Mitigating the Economic Impacts of Dry-Up

Mitigating the Economic Impacts of Dry-Up

As water on Colorado’s Front Range moves from farms to cities, a pioneering ICS economic study charts a more promising course for agriculture.

The purchase of 5,540 Bessemer Ditch Company shares from Pueblo County farmers by the Board of Water Works of Pueblo (Pueblo Water) will provide the City of Pueblo, Colorado, with reliable water long into the future, but it will dry up one-third of all Bessemer irrigated farmland (approximately 5,000 of 15,000 acres) in the St. Charles Mesa, Vineland, and Avondale communities. The loss to Pueblo County agriculture following dry-up is expected to exceed the water purchase price ($56 million) in just 3-7 years. An ICS economic impact analysis (EIA) commissioned by Palmer Land Conservancy—with funding from the Colorado Water Conservation Board, the Gates Family Foundation, the Robert Hoag Rawlings Foundation, and the David and Lucille Packard Foundation—examines how Pueblo Water can support buy-and-dry alternatives that create a better future for farmers.

Agricultural-to-municipal water transfers at the scale occurring in Pueblo County almost always precipitate decline in the affected farm communities. Job loss, the failure of forward- and backward-linked industries, diminishing potential for new ag enterprises, hardships for the next generation of farmers, fiscal and land use challenges for local governments—these are the all-too-frequent results of dry-up. ICS’s EIA, which combines sophisticated analytics with exploratory scenario planning approaches, illuminates pathways to maintain—even improve—Pueblo County’s agricultural economy in the face of dry-up. The study links spatial analyses and economic models to assess alternative water development scenarios. The alternatives look at maintaining irrigation on high quality farmlands, providing remaining farmers with access to those lands, establishing innovative water-sharing agreements, and drying areas strategically to minimize agricultural impacts while maximizing environmental gains.

The alternatives are possible because of efforts undertaken by local advocates to establish key provisions in Pueblo Water’s decree to protect Pueblo County agriculture. One of these, a “substitution of dry-up” provision, allows remaining farmers to acquire highly productive farm ground that will otherwise be dried by Pueblo Water and move water to that ground from less productive areas, which are then dried instead. Earlier ICS studies, undertaken in partnership with Bessemer farmers, demonstrate the potential for substitutions to result in higher annual yields and increased real estate values—significantly improving a farmer’s bottom line.

As the EIA illustrates, in a “do-nothing” dry-up scenario, where Pueblo Water dries all the farms it purchased water from, the range of loss to Pueblo County would be substantial: between $8.4 million and $17 million annually. But the alternative dry-up scenarios create very different outcomes. Substitution of dry-up projects on 1,500 acres with optimized production practices would enhance total economic outputs over current Bessemer-derived production by $2 million/year (from $29.1 million to $31.1 million)—even with 5,000 acres of dry-up. A 1,000-acre continuing farming alternative, where Pueblo Water maintains irrigation on 1,000 acres—and installs drip systems to support farmers helping to expand production of high-value vegetable and specialty crops—would maintain current economic outputs and capitalize on growing retail markets for these products. A rotational fallowing program on 1,500 acres could produce similar outcomes. Substitution of dry-up projects offer permanent dry-up mitigation solutions that enable Pueblo Water to secure its full municipal yield. Continuing farming alternatives require some water sharing. Rotational fallow programs result in slightly greater loss of yield and, while feasible, pose other implementation challenges that would need to be surmounted.

The study examines ten alternative scenarios in total. The alternatives allow Pueblo County and Pueblo Water decision makers to compare mitigation strategies in light of Pueblo County’s 1041 permit requirements, which mandate that water supply projects not degrade any current or foreseeable future sector of the local economy, including agriculture. Pueblo Water will be required to secure a 1041 permit before it can develop its water supplies.

Read the ICS study: The Economic Impacts of Dry-Up on Colorado’s Bessemer Ditch

Read the Pueblo Chieftain article: How the future of Pueblo County farming may call for dry-up of less productive farmlands

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