Water Resources Podcast – Todd Votteler: Water Markets and Their Transformational Potential
[00:00:22] Bridget Scanlon: I'm pleased to welcome Todd Votteler to the podcast, and Todd is the principal at Collaborative Water Resolution that addresses conflict resolution, stakeholder engagement, and policy development. He is also co-founder and editor-in-chief of the Texas Water Journal and hosts the podcast Talk+Water.
I'm really delighted that he has the time to talk with us today. So recently he published a report titled Water Markets for Texas that was released on World Water Day, which is March 22nd, and today we are going to focus on discussing the contents of that report. So thank you so much, Todd, for joining me.
[00:01:03] Todd Votteler: Hi, Bridget. It's great to be with you and I'm looking forward to having you on my podcast soon.
[00:01:10] Bridget Scanlon: Right, so, Todd I thoroughly enjoyed the report. It was so informative and really game changer for water resources management in the Rio Grande and in the Edwards. So I'm just wondering, what motivated you to write the report?
[00:01:27] Todd Votteler: Well, a few years ago I got together with a friend of mine named Jeremy Mazur, who worked for Texas 2036, and we were talking about what are some potential ways to really fundamentally change water in Texas and solve some problems that are emerging as more and more people move to Texas and more businesses start up here and need ever increasing amounts of water. And so we were talking and then started thinking about water markets and what had happened on the Edwards Aquifer water market and decided, hey, that would be a good topic for research. And so, Lyda Hill Philanthropies provided the funds for Texas 2036. And so, I started this research project and I got help from Gabe Collins at the Baker Institute at Rice University with looking at this Edwards Aquifer data in particular, and I got help from Matt Berg with Simfero Consultants to help me with the Rio Grande portion.
[00:02:38] Bridget Scanlon: Well, I really enjoyed reading it, and I learned a ton from it. And one of the things that you mentioned in the report, you say, when water is priced as a commodity, the price sends a signal to sellers, buyers and users. And your table 1 was really informative about the economic benefits of one acre-foot of water in the different planning regions throughout Texas.
I realize the data are from 1995, but I think the relative values are very helpful understanding the return on investment for water. So maybe you could talk about those a little bit about the price that different sectors are willing to pay or do actually pay for water.
[00:03:18] Todd Votteler: So this table came from a report by the Texas Water Development Board, in one of the state water plans. And it took a look at the economic benefits of an acre-foot of water in, in different sectors. And for residential, they came up with a range, and this is, remember this is 1995, of $28,000 to $54,000 per acre-foot in terms of the economic benefit.
And for commercial, $123,000 to $335,000 dollars per acre-foot of water applied to commercial activities. And so then you compare that with, the largest use or one of the largest uses of water in Texas, which is irrigation, right? Agriculture in general is still the largest use about 50%, but irrigation is the major use within agriculture. And they estimated that, hey, that was producing about $90 to $470 per acre-foot in terms of economic benefit. And so when you look at those, you can see that there's an argument for allowing water to be used for the highest benefits to some degree, right?
I mean, we all need agriculture and we want to make sure that we have a healthy agriculture sector. But it's also true that there are some crops that use a lot of water, which are of relatively low value. And, all across the west, those crops are using a lot of water in part because the incentives are not there to do much else, right?
They're in the prior appropriation system and there's not a water market where the value of that water can rise to a point where a water right holder might say, you know what, I'm going to grow this higher value crop that uses less water and maybe take some of the remaining water and sell it or lease it to a city or somebody else who needs it. And, hey, have a much more diversified business that way. Right?
[00:05:28] Bridget Scanlon: Right, and you mentioned, Texas, about half of the water is used for irrigation. And when I was looking at the 2022 data, Texas used about 15 million acre-feet in 2022 and some of the listeners may be more familiar with metrics. So, one million acre-feet of water is equal to 1.2 cubic kilometers.
So it's very similar in terms of cubic kilometers. So half for irrigation and then about a third for municipal and less than 10% for manufacturing and other sectors. But then, I think the message that gives then, Todd, is that uh, there's a lot of buffer there with all of that water being used for irrigation, then that provides a buffer that it could be moved then.
And I think, your report emphasizes how it has been moved when you have created water markets.
[00:06:19] Todd Votteler: Right.
[00:06:20] Bridget Scanlon: Maybe you could define what a water market is. I know you did a lot of work on this and I'm sure you iterated on how to define a water market.
[00:06:29] Todd Votteler: Sure. I spent a lot of time on that and collected a lot of different definitions because there are a lot of different definitions for water markets. And I finally came down to this definition. And so the way that we define water market in this report, which is called Water Markets for Texas. “A water market is an organized and regulated system that facilitates temporary and or permanent exchanges of water usage rights from any source among voluntary participants within a specific geographic area.”
So, I looked at water markets, around the world actually. But three in particular, the Colorado Big Thompson in Colorado, and then the Rio Grande surface water market in Texas, and then the Edwards Aquifer groundwater market in Texas.
