May 16, 2006

Testimony before the Nebraska Natural Resource Committee
Holdrege, Nebraska

Presented by:

Steve Smith, Director
WaterClaim

WaterClaim is well known for advocating water transfers.  And, as all of you know, we are not the first.  Transfers have been talked about long before WaterClaim came along, and transfers from one Basin to another are happening now.

First, I would like to thank Senator Schrock for arranging for this hearing and for permitting WaterClaim to speak. 

Let me begin by asking, “What happens if we do not do transfers?”

• First, we do not know what our allocation is until after we have used the water.  This means we must use less than what is possible, just to make sure that we are within the allocation. 
• Second, shutting off an irrigation well today does not have any benefit to the stream until years later.  The number of years ranges anywhere from one to infinity. Shutting off a Quick Response well does not give its maximum benefit for seven years.  Therefore, we must anticipate our allocation and our usage years in advance.  That is difficult to do when it takes the DNR six months to tell us last year’s numbers, let alone make any predictions. 

It is impossible to comply with the fluctuations in allocation by shutting wells on or off on an annual basis.  The delayed benefit of shutting wells off means the shutdown of irrigated acres is only beneficial on a very long-term basis.

Over the last 20 years, Nebraska’s allocation in the Republican River Basin has fluctuated between 200,000 acre feet and 415,000 acre feet.  To comply with the Agreement, we must not only accurately predict future allocations but also know how much of a benefit and when we get that benefit for each well we shut off.    

• Third, because of the delay in the effect that irrigation wells have on the stream -- otherwise known as the Lag Effect -- additional reductions in usage must be made each year.  CREP and EQIP are just the beginning.  Even though there are no new wells and no new acres, depletions will increase each year.

There are about 1.2 million irrigated acres in the Republican River Basin.  The Lag Effect will cause an increase in depletions of about 1% each year, even though there is a moratorium on new wells.  That means we will need to take about 12,000 acres out of irrigated production each year, every year, to make up for the depletions caused by the irrigation done by my father and grandfather.

$125 an acre multiplied by 12,000 acres equals a cost of $1.5 million for year one.  The following year, another 1% must be retired at the cost of an additional $1.5 million, or a total of $3 million.  In year three, a total of $4.5 million.  There is no end to this, according to the DNR.   In year four, we up it to $6 million.  This assumes that rents remain at $125 an acre.  Remove 1% of the land each year, add increased demand for land, add higher revenues from ethanol demand, add inflation, and rental rates will continue going up.  They are currently going up an average of $2 an acre each year. 

These costs are on top of CREP/EQIP, and it is doubtful the Federal government will be there to pay this bill.

Each year, we must retire more acres to compensate for the pumping done decades ago.

• Fourth, Nebraska will fail to comply with the requirements of the Agreement.  This places Nebraska at risk of having a judge step in and order the immediate shut down of all wells.  Don’t think it can happen?  Less than two weeks ago, a judge ordered the immediate shut down of irrigation wells on the South Platte river in Colorado.  The seed is already in the ground, but the judge says, “Too bad.  No water this year.”

Are you going to compensate the farmers in the Republican River Basin if a judge does the same thing in Nebraska in 2009?  Do you want to be the one to enforce the judge’s order?  The Legislature has received repeated alerts from WaterClaim warning of this possibility.  Colorado is demonstrating for us that the threat is real.  It is the responsibility of the Legislature to protect its citizens from such threats.

These are just four of the things we need to consider if we don’t do transfers: 

1. Under-utilization of the available water to assure that we remain in compliance.
2. An impossibility to comply by adjusting the number of wells on an annual basis because of the delayed effect they have on the stream.
3. An increase in depletions each year of about 1% that will require another 12,000 acres each year to be taken out of production.
4. A very real and significant risk that a judge will order the complete shutdown of all wells.  This could be done even in the middle of the growing season, as it has this year in Colorado.  What happens in Colorado on the Platte can happen on the Republican in Nebraska and, once the Cooperative Agreement is in place, it can happen on the Platte in Nebraska.

There are other problems if we don’t increase the water supply, but these four are enough to scare me and persuade me that we must find an alternative to continuous cuts.  Reductions in usage alone will not work without destroying the economy.

Nebraska has two choices.  Either we increase the water supply, or we reduce usage by more each year.  We risk a complete shutdown of all wells, if we don’t.

