Republican River Settlement Solution

Republican Compact Water Lease Program

November 2004 Draft

WaterClaim

308 882-3020

info@waterclaim.org

Republican River Basin Solutions – Stored Water

One Page Summary

The Problem:  The Republican River Basin occasionally fails to provide sufficient water to Kansas as required by the KS/NE Settlement.  This is causing 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.  This requires a well field in the Platte River Basin and a transfer of this water to the Republican River Basin .  Total cost of the project is approximately six million ($6,000,000) per year for 20 years.

This allows the import of enough water to meet all of the Settlement requirements, even in the driest years.  There are several benefits:

• It fulfills the requirements of the Settlement. 
• It helps Harlan County Reservoir remain full every year.
• 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 $0.00425 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 November/2004

Republican River Basin Water Solutions

Detailed Overview

Summary

The Problem:  The Republican River Basin occasionally fails to provide sufficient water to Kansas as required by the KS/NE Settlement.  This is causing 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.  In this area, there has been a 50 to 100 foot increase in the water table in the last 50 years.  The water removed from the Platte River Basin would come from a reduction in consumptive use. 

Any water transferred into the Republican River Basin counts as a 100% credit for Settlement purposes. 

A well field would be created in Phelps County and the water transferred to the Republican River and Harlan County Reservoir via a natural waterway.  The majority of the costs will be to construct the well field, the basin transfer station, purchase of the land for the well field, and erosion control on the natural water way along the 40-mile diversion. 

Economic Review

These costs are below what each interested party has already expressed a willingness to contribute to alternative solutions.  The import of water will also reverse the estimated $80,000,000 to $100,000,000 annual reduction in the regional economy, as estimated by Ray Supalla of the University of Nebraska in his economic study released in October 2004. 

The import of water will eliminate the entire economic loss that Supalla estimates and will, by our estimate, increase economic activity by at least $20,000,000 per year.  This is because a stable water supply will increase land values and increase the number of visitors to the area for recreation, as shown by a Bureau of Reclamation study.  A stable water supply will allow businesses that cater to the recreational and agricultural sectors to invest in and add more jobs to an area that is in great need.

The import of water will have, over a 25-year period, a net benefit of over $2.5 billion dollars.

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 has been 36,000 AF, and this has happened during the worst drought in recorded history. 

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. 

Combined with the already planned CREP program, the importation of up to approximately 30,000 acre feet can compensate for several decades of Modeled Lag Effect requirements.

• 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 expected to contribute 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 50,000 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 dry year leasing of water rights from landowners.  We take no more than the landowner now consumptively uses.  The water is leased throughout the Phelps County area.  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 wells so there is no water being used that was not already being used  for irrigation.  The landowner is well compensated for the use of the water.

How is the water transferred?

The water is collected via a series of small pipelines and moved to a central location.  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.  The water is transferred from the well to the canal lateral.  The canal is then used to transport the water to the collection point.  The collection point is at the beginning of the Spring Creek ravine.  This is a natural waterway that currently runs water. 

Cost of the Project

Infrastructure  

Annual Costs  

Where the money comes from  

Revenue Sources
	Basin Property Taxes	$      2,018,889
	State Funds	$      2,018,889
	Federal Funds	$      2,018,889
		-
	Total Revenues	$      6,056,667

Property taxes are increased $0.00425 per $100 in valuation to generate the Basin share of the solution.

Who gets the water?  Water Model Accounting.

Import up to 30,000 acre feet of water.  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.  

Parties to this Agreement

The details of the water distribution must be agreed to by all parties to the Agreement.  This includes:

• Department of Natural Resources
• Tri Basin Natural Resource District
• Central Nebraska Public Power and Irrigation District
• The Army Corp of Engineers
• The Bureau of Reclamation
• Nebraska Game and Parks
• The various Irrigation Districts
• The Upper, Middle and Lower Republican Natural Resource Districts
• Well Field Land Owners

The Agreement must incorporate the following elements to be acceptable to all parties:

• Comply with all existing agreements between various users of water captured in Harlan County Reservoir.
• Not interfere with the Tri Basin NRD aquifer users that neighbor the water collection system..
• Allow a sufficient quantity of basin-transferred water to be unconsumed by Nebraska to always remain in compliance with the Settlement.
• Allow a sufficient quantity of water to remain in Harlan County Reservoir to always keep the reservoir above the water short year trigger.
• To permit other above-Harlan reservoirs to capture water and, over a number of years, to maintain all reservoirs to their active level.
• Agreement from each of the parties to supply their agreed-upon financial contribution to the project.