And, you can see that those are systems that are well-defined and managed so that the transactions happen, as opposed to, you think about other places in Texas where you don't have a water market and you want to say have an inter basin transfer, or you want to just buy a water right, and change its use or move it to another part of stream or something.
Well, to do that, you've got to get a hydrologist to help you and usually an attorney and you go through a permitting process and then there is a public comment process and then possibly hearings. And so, that can take years, and it's enormously expensive, right? And so, when I think of a water market, and this is a really simple way to, to, it's probably too simple to think about it.
But when I was going back and thinking of great examples, I thought, when I was born, my dad bought me a share of AT&T. And then, when I got to be 18, and this is in the, this is in the eighties, right? I, when I got to be 18, I wanted to sell that share in the stock market. Well, now all I had was a paper share. And so I had to go through a process of getting a notary to help me and then sending it off to a brokerage firm who would eventually transfer it. And then there was a share that could be traded, something that could be done with. Now, as opposed to a system that's defined and put in place for trading those rights, you don't need to go through those other steps, right?
And so, you can have a right that you can lease to somebody or you can sell to somebody within a well-structured system where the rules are open and transparent for everybody, and that can allow the water in that system to rise to the level that is consistent with the demand. And when that happens, one of the great benefits is that people use their water much more efficiently because they have incentives to do that.
And so, we talked a little bit earlier about how much water in Texas is used for ag, and it varies between about 50 and 60% annually. Compare that to California where it's 80%. And so all that water or much of that water is for lower value uses even in municipal. Texas municipal use is about what, 33%, 34%?
But a lot of that is for lawn irrigation, right? I mean, so when you think about it, those two largest uses, if the water really was reflected, the value of it was reflected in the price of the water, we wouldn't be using much of it for irrigating lawns, right? And we wouldn't be using as much of it for lower value crops. That might make sense to grow someplace else where you get more rainfall and you don't have to irrigate as much. And so that would lead to less water use, but a rise in the value of water such that our behavior towards that water would change. And that's what you see has happened in the Rio Grande, and you see it really clearly, much more clearly because we were able to get all the data we needed in the Edwards to see how that is played out.
And you see it in other places like Colorado and the Big Thompson project, which is managed by Northern Water.
[00:11:05] Bridget Scanlon: Yeah, it is fascinating. I really enjoy reading books written by behavioral economists because trying to figure out what people are going to do and what shapes their behavior. But the market really helped change behavior. One of the things that you mentioned in the report that we often have a crisis that initiates a change in action. And for these water markets then it seemed like you mentioned the 1950s drought that Texas was subjected to 50 to 57, and so maybe you could describe the Rio Grande water market and how that evolved from the fifties drought and the building of the reservoirs and, the water rights issues and things like that, that would be very helpful.
[00:11:46] Todd Votteler: Sure. So, one thing before I do that to note, which is relevant to this discussion we're about to have is that in the Colorado water market, Big Thompson and the Edwards Aquifer water market and in the Rio Grande, the creation of the water market was an afterthought. No one set out to create a water market in either one of those initially. They were water issues that resulted in a limited amount of water, specific amount being available for use. And because the rules were in place that capped how much was used and defined everybody's right. It was an opportunity to put in place rules for trading.
And, so, in all three of those water markets, they were really kind of an afterthought. But, talking more specifically about the Rio Grande, so, the drought record in Texas, depending on where you're living, it's starting in the forties or in 1950 and ending in a big flood in the spring of 57.
And so, in the kind of key year 56 the situation in the Rio Grande was so serious that litigation started, there was not nearly enough water to go around for all these water rights that had been issued by lots of people. Counties had been issuing them, the state had issued some, some were never issued, but were kind of, people knew that somebody had been taking water out of this one part of the river or one of the tributaries.
And so, that drought led to a situation where people were running out of water and the rights couldn't be utilized. And so, a state judge, Judge Starley worked with the plaintiffs and defendants in that case and create a system where essentially Prior Appropriation, and you did ask me about different types of water right systems So, I'll go ahead and describe that one. Prior Appropriation Doctrine, that's the water rights system primarily in the Western United States that operates under the principle first in time, first in right. Meaning that individuals who are the first who divert and use water from a stream, or, even aquifer in some places, they have a superior right to continue to use that water even if people come in later and need it. And so, this is a system that establishes a priority based on the date of first beneficial use, not necessarily landownership. And so Texas is a Prior Appropriation state but also recognizes another type of water right, Riparian Water Right, which is most common in the eastern part of the United States. And that's a water right system where if you own land and you're on a river or lake or creek, you have a right to divert water for beneficial use. And if you sell your land, somebody else will have that ride, but you can't sell that, right, it always stays with the land because it's associated with being adjacent to the stream or whatever, water body. And so, in the Rio Grande, we had Prior Appropriation. The judge had all these rights, some which were never really approved by a county judge or the state and those that were [approved]. And essentially what he did was said, look, Prior Appropriation is not working here.
