The Value of Senior Water Rights

Reading Aspen Journalism’s recent article “Colorado Rancher Grapples with Water Rights Abandonment Listing” brings to mind another ranch in the area, The Farm on the Colorado. A listing of Mirr Ranch Group’s, it, too, is located in the Colorado River Basin, a region that comprises seven states supplied by the river whose water was divvied up back in 1922 by the Congress-approved Colorado River Compact, aka “The Law of the River.”

A Case Study in Steamboat Springs

As the article describes, in Colorado every ten years the state reviews all water rights to see if they’ve been used. One’s water rights can be abandoned if they are not regularly put to beneficial use. 

The Steamboat rancher who is the focus of the article is in danger of losing one of the numerous, various water rights that irrigate his large cattle ranch, specifically one that waters a distant hayfield that is supplied by a ditch that is in poor shape and delivering far less than the amount of water that the right describes on paper. 

The rancher has filed an objection but admits that this right has been a challenge for his operation to use beneficially and that it could possibly be a water right that the state abandons.

The Issues at Hand

This raises a couple of issues. First, the amount a user actually consumes on the ground may differ from what that landowner’s water right states on paper, a right that is typically adjudicated, or codified with the State of Colorado’s Water Conservation Board agency. 

Secondly, the value of said water right can vary depending on the historic, practical context of that right. The article points out how some older, senior rights have a lot less chance of ever being abandoned. Such a water right might also be efficiently and effectively delivered to its receiving lands, thereby consuming a high percentage of what the right says on paper. 

These are important details that a ranch broker and water lawyers and their water engineers work hard to understand for a property, especially when it’s brought to market for sale.   

Case Study: The Farm on the Colorado

Such is the case with The Farm on the Colorado, a 1,100+ acre ranch located west of Glenwood Springs on the mainstem of the Colorado River. This property possesses senior water rights, most of them pre-Compact, which, as the article points out, likely enhances their value – and that of the property’s – because water rights as old as The Farm’s that date to before the Colorado River Compact became effective in 1929 “enjoy an extra level of protection from abandonment.” 

The Farm’s water rights, are consumed by over 300 acres of hayfields and pasture. That water is delivered efficiently by a very well-maintained canal and is applied to the farm’s lands reliably and copiously every year throughout the growing season, from April to October (yes, even last year, a drought year seemingly everywhere else).

Maybe even more important than being essentially “exempt from abandonment,” The Farm’s surface water right diversion is senior enough that it has never been called by more senior rights on the Colorado. And this is in a river basin that is increasingly subject to federal drought management due to low flows and low reservoir levels at Powell and Mead.

The Value of Senior Water Rights

As you can see, in this context, there’s substantial value to the water rights at The Farm on the Colorado. Add to this, how little developable land exists in the fast-growing I-70 Colorado Ski Country corridor and the acute need for housing in the nearby resort mountain towns in this region and we see even more elements that add to the value of this property’s water and land. (The Farm is an hour from Aspen, Vail, and Grand Junction.)

An Intriguing Investment Opportunity

While Glenwood Springs and Aspen and many western Colorado mountain towns are discussing moratoriums and pushing back on new development, the Farm sits well-positioned to take on such investment. It is located within the Town of New Castle’s Urban Growth Boundary, even contiguous to the town in some spots, so the Garfield County Comprehensive Land Plan says this geography makes The Farm conducive to future annexation and development (by the way, while MRG often works on ranches that will stay ranches, this property is different; even the local land trust maintains that this property is meant for development because of its locale beside the town). 

The far-sighted current landowner of The Farm has even negotiated terms that expedite the transfer of this agricultural water right to a municipal one, should a future owner wish to do so. This strategy “tees up” the property for a future use dictated by the local market needs, further enhancing the value of its water right.

All The Farm on the Colorado needs is the water to supply such development. A look at the history and context of its water rights tells us that it does. 

The Farm on the Colorado - Colorado Ranches - Mountains and Farms

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