Republican River Settlement Solution

Republican Compact Water Lease Program

August 2005 Draft

WaterClaim

308 882-3020

info@waterclaim.org

Republican River Basin Solutions – Stored Water

One Page Summary

The Problem:  The Republican River Basin will fail to provide by the end of 2007, sufficient water to Kansas as required by the KS/NE Settlement.  This will cause Kansas to seek damages from Nebraska and will cause the agricultural sector to make major changes that are detrimental to the economy of the region. 

The Solution:  Import water from the Platte River Basin , Phelps County area to Harlan County Reservoir.  Water would be collected using the Central Nebraska Public Power and Irrigation District canals.  Total cost of the project is dependent on the quantity of water transferred.

There are several benefits to importing water rather than shutting off irrigation wells in the Republican River Basin.

• It fulfills the requirements of the Kansas Settlement. 
• It avoids expensive damages and penalties paid to Kansas.
• It helps Harlan County Reservoir remain full .
• It provides the farmers in the entire basin with stable water policies.
• Water short year triggers are eliminated, and farmers may continue to access the water required to make a living.
• Main street businesses are assured of a stable agriculture sector.
• Cost is substantially less than all alternative solutions.
• The regional economy is grown rather than restricted.

The cost of this project is paid by:

• NRDs - $2.0 million – Republican Basin property tax of $0.0425 per hundred. 
• State - $2.0 million – Most believe the State has the obligation to pay the entire compliance costs.  This is a fraction of the State’s responsibility.
• Bureau of Reclamation – Guarantor of project loan and storage rights in Harlan County Reservoir.  The Bureau receives water for their irrigation district and recreational customers.
• Federal - $2.0 million – The project will create a 30-mile stream with parks, wildlife, and recreational opportunities.

Total collected: $6.0 million.

Because of how the Settlement Model works, it is possible to count some of the water for more than one beneficial use.  This allows the area to irrigate more and have more water available for recreation and environmental benefits while still staying within Settlement compliance requirements.  This solution is less expensive than current plans, creates economic activity rather than restricting it, and acts as a demonstration of how to solve other water shortages throughout the western United States .

ROUGH DRAFT August/2005

Republican River Basin Water Solutions

Detailed Overview

Summary

The Problem:  The Republican River Basin will fail to provide by the end of 2007, sufficient water to Kansas as required by the KS/NE Settlement.  This will cause Kansas to seek damages from Nebraska and will cause the agricultural sector to make major changes that are detrimental to the economy of the region. 

The Solution:  Import water from the Platte River Basin , Phelps County area to Harlan County Reservoir.  Water would be collected using the Central Nebraska Public Power and Irrigation District canals.  Total cost of the project is dependent on the quantity of water transferred. Any water transferred into the Republican River Basin counts as a 100% credit for Settlement purposes. 

No new water use is created to supply the transfer.  There is no new draw on the Mound and there is no new draw on the river.  All water for this project is already being used.  This project simply moves the location of the use from the Platte River Basin to the Republican River Basin.

The water can be sourced from any point west of the diversion point.  This includes water from the Wyoming border to Loomis.

The water is transferred to the Republican River and Harlan County Reservoir via an existing natural waterway.  The majority of the costs will be to lease the water from the existing water right holder and to CNPPID for the use of their canals.   

Economic Review

If Nebraska does not comply with the Kansas Settlement Agreement by the end of 2007 then it is very probable that it will owe Kansas for damages, interest, and potentially penalties.  It will also incur attorney and consultant fees.   Kansas was able to collect in damages the equivalent to $145 an acre foot from Colorado in 2004.  Based on DNR volume information, we estimate that this bill will be for $20,000,000 to $30,000,000.  In addition to paying this bill, Nebraska must still modify its water use to remain in compliance in future years.  The costs for doing this via reductions in usage are greater than the 2007 compliance cost.  Estimates of this cost are dependent on the method used to reduce usage.   There are no financial benefits to reducing usage. 