So, he entered a permanent injunction on the use of Prior Appropriation Rights on this portion of the Rio Grande, really the middle and lower Rio Grande in Texas, and replaced it with a Correlative Rights System, a Surface Water Correlative Rights system based in the storage in Amistad Reservoir.
I think it's Amistad. I always get mixed up as, which one it is, Falcon or Amistad. I think it's Amistad. And so, there was no longer a priority day associated with those rights. Now, there was a priority of uses. Municipal and industrial water uses came first and are the kind of the first 225,000 acre-feet or so that are available and guaranteed in Amistad.
And then you've got other rights that are lower in priority, including eventually irrigation rights, which are the majority of water rights and majority of use in that system. And so, essentially the judge said, hey, there's about 9 million acre-feet here. And he doled it out and irrigation uses accounted for about 93% of the water use in say, 1971, right?
When that, that water market started to function. Today, it's about 85% [ag use]. And there's a mechanism that allows ag users to convert their rights to municipal rights, but when they do that, it, their rights take a haircut at 50% or, I can't remember, 60 or 40% but uh,
[00:16:49] Bridget Scanlon: It was 50 and 40%, I think.
[00:16:51] Todd Votteler: Right. And so, they can convert it to a municipal right,
but it's not gonna be, say if it starts at 100 acre-feet for ag rights, irrigation rights it's converted to 50 for municipal. And so that system I would argue has really worked well. And I see that even though everybody knows there's all sorts of trouble going on right now on the Rio Grande because of the low flows and issues with the 1944 Treaty and the 1906 Convention with Mexico about releases.
But I think it's really important to remember there has not been a new water project of any size in the Rio Grande since Amistad, which I think is, if it's it's either Amistad or Falcon. I have to go back and check which one it is, but that.
[00:17:40] Bridget Scanlon: Amistad is the more recent one. It was 69.
[00:17:42] Todd Votteler: Yeah, 1969, think about it that region with all the growth, the last major new water project is 1969.
And so I would argue that, hey, if they had not had the water market in place, they would've reached the breaking point decades ago. But they're still getting along, right? But they're suffering now from the fact that they don't have additional supplies. And unfortunately, the Rio Grande is an area where there's not a whole lot of alternatives, not a whole lot of groundwater available.
Most of the sites that are good for building any kind of a surface water reservoir are already taken advantage of. And so, the water market has helped them enormously. And we'll see how it continues to do in the future.
[00:18:26] Bridget Scanlon: Right. And it's interesting what you say, I mean, the water market then allowed the irrigators with water rights to sell them to other irrigators. to hire irrigators that were growing higher value crops. So even within the sector and that was a full transfer. It wasn't the 50 and 40% with the municipal but is it like two-acre-feet per acre that they were allowed or that doesn't is that something else I was looking at
[00:18:54] Todd Votteler: That's from, that's the Edwards Aquifer, yeah when
[00:18:56] Bridget Scanlon: Well, okay. Right, right, right.
So, so anyway the 50% or 40% then from municipal but even still irrigation is 85% of the total water use. So even with this water market and the ability to move it around, it moves within irrigation to higher value crops and then some moves to municipal. But irrigation is still the elephant.
[00:19:21] Todd Votteler: Right, right in the Rio Grande it is. And the Edwards irrigation peaked in probably 1985, but it's still going on. And most of the trades right now, and I'm not just talking about sales of rights, but leases and, contract water in the Rio Grande, that's between ag users for the most part right now, that's most of it. And in the Edwards it's mostly ag right now. Although initially when that water market was created, a lot of the water was going from ag to municipal. And in Colorado there's still ag use in that system. And so, agriculture was not wiped out.
[00:20:00] Bridget Scanlon: And that's one of the fears, isn't it?
[00:20:03] Todd Votteler: That is one of the fears and so, this is one of the things that I'm really, I hate to say this, but I'm gonna use it. My mom would never approve me saying, I'm proud of, I'm proud of something I did. And so, I came up with these ethical guidelines for creating water markets.
Because in part there, I think a lot of people in rural communities, ag communities who look at a water market and think that's going to be the end of ag. And that's, it's usually not. I mean, and if you look at the design of these water markets, the Rio Grande water market, ags doing fine if they
can solve the water deficit, right with Mexico.
And in the Edwards there's still lots of ag production and that can be the same any place else if you just design the market in a way that encourages some water to be maintained in the ag sector. And there's some, there's a natural tendency to do that when you have these large amounts of ag water, like we talked about in California, 80% of the use, Texas, 50 to 60% of the use where that water really becomes the fuel for the market.
Right? That inexpensive ag water fuels the water market and over time, there's less water for ag and maybe even shrinking the amount of water that's available if you want to do that, if you're over allocated, you know you can design a market that makes it a more sustainable system. But for the ag users, many of them, they're selling some of their water rights.
