 to hit the aquifer’s sustainability targets, the state engineer has warned that this office could have to shut down the region’s wells if it becomes obvious that they are not on the path toward sustainability. Simpson and the two land trusts suspect that the compensation provided by conservation easements could motivate irrigators to limit their groundwater withdrawals even more significantly than they’ve done  so far.

“This is uncharted territory,” he admits. So far, only one farm in the San Luis Valley has entered into a conservation easement that would restrict groundwater pumping. Members of the local conservation community support the effort, but it remains to be seen if more land trusts and their financial backers will also get behind it. “But if this [conservation easement] effort is successful, and if we can get enough participation and some help from Mother Nature, this could be a huge step back to historical conditions and a healthier aquifer—which effectively means healthier everything, including river systems and riparian areas,” Simpson says.

In the San Luis Valley, while using conservation easements in this new, flexible way could mean healthier “everything,” across the state, creating conservation easements that allow for flexibility in water management can give all parties greater water security, says Knott with CCALT. To avoid state intervention in the San Luis Valley, irrigators will need to further self-regulate their groundwater withdrawals.  And as nearby municipalities come looking for water to support growth, flexibility keeps landowners’ hands on the steering wheel. Says Knott, “We don’t want municipalities to get to the point where they feel they have to seize water. Collaboration can forestall that and build a more sustainable future.”

A freelance writer living in Steamboat Springs, Colo., Kelly Bastone covers conservation and the outdoors for publications including Outside, AFAR, 5280, Backpacker, Field & Stream, and others.