Because the water pumped from the ground does not have an effect on the stream until years later and even then it is a fraction of what is pumped, reducing usage is a long term solution and a very inefficient one at that. 

Water imported into the Basin yields an immediate credit to the State for complying with the Kansas Agreement.  So reducing one hundred acre feet of usage in the Republican River Basin may receive only five acre feet of credit toward Kansas in the first year.  Where importing one hundred acre feet into the Basin will have one hundred acre feet of credit.

As a result, it takes far less money to import water than it does to accomplish the same water numbers by reducing usage.

Ray Supalla of the University of Nebraska in his economic study released in October 2004 estimated $80,000,000 to $100,000,000 annual reduction in the regional economy if water usage was reduced by 20%.  Based on information obtained from the DNR, we estimate that to comply with future water reduction requirements, the Basin would need to reduce usage by about 30%.  This would cause even greater losses than what Supalla estimated. 

If water is imported into the Basin, then none of these economic damages happen.  As a result we believe, Nebraska has only one logical choice in complying with the Kansas Settlement Agreement and that is to import water into the Basin.

Solution - Import water. 

• It fulfills the requirements of the Settlement. 

For every acre foot of water imported into the Basin, the Model allows a one-for-one credit.  This is a direct reduction of Nebraska consumptive use.  The greatest deficit consumptive use Nebraska has accrued is 36,000 Acre Feet. 

The Department of Natural Resources states that we must compensate for something called the Lag Effect.  The DNR estimates that this Lag Effect will, in time, require greater reductions each year in ground water pumping. 

By the end of 2007, Nebraska must bring its usage within its allocation.  The five year average for 2003-2007 must be less than its allocation.  Nebraska is over its 2003 and 2004 allocation by 62,000 acre feet.   For the purposes of this proposal we assume Nebraska will be 100,0000 acre feet over its allocation.

Even if every irrigation well in the Republican River Basin were shut off in 2006 and 2007, Nebraska would not receive enough credit to bring it in compliance.  Therefore Nebraska has two choices - either allow the courts to determine Nebraska water policy or import water. 

• It helps assure Harlan County Reservoir remains full every year.

Because the water we import is not owed to Kansas or any other entity, we can store the water in the reservoir and still receive the credit against consumptive use.  This allows us to “fill” the reservoir to its active level.  Once it is at this level, we only release the water necessary to keep the lake below flood level.  This water can be released to the streams or the canals, according to what the interested parties negotiate.

• It provides the farmers in the entire basin with stable water policies.

Because we are importing more water than the Model says we owe Kansas every year, the farmer can be assured that he will be allowed to use the water he needs when he needs it.  It is still prudent to implement water plans and habitat management plans that manage the water and do not allow growth in water use that cannot be satisfied by this solution.  The water we import is more than enough to allow all current water uses to continue.

• Water short year triggers are eliminated, and farmers may continue to access the water required to make a living.

Because we are not required to release the water from the reservoir, we can always be assured that the lake will not drop below the trigger level that will cause a Water Short Year according to the Settlement. 

• Main street businesses are assured of a stable agriculture sector.

Businesses that are reliant on the agricultural sector will have a stable customer base.  The plans to retire acres and, hence, eliminate an agricultural businessman’s customer base will not happen.  Because the water will be there, long-term investments can be made and the mainstay of small towns will continue to exist.

• The regional economy is grown rather than restricted.

When the lake is always full, when the farmer has the water he needs to raise a crop (even in a drought), the region will prosper.  Elimination of farmable acres eliminates jobs and the need for people, thus creating harmful economic impact.  By adding water to the community, we allow more businesses to thrive, especially in the Harlan County Reservoir area.

• Cost is substantially less than alternative solutions.

Current plans will reduce the local economy by $80,000,000 to $100,000,000 per year.  This is according to the economic study done by Ray Supalla in 2004.  The federal government is contributing over $158,000,000, in the form of CREP money, for the removal of jobs in the area.  According to the DNR, CREP alone is not enough to resolve the problem.  An additional 100,000 acres must be taken out of irrigated production.  The economic consequences of this are huge. 