A lot of them are leasing their water rights and you know what they do. You see this is very common. An ag water right holder will say, if I grow this other crop or put in this new conservation technology, I can free up, 50 acre-feet or 200 acre-feet or whatever, that I can lease to somebody or sell to somebody.
And so what happens is, they have two businesses right? Now, they've got their ag business and their water business, and, they are providing water to people who need it. A lot of it goes to other ag users who need water. But that makes for a much more resilient ag economy.
It's one that's more sustainable, right? If you're, if you're reducing the overall amount of use, like has happened for example in the Rio Grande and in the Edwards, in those water markets. You make a system that can keep going for a long time.
[00:22:35] Bridget Scanlon: I think that's reflected. I know I was reading reports a while back about California droughts and stuff and that the ag didn't suffer as much as they would anticipate because the markets the people with the perennial nut trees and stuff like that, they were buying the water,
even if it was expensive because they couldn't fallow. And so the economics of ag didn't suffer as much as you would expect, you know, because it went to the higher value users.
[00:23:03] Todd Votteler: Yep. That's, yeah, that's called hardening the demand, right? I mean, you're planting trees, those trees have got to have water every year. It's the same with pecans here in Texas, right? We still, growing pecans on the Rio Grande, growing them out west of Austin in places and, pecans, use a lot of water.
I think people don't really initially think about how much water pecans use, typically what happens is they get flooded, they flood them towards the end of the annual cycle, and that ends up using quite a bit of water.
[00:23:36] Bridget Scanlon: Right. And then you mentioned that a lot of people are actually leasing their water. So the market in the Rio Grande has changed over time. I mean, if you look at the 2024 data, there are a lot of short-term leases, more than sales. Contract water, maybe you can describe that a little bit.
And then you also bring up terms like bed and banks permits things like that. And I really like the irrigation modernization and the water saved then, uh, then, they can sell it that's just amazing. So maybe you can experience some of those terms
[00:24:06] Todd Votteler: Well there, um, you know, there is an interesting diversity of different types of transactions that can take place in water markets. And so, I've got a section in the report that just, it's not only pertains to Texas, but looking across the country, what are different types of transactions? And, you've obviously got sales of water rights, you have lease leases of water rights, you have, systems where you pay somebody you know to fallow land.
You pay somebody to interrupt their water use if you get in a drought or something like that. And then you have certain types of exchange of water rights in various places. I mean, can't even them remember all. I was surprising the number of different types of transactions that, that you can have within a water market.
And so, when you look at, for example, what's going on in the Rio Grande and what's going on in the Edwards, most of the transactions nowadays are leases. There are sales of rights for sure. But what you see in a lot of water markets like the Rio Grande and the Edwards, is there's a lot of sale activity at the beginning because there's a lot of pent-up demand usually, that the water market was created because of some water crisis. Right? Which happened in both the Rio Grande and the Edwards. And so the water market gets started, okay? The municipal, industrial, water users who need assured supplies, they have a motivation to go in and get it done then, right? And so they're spending the money to solve that problem for themselves, right?
They don't want to be a situation where they get in a drought and all of a sudden they don't have enough water, compared to a recent drought.
This is a situation that happened in the Edwards. When the Edwards market got started, the San Antonio Water System didn't get permitted the amount of water that would have been available during a similar drought to one in the eighties. And so they needed to make up some supply. And so, they had an incentive to, early on enter that water market to go buy rights. And once they satisfied the amount that they needed, they stopped buying to the degree they were before. And, they're still buying today, but not in the same kind of systematic manner and maybe not paying the same prices that they were or early on. But, you can look at water markets and see that, it's again, kind of like the stock market example, there are gonna be periods when people are gonna pay, be paying more and less, right?
Depending on, shifts in climate and also, population growth, and okay, we now have like exhausted these supplies, maybe we need to go back in the water market and buy some more. Now this is not the situation in a lot of places, but in Colorado, in that water market, which is a big inter basin transfer from the West Slope where 80% of the water is, to the East Slope where 85% of the people are. Those prices for an acre-foot, they've got 310,000 acre-feet in that water project in that pipeline, and they're all divided up into one acre-foot increments. And last year somebody bought an acre-foot for $80,000. Some municipal user, right? That's kind of extreme. Now that's may not be extreme in 20 years, right?
People may say, oh boy, that was a bargain. But obviously the people who needed that water looked at the situation said, okay, well, it's cheaper to go buy water in this system than to go out and build a new water project, even though ultimately that water project may produce water for a lot less than $80,000 an acre-foot, but I only need one acre-foot or 10 acre-feet.
And there are no other water projects to buy from and I don't want to build my own, and so here's a great alternative and I can get it right now. I don't have to wait.