Benefits to stakeholders

Farmers:

Groundwater Users

o Continued access to sufficient water to raise a crop and make a living.

o Elimination of water short year restrictions that would severely damage the financial viability of many farms.

o An increase in the water table for land below the reservoirs.  This helps replenish the aquifer.

Surface Users

o Increased canal flows, meaning the farmers have an increased ability to raise a crop and meet their financial obligations.

Businesses:

·        Ag supply businesses now have a stable customer base.  By maintaining the number of irrigated acres and the availability of water, demand for inputs and grain movement should remain strong.  This means the businesses supplying these resources retain their employees and contribute to the community.

·        Businesses around the reservoirs thrive.  As we are able to maintain the reservoir levels at their optimum recreational level, the number of people using the lakes jumps, as indicated in the study done by the Bureau of Reclamation (Technical Report For the Draft Environmental Impact Statement Republican River Basin Nebraska and Kansas Long-Term Water Supply).  This allows new and existing businesses to cater to this increase in customers.

Central Nebraska Public Power and Irrigation District:

·        Financial compensation for the use of their canals and right of ways..

NRDs:

The Republican NRDs are being asked by the State to make cuts in water usage.  The University of Nebraska estimates these cuts will cost the area more than $100 million dollars a year.  By importing water, we allow the NRDs to avoid water short year reductions and to make much more acceptable changes in water allocations. 

While ground water must still be managed, these plans can now be created outside a world of fear and panic.  Time can be taken to create policies that protect the environment and the economy at the same time.

Specifically, the NRDs benefit from:

·        The maintenance of Harlan County Reservoir above the 119,000 acre foot level.

·        No acreage retirement programs are necessary though they may be implemented anyway.

·        A lower tax than alternative plans.

·        Water available for business development.

·        An increase in community activity rather than a decrease.

Irrigation Districts:

·        Bostwick Division – This set of canals sees a substantial increase in available water.  The farmers on these canals are one the major beneficiaries of the plan. 

·        Other canals, such as the Frenchman-Cambridge, will also benefit.  We catch more water at higher elevation reservoirs and benefit all canal users. 

·        The districts make their money by distributing water.  If there is no water, then the district is still liable for the debt it has incurred.  The water we bring to the basin will help keep the districts viable.

State of Nebraska :

The State of Nebraska is the greatest beneficiary from this plan.  The financial obligations it has as it complies with the Settlement are substantial.  We estimate the cost to the State is at least $18,000,000 per year in direct costs, plus the loss of income and sales taxes generated by the retirement of 150,000 acres of farmland.  This is on top of the costs paid by the Federal Government. 

Even if the State manages to transfer the direct costs to the people of south central and southwest Nebraska , it will still lose thousands of jobs and millions in sales and income taxes, if land is retired.  Then, as the rural areas are depopulated, the State itself suffers.  Yields on about one million acres are reduced.  Because any reduction in yield has a direct effect on the net income of the farm, income and sales tax loss from the basin will be significant.  The UNL study done by Ray Supalla indicates this will be more than $100,000,000 in lost economic activity per year.  The State does not get a cut of any transactions that do not exist.

However, by participating in this transfer of water, all of these costs are avoided. 

The prime benefits to the State are economic and social.  Not only does the State avoid huge annual costs, but it also helps provide the essential ingredient to the survival of an entire region of the state.

Specifically, the State benefits via:

o Relief from a much greater financial obligation to buy out acres.

o Relief from the political fallout caused by forcing parts of the state to assume the obligation of the State.

o Relief from Kansas Lawsuits.                        

o Increased Hunting, Fishing, Recreation.                  

o Increased Business Activity.              

o Increased Tax Revenue.                     

o Decreased State Aid Needs.                        

o Increased Use of Water Resources within Nebraska .                    

o Employ more people during project construction.

o Continued employment of the people who would have left due to the loss of access to sufficient water.