We estimate the annual costs of our solution at about $6,000,000 per year for 20 years.  This investment maintains economic activity and actually grows the economy instead of eliminating jobs.

Where does the water come from?

The water comes from a reduction in consumptive use in the Platte River Basin .  This reduction comes from interruptible dry year leasing of water rights from landowners.  We take no more than the landowner now consumptively uses.  The water is leased throughout the Platte River Basin.  This map shows one of several possible sources of water and transfer points.

It is important to note that no new wells are drilled.  The only water used comes from the lease of existing water uses.  The landowner is well compensated for the use of the water.   It is also important to note that the Water Collection Area we show here can stretch all the way to the Wyoming State line.

How is the water transferred?

The water is collected via the existing CNPPID canals and moved to a transfer point near Bertrand.  Here, the water is transferred from one basin to the other.  From the location we have identified, there is a natural waterway.  This diversion will increase the flow in the waterway and will likely necessitate erosion control measures for the first ten miles.  The remaining twenty miles is forested.  Water is currently flowing on the bottom twenty miles from a natural seep with its water source in the Platte River Basin.

Cost of the Project

Infrastructure  

Annual Costs  

Startup Costs

Because of the large over uses Nebraska has used during the drought, the first two transfer years will incur a substantially higher cost than what we project the annual costs at.   The annual costs above assume 25,000 acre feet transferred each year.  However, in 2006 and 2007 we anticipate the transfer requirements will be for 50,000 AF each of these two years.  As a result we anticipate the first two years will each cost close to $9,000,000.

Where the money comes from  

Revenue Sources
	State Year 1	$      9,000,000
	State Year 2	$      9,000,000
	State Year 3-future	$      1,700,000
	Basin Year 2-future	$      3,000,000

Because Nebraska needs to bring its usage within its allocation by the end of 2007, it must begin a water transfer in 2006.  However, the NRDs and the Basin do not have the authority to collect any taxes and hence cannot pay any portion of the 2006 or 2007 costs.  Even if the 2006 Legislature authorizes a funding mechanism, revenue from new taxes will not be available until the end of 2007.  Thus the State is the only entity that has the ability to fund the first two years of transfer. 

For this reason we suggest that the State fund the first two years of the project and that once a funding mechanism is in place that the burden be shared by the State and the Basin.

There are approximately 4.749 billion dollars of taxable property within the Basin.  About half of this value comes from irrigated land.  Hence a $0.06 per hundred tax on all Basin property or a $3 per irrigated acre would raise the Basin share of the revenue.

Who gets the water?  Water Model Accounting.

Import up to 50,000 acre feet of water in the first two years.  Up to 25,000 acre feet in each subsequent year.  Because of how the Model works, we may count some of the water uses multiple times. 

Here, we show three of the many possible ways to divide the water.

We cannot use more water than we import.  So, in all cases, total water disbursed cannot exceed total water imported.

The other constant is that credits toward Compliance must always equal or exceed Compliance Requirements. 

Water that is stored in Harlan is a credit toward compliance, as is any water delivered to the stream or to the canal, as long as it is not used by a downstream Nebraska user. 

In-basin transfers are waters that are held in the reservoir or released to the stream but which can also be used by aquifer users elsewhere in the basin 

We estimate that approximately 50% of the water consumed by a Nebraska surface user below the Harlan dam will count as consumptive use.  We estimate the other 50% to be credited as seepage back into the aquifer and a credit toward consumptive use.

Under all scenarios, Kansas receives more water crossing the border while Nebraska remains in compliance and is allowed to continue using the water it does now.

Because we import more water into Harlan than we are required to release under existing distribution agreements, it is possible to exchange this water for captures in higher elevation reservoirs.  These captures can be offset by releases from the imported water.  Over time, this will allow us to fill all reservoirs in Nebraska while remaining in compliance with the Compact and Settlement.  In time, this allows us to create a win-win situation for everyone in Nebraska and Kansas . 

Three possible water accounting scenarios.