[00:28:16] Bridget Scanlon: Right, right. So, one of the things that I found surprising in your report was how poor the projections were. There were population projections, I guess it was TWDB at that point in 1984 in the City of Brownsville, they projected 2020 and 190,000 people, but the actual population in 2020 was 140,000. And then they projected large water shortages. 130,000 acre-feet in 2000, and 440,000 by 2030. So, kind of highlights the difficulty of making these projections your thoughts on why the projections were off, or, the population growth or.
[00:28:56] Todd Votteler: Sure. So, what's the key there is there were differences in the population projections, but the real interesting thing that I found is that where the water markets were created the projections of how much water would be needed in the future, and I'm talking, some of these projections were just five years out, right?
They were way off. And I'm not just, I'm not meaning to pick on the [Texas] Water Development Board here because everybody got it wrong. I mean, the major water entities in those regions got it wrong. Because what happened? Well, they're creating the water market.
The Edwards is the great example of this. They're creating that water market and they are calculating how much water they're going to need based on kind of the old model, right? Population grows and the water demand grows with population. But that's not what happens once the water market's created, because the incentives are totally different now for people in terms of their water use, right? And the people who now have water rights and their incentives to maximize their profit on those rights. And so, what happens is water use goes way down, and per capita use goes way down. And of course there was a big campaign to do that at the San Antonio Water System,
but that campaign was happening in parallel with the water market, and they were trying to get people to reduce their water use because the water market was here. And the Edwards was no longer subject only to the rule of capture. They couldn't pump out as much as they needed, regardless of how it impacted anybody else.
They had a permit and the permit said, this is how much you have. And during a drought, you might have a cutback of 10% or 20, or 30 or more. And so they had to live within those confines. And so, the water modelers, they're not used to that. And so they were expecting water demand to grow with population like it had in the past, but it had become decoupled.
And that's what I think you see in these water markets is this decoupling of the growth and demand in water, rising at the same pace essentially with population increase. And so that's a good thing when that decouples that, there could be increases in population, but the demand for water doesn't necessarily increase at the same rate because we are finding more and more ways to use it more efficiently because the market is really pushing us to do that.
And so in this report, one of the things that, we outlined in here is look, if you could create water markets in other parts of the state, kind of using a regional model, based on the regional water planning process, that in those regions efficiency and the, the value of water would change behavior such that you might not need to import new sources, quite as soon as you, you otherwise might have needed.
And so that, hey, maybe this is a good idea to like do some of more of this where we can create water markets, which they're not easy to create. As you can see, the two we have in Texas, the result of major water crisis and major litigation. But I outline in this report other ways that water markets could be created.
Here's some options short of being in that kind of situation like we were with the Rio Grande and the Edwards, where we could get water markets going and start changing our behavior with regard to water and benefit a lot of different people.
[00:32:41] Bridget Scanlon: Right, right. It's very interesting to compare the middle and lower Rio Grande where you have the water markets and then also the Edwards, and you've been doing some comparisons there. Maybe you could describe a little bit on how the restriction on water use and the cap on water use in the Edwards and how that has changed over time and the creation of the Edwards Aquifer Authority and things like that.
[00:33:03] Todd Votteler: Sure. So, full disclosure I worked for the federal judge, Judge Lucius Bunton, who had the series of Endangered Species Act casesover the Edwards Aquifer. And I worked in the first case here the Sierra Club vs. Babbitt for the court appointed monitor or special master, who was my mentor, a guy named Joe Moore.
And then in the follow on case Sierra Club vs. San Antonio, I was appointed federal special master for that case. And so the court said, look there needs to be a limit on use of this aquifer to keep these springs flowing and Comal Springs and San Marcos Springs where these complexes of endangered species reside, and which can be found no place else.
And so, the judge essentially said to the state legislature, look, you need to do this, it's not really going to be very good if the federal court has to do it. And so he gave them a deadline and the legislature created the Edwards Aquifer Authority. And that was really, the jumping off point for a lot of groundwater management in Texas because there was litigation over that [Edwards Aquifer Authority] in state court, which finally resolved the question, hey, was it constitutional to regulate groundwater? Well, the state [Texas Supreme Court] said, yes it was. And so there was the creation of a lot of new groundwater districts after that with some limited authority to regulate and manage your groundwater.
And so, the Edwards Aquifer Authority was created, the rules were put in place for how the water market would function, at the same time they were processing permits, based on historical use, how much people had used in the past in various places, even if they weren't using groundwater at that time on their property.
And also, a minimum amount of groundwater of two-acre-feet per acre for irrigators in places that might not have all the evidence that was needed to prove up, here's how much you've been using in the past. But they at least got that minimum amount. And so those rights started to be traded really in 2000, but some trades actually happened in [19]97. It was kind of a complicated situation where the permits were being issued and challenged and making their way through the courts and the Edwards Aquifer Authority. But what's fascinating to me is pumping from the aquifer peaked when the Edwards Aquifer Authority was created, the peak pumping was in 1989, and then the Edwards Aquifer Authority is created in 1993.
