Water in The West Delivers Significant Value to Ranchland

The summer of 1879 had been exceptionally dry, but Reuben Coffin was still puzzled that South St. Vrain Creek had dried up. And so the farmer, who lived near the recently established Colorado city of Longmont, set out upstream with a search party to investigate what had happened to his water source.

A History of Water in Colorado

To their surprise, according to a history by the Left Hand Watershed Center, they found a dam on the creek diverting water into nearby James Creek. Relying on the long-held principle of Riparian Rights – that is, if one owned land along a river, they had rights to its “natural flow” – Coffin’s party destroyed the dam to restore South St. Vrain Creek. And for good measure, they left armed men behind at the dam to prevent its rebuilding.

The dam’s builders never unholstered a gun to win this battle. They had experienced their own dry summer in 1863, when their water source at Left Hand Creek dried up. So they decided to dam the South St. Vrain to divert for their use. And they took a crucially important next step: Obtaining the legal right, as the newly created Left Hand Ditch Company, to construct the diversion. Once approved, it became the first inter-basin water transfer in Colorado history.

The Doctrine of Prior Appropriation is Born

Little did Ditch Company leaders Joseph Jamison and Porter Pennock know, but they had set in motion a new principle of water appropriation. But first, they had to sue Coffin’s group for trespassing and seek compensation for the dam’s destruction — as well as an assurance it wouldn’t happen again. Subsequent courts confirmed the company’s right to the water. That included the seminal 1882 “Coffin v. Left Hand Ditch Co.” ruling by the Colorado Supreme Court, which affirmed the company’s right to put the diverted water to “beneficial use” in their fields.

That ruling established the doctrine of Prior Appropriation (also known as “First in time, first in right”) as the basis for water law in Colorado. The law has since spread to Arizona, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.

So that’s why, if you are considering a ranch purchase in the West, one of your first jobs is to examine the water rights on the property closely. Even if the property under consideration has water, someone else might own those rights.

It’s also clear that the limited amount of water in the West provides strong value to its owner. Working in ranch brokerage for over a quarter of a century, I can tell you that rangeland without water rights in let’s say North Park, Colorado might be worth $500 an acre, while irrigated ranchland can rise in value to as much as $3,500 an acre. 

And this number does not even address the added value if the water passing through the ranch is a fishery. Water contributes in many ways to the overall value of a ranch. For example, it can add value to the underlying ground by creating crops, which yield income, and by enabling a rancher to raise livestock.

Recent years have seen ranchers across the West selling their water rights to urban water districts desperate to keep up with growth. But agreeing to these so-called “buy-and-dry” transfers, (like this one being proposed in Colorado), takes agricultural land out of production permanently and can have a negative long-term impact on the land.

Learn the Difference

Not all water is the same. In Colorado, for example, there are four distinct types of water:

• Tributary Water

• Non-Tributary and Not Non-Tributary Groundwater

• Designated Groundwater

• Exempt Wells

Get the details about each type and how a landowner might use them here.

Water rights | Irrigation at Porcupine Ridge Ranch

Case Study: Little Cimarron Ranch

Mirr Ranch Group has worked with ranch owners who want to preserve the water on their land via other options. Consider the example of the Little Cimarron Valley Ranch in southwest Colorado. The Little Cimarron River, which runs through the ranch, is an important fishery and a significant tributary of the Colorado River Watershed, but its use for irrigation was having a negative impact on its flows. To reverse that impact, the Western Rivers Conservancy in 2012 acquired the ranch and its senior water rights, which they conveyed to the Colorado Water Trust (CWT). The trust then developed an agreement that enabled the ranch to use the river for irrigation at no additional cost, so long as its owners would forego irrigation for periods of time to maintain proper flows in the river.

This kind of “split-water” agreement had never been accomplished. It was so successful, that in 2020 Mirr Ranch Group was able to sell the property to a private owner on behalf of the Conservancy. Since then, the ranch has continued as a productive agricultural operation while also supporting the health of the Little Cimarron River.

Case Studies in Colorado & Wyoming

Ranch owners can also benefit from their water rights by taking advantage of state and federal programs. In 2018, for example, the owners of Porcupine Ridge Ranch in Routt County benefitted from an Upper Colorado River Commission program. By voluntarily reducing consumptive use of its water rights and temporarily fallowing for one season nearly 2,000 acres (20% of the ranch), they received compensation of more than $400,000. 

There are other examples of private landowners working with government agencies and land trusts. That includes Fred Botur on his Cottonwood Ranch in Wyoming, where they also participated in the Colorado River program but also placed conservation easements on portions of the ranch and received funding to install pipelines, replace antiquated headgates, fix ditches and create large wetland and ponds.

Water Law Today

Want to learn more on your own about the value of water to a ranch owner? Start by reading Colorado Water Law for Non-Lawyers and consider moving on to the Water Rights Handbook for Colorado Conservation Professionals. And remember that the experts at Mirr Ranch Group can speed your learning curve.

Oh by the way: Nearly 160 years after it started the practice, the Left Hand Ditch Company continues diverting South St. Vrain Creek water into Left Hand Creek. And it’s still supported by the law of the West.

Contact us today if we can help you evaluate your ranch or a ranch property you’re considering buying.

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