Transbasin Diversions in Colorado: Of Corn, Cities and Cash Registers

Where once there was nothing but desert scrubland, beige and sage-gray as far as the eye could see, there is now a lush green plain, more Illinois than Colorado, the corn, alfalfa and sugar beets in neat rows and circles under the baking sun.

This is the broad plain of the South Platte River, a veritable agricultural wonderland in northeast Colorado, made possible by supplemental water piped from the far side of the spine of North America. Further upstream, a lawless gold miners’ camp has become the largest city within 800 miles, the center of a metropolis unparalleled in the Rocky Mountains, the undisputed industrial and commercial hub of Colorado.

This is Denver, which transformed itself from dusty cowtown to the Queen City of the Interior West in just 100 years on the twin drivers of the transcontinental railroad and transbasin water from high in the Rockies. Meanwhile, west of the snow-capped peaks lie the montane valleys of the Western Slope, steeped in rural history, a region that depends on diverting natural rivers to grow some of the finest fruits and vegetables in the country, and to keep tourism alive in its whitewater canyons and fly-fishing paradises.

This is the Colorado River its in natural state, wending its way westward toward the mighty Pacific… if we would let it get there.

The economy of the West is an economy of water. In this arid region, managing water resources is the first step to growing corn or growing a city. When we divert water from one basin to another, as is necessary due to geography and climate, we also transfer the economic value of that water from one place to another. As with the impacts on natural streams, this transfer is essentially a zero-sum game; the receiving basin has more water to put to economic use and the originating basin has less (although, as we shall see, the originating basin most often wasn’t using this water to begin with). This post will look at the economics of three of our main water users seen above: the farmers of the Northern Colorado Water Conservancy District, who draw supplemental irrigation water from the headwaters of the Colorado River; the manufacturers, businessmen and everyday citizens of Denver, who (knowingly or not) drink and use water mostly from the Blue and Fraser Rivers; and the agricultural and recreation communities along the Colorado, who lose half a million acre feet of water per year across the Continental Divide before they even have a chance to use it.

Unnatural Bounty: Northeast Colorado

I first discussed the Northern Colorado Water Conservancy District, most commonly known as Northern Water, in one of my previous posts in this series. Northern’s municipal subdistrict provides water to eleven cities north of Denver, but the district’s original purpose was to provide supplemental water to farmers along the South Platte River, which flows northeast from Denver into Nebraska. Both municipal and agricultural supplies developed by Northern Water are transbasin, originating in the Colorado River headwaters before being diverted twelve miles under the Divide as part of the Colorado-Big Thompson (CBT) Project.

Northern Water's agricultural service area covers 1.6 million acres in seven counties and extends all the way to the Colorado Nebraska border. Image courtesy Northern Water.

Northern Water’s agricultural service area covers 1.6 million acres in eight counties and extends all the way to the Colorado Nebraska border. Image courtesy Northern Water.

CBT water is unlike many agricultural transbasin diversions (the most famous example is the All-American Canal in the Imperial Valley of California) in that it supplies farmers with supplemental water. This means that CBT shareholders rely on native South Platte River water during spring runoff, when it is plentiful, in the early and middle growing season. By late summer and early fall, the South Platte is mostly depleted, and CBT water flows out of Northern’s reservoirs to “finish” the crops and send them to market. This makes calculating the benefits to East Slope agriculture somewhat different than in a place like the Imperial Valley, which was so dry before transbasin water delivery that it was named “the Valley of the Dead.”

Nonetheless, CBT water has enabled the expansion and reliability of irrigation in the South Platte basin. Many of the benefits are captured in a chapter by Charles W. Howe and K. William Easter (which, unfortunately, does not appear to be available online for your perusal), summarizing several studies of transbasin diversion benefits and costs. The authors estimate the incremental value of CBT water at $3 per acre-foot in 1961 dollars (Howe and Easter 1971: 40)- about $23.50 in today’s dollars, according to the Bureau of Labor Statistics. This is the value of the water alone (as represented by the market price of a share of CBT water), not the value of the post-diversion agricultural production. Considering that the CBT Project delivers an average of 213,000 acre-feet per year from west to east, this gives a  rough estimate of benefits of about $5 million in added value to CBT shareholders annually, assuming that the value of a CBT share has not outpaced inflation in the last several decades.