And so, the peak pumping was about 542,000 acre-feet in [19]89. And it's been around 420,000 acre-feet since the water market has been in place. And yes, there have been new supplies brought in, not to the water market, but to San Antonio. There's some confusion on that, people think groundwater from the Simsboro portion of the Carrizo Wilcox, it's being transported to San Antonio, 50,000 acre-feet in the Vista Ridge project. That does not go into the water market, that goes into the SAWS system, but the amount of water in the Edwards Aquifer and the permits associated with that are static. And so what you see before that Vista Ridge water reached San Antonio in 2020, that water use went way down. Yes, there was some other sources of water, small amounts of water from the river authority, I once worked for, the Guadalupe-Blanco River Authority, through Canyon Reservoir and some other sources of groundwater, et cetera. But, during that period from 1997 to 2020, it was really the Edwards Aquifer and the water from the Edwards Aquifer stored in SAWS, Aquifer Storage and Recovery facility, which was a major part of that water market.
SAWS created an underground storage facility in the Carrizo Wilcox and would take water from the Edwards, which was not only based on their rights, but they would lease rights, from other people or, somebody had leftover water that year, they'd get some of that, paying for and storing it in the aquifer storage and recovery facility.
And, the water market got humming and water use per capita went down. And so, it's a great example of what can happen in other places. The problem is, getting it all put in place because you can see with the Rio Grande and the Edwards Water market, the conflict associated with those, creating those markets is all upfront, right?
They went through litigation of various kinds and issues in the legislature, and then they create the water market. Now there's no conflict anymore. Transactions happen constantly and you never hear about them and so as opposed to system pretty much everywhere else, right? There's controversy over lots of water permits all the time, surface and groundwater.
Now, if you have a water market, those can happen without any controversy, right? But the controversial part happens when you're creating the water market because everybody wants more than their neighbor. And, people are worried about how the water market is going to impact them, what it's going to do to their community.
And so this report goes out of its way to try to describe ways to manage that conflict. Because I look at water markets as water conflict management opportunities.
[00:38:38] Bridget Scanlon: Right. And so you mentioned, so there's a cap in how much water they could use, and the feds said to the state, you need to cap it to maintain the flow in Comal and San Marcos Springs for the endangered species it seemed like in your report you mentioned maybe 400,000 acre-feet, but then it ended up being 572,000 acre-feet in 2007.
[00:39:01] Todd Votteler: So, the initial limit that was, well not the initial limit, but when the Edwards Aquifer Authority Act was created there was a 19-year period to get pumping in the Edwards Aquifer down to 400,000 acre-feet. And so the thinking there was when the Edwards Aquifer Authority Act was being created, they're going to have to build a major reservoir, and it was going to take about 20 years to build this major reservoir and to get the water to San Antonio as an alternative supply to supplement their use of the Edwards, that didn't happen. But, instead of the limit going down to 400,000-acre-feet I was involved with the legislation that created a process for putting a plan in place to protect those endangered species, really a water management plan, that functions within that water market.
And so, that 400,000-acre-foot minimum was eliminated, and the legislature said there's 572,000 acre-feet that can be used in this system. And so, we've never seen 572 being used. Maybe it'll happen in the future, but what you see really is that the top amount is maybe not as important as we used to think, because I used to think, oh boy, pumping can't be allowed to be set at 572 because that's how much you're going to pump. Well, it turns out that 572,000acre-feet can be pumped when there are no drought restrictions in place. Everybody's got, yeah, full use of their permits, they could use 572. But, what happens is 572 is available when you're not in a drought, it's raining and you don't need as much groundwater. And so, people don't use as much. And so that's why we don't get to that amount [572,000 acfre-feet]. Now in the future, could we? It's possible but San Antonio would need another large ASR facility, I think, to store additional water.
So that, they could take advantage of the rights that are out there. But, the cap has not made as big a difference where it was set. Although I was very worried about it being set so high. But, in any water market, you do have to have a cap. You have to have an upper limit on how much water's available.
And that's one of the issues that Texas struggles with, especially with groundwater, is that, there are a lot of demands for groundwater and, groundwater districts are, being threatened with lawsuits all the time. It's hard for them to enforce a cap, a hard cap. But a hard cap is necessary for a water market.
[00:41:47] Bridget Scanlon: Right. And so, I mean it seems like the aquifer storage and recovery project then allows them if they're not using their full allocation, so San Antonio Water System, if they're not using their full allocation, if it's a wet year or something, then they can store that water and then they can bring it back. How far is the pipeline to transfer? Yeah, there is a pipeline right to the ASR.
[00:42:09] Todd Votteler: Yeah it's just south of town or actually, I say south of town, San Antonio's grown so much since that facility was created, it's probably in town now, but, it's not very far at all.
[00:42:21] Bridget Scanlon: Okay. Okay. And then they treat that water then before they bring it back, they have a little water treatment plant there.