I have given you several reasons as to what happens if we do not increase the water supply. There are some here who welcome a shutdown of irrigation or at least a significant reduction in the amount of irrigation.  Some say that irrigation should never have been allowed in the first place.  Many employed by our tax dollars express this idea on a frequent basis. 

Allow me to address this idea that irrigation is bad.  It is possible for us to resolve the water issue by increasing the water supply instead of reducing usage.  But if the area is blockaded and prohibited from importation of the necessary resources, then you are forcing the economy of the region to change.  I ask the opponents of transfers to answer these questions:

1. Over what time frame do you want to see the shut down of irrigation to happen -- 1 year, 5  years, 10 years, 20 years, or some other period?  You may say, “I don’t want to stop irrigation,” but that is exactly what is happening now.  We are setting in place now the policies that are causing the slow strangulation of irrigation.  The agreement with Kansas requires a 1% reduction in usage each year, every year.
2. At what point in time are we satisfied that there needs to be no additional reduction in water usage?  Does this happen when we meet the Compact obligations or when the aquifer stops declining, or both?
3. Will you compensate the landowner for the reduction in access to water?  The room is divided on that question.  But, the question must be answered.  Ignoring this issue simply moves the question to a judge who may decide to simply shut it all off and order the State to pay the bill.  Everyone loses under that scenario.

Now, let me give you several reasons why we should increase the supply in the Republican River Basin.

One of the strongest reasons is because the US Supreme Court has already said it finds importing water into the Basin an acceptable method of compliance.  It said this regarding a similar dispute between Kansas and Colorado in 2004.  http://tinyurl.com/89zm2

Another reason is money.  The difference in cost between reducing usage and increasing supply is huge.  Shutting down wells costs a lot of money each year -- both in terms of land rent and the effect on the area economy.  We estimate that irrigated corn puts $250 an acre into the economy of the local community.  When we retire irrigated land at $125 an acre, another $125 an acre disappears along with the jobs that money created.  

Because of the delayed effect groundwater pumping has on the stream, we have to shut down between 5 and 10 times the number of wells to accomplish the same thing as importing the equivalent of one well.  We are not simply shifting the problem from one place to another.  We are decreasing the overall cost to the State.  Which is better: turning off 150,000 acres or 15,000 acres?  Which solution will cost the State less money or make it more money in the form of taxes?

Transfers are not an engineering problem.  They are not a cost issue.  They are a political issue. 

A lot of reasons have been given as to why increasing the supply cannot happen.  Every one of the reasons given is policy choice. 

In the transfers as proposed by WaterClaim:

• There are no new holes in the aquifer.
• There are no new depletions to the stream.
• We do not touch the mound. 
• We have no effect on the downstream communities.
• There is no effect on endangered species.
• There is no change in the law except to permit financing. 

I have found it necessary to repeat this often.  Those who do not like the idea of transfers choose to say that we will have a negative effect on the mound, the stream, and the downstream communities.  Some people attack our proposal for something it doesn’t do.  It would be nice if we could address the facts of what our proposal does, not some made up boogeyman.

Once again, the transfers, as proposed by WaterClaim, will not have any effect on the mound, the return flow to the Platte, the aquifer, or the endangered species other than what is already happening now through existing irrigation.  Therefore, if you oppose transfers for any of these common reasons, then you must also logically oppose the existing effects that irrigation has now in the Platte. 

To summarize: What happens if we don’t increase the supply?  One, we underutilize our allowance to make sure we are safe.  Two, we adjust wells on and off and reduce pumping in a futile gesture. Three, because of the Lag Effect, we turn off five to ten times the number of wells that other solutions permit.  Four, we risk a complete shutdown, destroying the economy.

Compare the cost of Nebraska’s two choices.  Consider the risks of failure to comply.  Remember what just happened in Colorado less than two weeks ago where a large number of wells were ordered shut off, even though the seed was in the ground.  Ask yourself if you are willing to buy irrigated land anywhere in the Republican River Basin.

This is a public policy decision that either the Legislature or the courts will decide.  There is enough water to permit a smooth transition to a dryland economy if that is what we choose to do.  But don’t the people living in the Republican River Basin deserve to know what we, as a State, have planned? 

If we make no choice and defer the problem to someone else, then it will be a judge we don’t know from an unknown State with unknown experiences that will make the decision for us.  Unfortunately, some in this room want that.  But I think we can do better.  I think we can sit at the table and honestly list the problems, identify all the possible solutions, and do what is best for the State.

Attached:        Rocky Mountain News story on shut down of wells

                        Ten reasons why we can’t do transfers