Weld County, one of the primary beneficiaries of CBT water, is the richest agricultural county east of the Rockies. Image courtesy Weld County.

Weld County, one of the primary beneficiaries of CBT water, is the richest agricultural county east of the Rockies. Image courtesy Weld County.

There is also the value of agricultural products to consider. Northern Water does not publish an accounting of their members’ crop sales, but the Colorado Department of Agriculture states that the eight counties served by Northern sold about $2.8 billion worth of produce in 2007. Most of the most productive agricultural land in these counties is served by the CBT. Even if we discount the latter figure to reflect that there is agricultural land here not served by Northern Water, and that CBT water is only supplemental water, one could reasonably say that the annual benefits to agriculture in northeast Colorado from transbasin water are on the order of several hundreds of millions to perhaps over one billion dollars.

Dryland Boomtown: Metro Denver

Denver is the capital, largest city, and economic and cultural hub of Colorado and the Rocky Mountain Region. The city and many of its suburbs are served by perhaps the most powerful water entity in the state, one that draws the ire of many communities on the Western Slope (more on this in a later post), Denver Water. Denver Water relies heavily on two transbasin diversions from the upper tributaries of the Colorado River to the South Platte River and South boulder Creek.

Similarly to Northern Water, Denver has never attempted to publicly estimate the economic value of their transbasin diversions. However, some back-of-the-envelope arithmetic can provide us with a general idea. The gross metropolitan product of Denver and its suburbs was estimated at $161.5 billion in 2011 (see page 26 of this report from the U.S. Conference of Mayors) and Denver Water serves 1.3 million of the 2.6 million people in the Denver metro area, so for simplicity’s sake, let’s assume the gross product of Denver Water’s service area is $81 billion (although it’s certainly higher, since Denver Water serves nearly all of the region’s major business districts and much of the local manufacturing).  Denver Water diverts an average of 121,679 acre-feet per year through the Roberts and Moffat Tunnels, and claims to use 250,000 acre-feet annually, so to keep the math simple I’ll call the economy supported by Denver’s transbasin water upwards of 40 billion dollars. This isn’t really a comparable figure to the above $1 billion of agricultural products due to the different roles played by water in agricultural and urban production, but it’s safe to say that the people producing Denver’s output wouldn’t be here without transbasin water to drink.

Peaches, Trout and Whitewater: Western Colorado

The role of water in the Western Slope economy takes on many forms (as it does elsewhere). The Colorado and Gunnison River basins have been, from the first white settlement, a haven for agriculture. Palisade peaches, Olathe sweet corn, and apple and cherry orchards of the North Fork Valley are highlights of Colorado’s farming scene, all nurtured by a mild climate, fertile topsoil carried down over millions of years from the high mountains, and irrigation. The Grand Valley irrigators are the primary beneficiaries of Colorado River water before it flows into Utah, and have the most to lose, in a sense, from transbasin diversions serving the Front Range. Mesa County, the home of the Grand Valley, produced $61.2 million of agricultural products in 2007, ranking 23rd among the 64 counties in the state and first among counties west of the Continental Divide.

Nearly every agricultural county west of the Divide is impacted in some way by a transbasin diversion, which makes the overall impact difficult to quantify. But narrowing the scope of the question to those counties along the main stem of the Colorado and Blue Rivers, which are drained directly by Northern Water and Denver Water as described above, provides a point of comparison. Those five counties combined to produce $98.7 million of agricultural products, mostly cattle, in 2007. The flow of the Colorado River before it takes in the Gunnison River is about 2.771 million acre-feet, and the total transbasin diversion out of the Colorado River headwaters is, on average, 374,085 acre-feet, or about 13.5% of the available flow at Grand Junction (That figure would be 18.33% if you include the ditches and tunnels augmenting the Arkansas River headwaters to supply the cities of Pueblo and Colorado Springs and the farmers of southeastern Colorado). There’s no guarantee how transbasin water would be put to use if all the tunnels and ditches across the Divide were shut, but if its productivity were similar, you might expect an additional 13.32 million dollars for the nine Colorado River counties.