Game and Parks:

This plan provides:

·        Increased stream flows in the Republican River below Harlan County Reservoir. 

·        Increased lake level in all reservoirs in the Republican River Basin . 

·        Increase in recreational opportunities, thus more visitors and greater revenue from sales to those visitors.

Graphic Source: http://www.usbr.gov/gp/nepa/rep_riv/coe_rep/chapter3.htm

The average number of visitors to Harlan County Reservoir over a 10-year period is 422,000 people.  This number is highly dependent on the amount of water in the reservoir.  When the lake is high, the number of visitors is high.  When the lake is low, the number of visitors decreases.

Bureau of Reclamation:

The increase in the water supply helps the Bureau provide water to its customers.  The viability of its customers is of great benefit to the Bureau.

Army Corps of Engineers:

The increase in the water supply helps the Corps provide water to its customers.  The viability of its customers is of great benefit to the Corps.

Federal:

·  Keeping about 100,000 acres of land in production.

·  Maintaining sufficient water supplies to one million acres of ground water irrigated land.

·  Improving the water supplies to over 100,000 acres of surface irrigated land both in Nebraska and Kansas .

Well Field Landowners:

·  Above market rate financial compensation for the land. 

·  Probable ability to continue to operate the land.

Action Plan

This is not a water problem or a technical problem.  It is a political issue, and the solution can be provided by the policy makers.

For this to work, we ask each party to take the following actions.

Farmers:

·        Agree to limit development to long-term water availability.

·        Support a $0.00425 per $100 increase on property taxes on all Basin property.

Businesses:

·        Support a $0.00425 per $100 increase on property taxes on all Basin property. 

Central Nebraska Public Power and Irrigation District:

·        Lease off-season canal usage to the project

NRDs:

·        Impose and collect a $0.000425 per $100 increase on property taxes for the project period.

·        Dedicate all of the proceeds of these taxes toward project payments.  If valuations go up and additional revenues are generated, those additional fees will go toward paying down project costs faster.

·        Put allocations in place that will maintain the volume of water usage at present levels. 

o       Further reductions from current usage will not be required unless Harlan County Reservoir falls below the Settlement trigger level of 119,000 acre feet.

o       Additional allocations of water from current usage will not be permitted unless the increase is offset by water made available to the NRD or landowner from imported project water.

·        Create rules for the transfer of water from one allocation holder to another that encourages the conservation of water but does not restrict the free trade of these allocations as long as the Settlement Model reports less consumptive use within the next 40 years because of the transfer. 

·        Maintain on file a record of how much each acre is allocated, uses, and contributes to the consumptive use according to the Settlement Model, as well as who controls this allocation.

Irrigation Districts:

·        Permit the imported water to remain in storage and separate from the consensus agreements that are in place now.  The primary purpose of the water is to comply with the needs of the State of Nebraska to remain in compliance with the Settlement agreement. 

·        Negotiate a supplemental consensus agreement that distributes this imported water between the needs of those paying for the water.

State of Nebraska :

·        Permit the basin-to-basin transfer.

·        Permit the transfer of water to another State.

·        Implement legislation that allows the NRD to increase the taxes.

·        Commit to the State’s financial share of this project.

Game and Parks:

·        Permit the transfer of Mound water to the Republican River Basin

·        Help create and then manage the parks and trails along the enhanced stream that is created.

Bureau of Reclamation:

·        Allow imported water to remain in storage and separate from existing consensus agreements.

·        Negotiate a supplemental consensus agreement that distributes this imported water between the needs of those paying for the water.

·        Permit the use of storage rights in the reservoirs throughout the Republican River Basin .

Army Corp of Engineers:

·        Allow imported water to remain in storage and separate from existing consensus agreements.

·        Negotiate a supplemental consensus agreement that distributes this imported water between the needs of those paying for the water.

·        Permit the use of storage rights in the reservoirs throughout the Republican River Basin .

Federal:

·        Support the project.

Water Collection Field Landowners:

·        Allow the water or land to be leased or sold at a better than market rate.