Uh, and how Much are they storing there I mean, what's the capacity of that? Uh, ASR system? It's
a porous media aquifer. So the Edwards is a karst aquifer, it's very dynamic responds very quickly to drought, but then recovers very quickly too. But then they want to store it in a porous media aquifer And then the Carrizo Wilcox is porous media aquifer and provides the storage so it's not running away.
[00:42:51] Todd Votteler: Right. So, years ago I was on a panel or a committee, a regional committee that SAWS created related to the Aquifer Storage and Recovery facility they had, and there was a lot of debate about how much could it actually store, right? Because it kept storing more than they thought. And so, I remember that the U.S. Geological Survey was like, ah, we don't think it can store as much as you think.
And I recall that at some point they had over 300,000 acre-feet in it. I believe, and you'll probably get some emails, people telling you, no, he's wrong, but I thought it was 300-315,000 something at the maximum. So it's quite a bit of water, for a city the size of San Antonio.
And if you're able to use it where you're filling it up when you have opportunities to do so, and then using it during drought periods, it really helps to stretch your supply because you've got it there and it's not evaporating like it might be in a surface water reservoir and you don't have to worry about people getting upset when you're taking, drawing it down, and they can't get their boats out of their docks like they do on many surface water reservoirs.
There's all sorts of issues with that, right? And so, you think about it, to me that was one of the keys for creating other water markets in other parts of the state. Hey, you could maybe create aquifer storage and recovery facilities in conjunction with these water markets so that you would have a place where water could be stored and then kept and then sold.
And there are all sorts of ways you could do that, rules you could put in place that make sure, hey, if you want to that we're going to make sure that we've got enough water for our needs here. And maybe anything above this can be sold all sorts of ways you could do that. And so I try to outline how you might do that using some rules that are already in place.
The Texas Water Development Board has the power to create regional water banks and also has the power to make a regional water bank and have somebody else run it like a groundwater district. And so, I'm hoping in the future that we'll see somebody take advantage of those opportunities.
[00:45:09] Bridget Scanlon: So, I mean, you explained earlier that San Antonio Water System bought a lot of rights early on in the period 1998 to 2005. And then it was interesting to see that during the drought of 2011 to 15, a lot of the trading was to irrigation uses. And then there's also this program called VISPO yeah. Can you describe that? I think it's fascinating.
[00:45:35] Todd Votteler: So VISPO stands for Voluntary Irrigation Suspension Program Option. And so in that program, and I'm probably very out of date on this, but at one point it was 35,000 acre-feet. They were paying farmers a fee, annual fee every year. So that the farmers who were in that program, when they got to a certain drought year, they would tell the farmers in October, hey, the aquifer is really low, so next year you need to refrain from using your water right. And so they get a balloon payment that next year. So they're paid a certain amount. I think maybe at some point it was $54 a year per acre-foot or something like that. It might be more now. And then they got a balloon payment that was maybe three times that much in a drought year per acre-foot.
And so, those figures, they may be a lot more now. But, that was an amount of money that those farmers could rely on every year. Being in that program and in very few years, really having to be in a situation where they weren't going to irrigate. They could still farm, they could dryland farm or something, they just couldn't use their water for irrigation that was entered into that program. And so that was a way to use the market, to reduce demand during critical years. And so that's been very successful and I know that program has been I think exported in other parts of the west, at least
I know they have some similar programs that people have put in place and I know there's been a lot of discussion in other places about, hey, this, might work really well here. But it's been a very successful program in Texas. And one thing to note, the farming community was really concerned that, especially the Farm Bureau was against the creation of the Edwards Aquifer Authority.
During those years in the litigation, they were plaintiffs essentially suing to keep the Edwards Aquifer Authority from being created. And the farmers that were supporting that litigation, just a few years after the creation of the Edwards Aquifer Authority, they had become big supporters of the Edwards Aquifer Authority because they saw what it did and what creating the market did for them. They had this fear that maybe the creation of this water market and this regulatory entity were going to end up taking their water away from them. Now what it did was it really created water rights, a property right, that really had not been there before. Under the rule of capture, you don't have a property right.
Somebody can put in a pump next to your property and drop your well that's not a property right. But the Edwards Aquifer Authority created property rights and the farmers recognize that point, hey, we can really benefit from this, and of course many of them have.
[00:48:25] Bridget Scanlon: Right.
[00:48:26] Todd Votteler: At least the ones who have their own water rights.
[00:48:28] Bridget Scanlon: Yeah. Yeah. And you were right. I mean, $54 an acre-foot any year. And then, forbearance years, $160 an acre-foot, and in 2020, 42,000 acre-feet enrolled. And then, once you enroll, you have to be enrolled for five years, I think, or something like that. And there's some regulations like that.
[00:48:49] Todd Votteler: Yeah, they had, and this has changed as well, I think that they had a five-year enrollment and a 10-year enrollment. And so those timeframes may have changed. I think there was even a shorter one at one point. But, those programs, originally, they had a hard time getting people sign up until they realized, okay, here's the amount you have to offer per acre-foot.
Once they found the right amount, then they had farmers signing up. And, from what I've heard, they don't have problems getting people to subscribe to it anymore, and so that's good for the whole region.
[00:49:20] Bridget Scanlon: And you mentioned the decoupling between water use and population growth and the San Antonio Water System, their conservation group, Karen Guz and those guys, they do amazing work. I mean, full plumbing fixture replacements, landscape conversion programs. The gallons per capita per day has gone down from 225 in 1982, as you described in the report uh, 111 so, less than half in 2022. It really is fantastic. And then conservation, a lot of people say we emphasize developing new supplies a lot of the time, but conserving is probably the least expensive
way to manage the water.
[00:50:03] Todd Votteler: Right, right. So, SAWS has done a fantastic job of getting people on board with conservation as has El Paso Water. And, you look at those two entities and where they're located, right? It's necessity, that has pushed that on, right, has given that fuel.
And so both of those communities are leaders in this state in terms of the reduction in water use per capita and the water market in San Antonio helped a lot with that. And because the users themselves change their behavior, and that can happen in other parts of this country that are really struggling especially out west.
And, hopefully, we'll see more water markets in the future. I think that some of the kind of fear associated with them is dealt with and you can have an open and honest process where people can get together and design the water market.
I mean, that's essentially what happened in the Edwards and with the Rio Grande to some extent, it was really, the rules were put in place by TCEQ, Texas Commission of Environmental Quality, or its predecessor, TNRCC, Texas Natural Resource Conservation Commission. I can still remember the old acronyms too! So that, they have a hand in creating the water market and that is really a key, I think, in having it accepted and being able to put them in place.
[00:51:29] Bridget Scanlon: I think the messages from this report are just so powerful and with so much water being used for irrigation in the west it's a huge buffer then that I think having a market, being able to trade, will really help higher value ag users and then to municipalities and stuff, and having that framework and everything.
I think it's going to be a big part of the future of water management because it would be a necessity. And your report it just really is so informative and very interesting to read, and you did a terrific job. I commend you and I think it'll be a great resource for people and a great tool to communicate the value of water markets
[00:52:10] Todd Votteler: Well thank you, thank you. On behalf of myself and my co-authors and Texas 2036, who decided to do this and Lyda Hill Philanthropies, who made all this happen. Really appreciate that.
And the report really was written to have applicability elsewhere in the United States because, the problems that we're dealing with in Texas are similar to other western states are dealing with.
[00:52:39] Bridget Scanlon: Right. And you mentioned the Vista Ridge, San Antonio buying water from Vista Ridge, 50,000 acre-feet, and that's coming from the Carrizo-Wilcox to San Antonio. So, I guess there are concerns with the people surrounding that region where the water would be pumped.
I was reading Steve Young's paper in Texas Water Journal, which is very informative. 140 miles that they'll be transporting that water and drawdowns of 300 feet to 400 feet, and the wells are about a thousand to 3,000 feet deep. And I guess, do you have any idea what they're paying for that water or is that transparent?
[00:53:18] Todd Votteler: I have seen that, but I don't remember right off hand. I know it's quite expensive, and, it's not the first pipeline from the Carrizo-Wilcox. Of course, there's a right now there's litigation over a permit to move water, I think near Bryan College Station to parts of the Austin area.
And, same kind of thing, where the community where the water's coming from is concerned about their future. And so, that's something that I spent a lot of time discussing in this report. About those fears and how using water regionally more efficiently can reduce the need for big transfers like that.
I'm not saying to eliminate them altogether, but reduce the need. And so just looking at the Edwards, the number of reservoirs that were projected to be needed for San Antonio prior to the creation of the water market is really kind of shocking. Cibolo and Goliad, Cuero !, Cuero 2 and others on the San Antonio and Guadalupe Rivers.
And those projects, none of them were ever built. And so, the ability to use the water that you have now more efficiently is a great starting point. And then, if you need water, import it from someplace else, then you can cross that bridge.
But, transporting water in a big IBT, inter basin transfer, to a city that has not gone through the process of creating a water market and fundamentally changing how it values its water, that project, I think, really ends up prolonging their current water uses, right?
Their current kind of uses of water for lawn watering and other things, which, that treated water treated drinking water standards really can be put to much better uses. And so, the water market can help us get there to do that.
[00:55:20] Bridget Scanlon: Right. Well, our guest today is Todd Votteler he's a principal at Collaborative Water Resolution and is the co-founder and editor in chief of Texas Water Journal. And listen to his Talk+ Water podcast. Thank you so much, Todd, for your time, and I think your report will be a huge success and Texas of course is dealing with a lot of water issues and putting money into it, a billion dollars, the Prop 6, and all of those things, so very timely and very important, so thank you.
[00:55:51] Todd Votteler: Thanks, Bridget. I really enjoyed this and I can't wait to have you on my podcast.