While our mental image of northeast Colorado is probably replete with farms and ranches, we probably don’t think the same of the Western Slope. Instead, we probably see something like this:

Western Colorado’s primary industry, despite the history and quality of its agriculture, is tourism. This link provides a wealth of statistics regarding direct and indirect tourism impacts on Colorado counties. The data indicate that direct tourism spending alone generated $2.15 billion for the five Colorado and Blue River counties in 2012. Allocating a percentage of that to water supplies is trickier, of course, though it’s reasonable to assume the plurality of visits to the five counties involved skiing, rafting and/or fishing. While natural snowfall is not subject to transbasin diversion until it melts, ski areas do retain water rights for snowmaking, and successfully sued the U.S. Forest Service to retain those rights. Quality of rafting is obviously directly connected to water available in the Colorado River, and rafting groups have fought against the additional transfer of water to the Front Range in the Moffat Firming Project, as have sportsmen’s groups like Trout Unlimited. Nevertheless, it seems impossible to attribute a certain amount of economic loss to either additional or the existing transbasin diversions from the Colorado River headwaters.

Conclusions

It’s inarguable that transbasin water has been a bonanza for Colorado. Northeastern Colorado is the most productive agricultural region between California and Kansas mostly because of imported water. Denver, likewise, has grown to be the economic hub of the Rocky Mountains on the back of intensive water development, about half of which is transbasin. Meanwhile, Western Colorado has used more water to irrigate less land, produce less agriculture, and support a tourism industry that pales in comparison to the commercial might of the Queen City.This shouldn’t surprise us, as the three tunnels under the divide that I’ve discussed in this post were built precisely because of the amount of money behind them.

An economist, therefore, might argue for greatly increased transfer of West Slope water to the east, to grow more profitable crops, and build more homes, offices and factories. A purely efficient market might buy out every Grand Valley farmer, drain the Colorado River (ignoring for the moment that Colorado must deliver water downstream to neighboring states), build massive storage up and down the Front Range, and put all that water to use pumping out cattle, corn, soybeans, aircraft and machinery. The cash register bells would ring.

But this line of thinking is very troubling for just about every other perspective on our limited water resources. We’ve already covered the habitat impacts of such an approach in this series, and to complete the series I’ll turn our focus to the political and social cost of transbasin water, and who seems to have the ethical high ground when it comes to transferring water from West to East.

This post is the fourth in a six-part series covering the policy, science and values of transbasin diversions in Colorado, fulfilling requirements for ENVS 5000 at the University of Colorado Boulder.

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2 thoughts on “Transbasin Diversions in Colorado: Of Corn, Cities and Cash Registers

  1. I am very impressed with your calculations and clearly economic interests play a large role in the diversion of water. Reading about the Transbasin Diversions in Colorado have just really surprised me. Throughout the time that I have lived in Boulder (over 35 years), I have known very little about water diversions. I have always known about reservoirs, but didn’t understand that the water was coming from the Western Slope. I don’t think this was for lack of interest or intelligence, because a number of others I have spoken to also did not know this. My comment to your blog in general, not just this post, is more about the lack of education of the users of water. Certainly, the builders of infrastructure know and understand, but I really doubt that the average Denver citizen knows about water diversions. As this information has really given me a new appreciation for water, I wonder if more informed citizens, agricultural industry and businesses would be more inclined toward conservation efforts. Additionally, if there were substantial monetary benefits to doing so, I think the situation may shift. As you’ve shown, people are really motivated by the dollar.

    • Hi Laura, thanks for your comments. It’s only recently that water providers have seen value in educating their customers about the complexities of water supply and the value of conservation. Denver Water’s “Use Only What You Need” campaign (and its predecessors) have been quite successful: since 1980 Denver has grown to serve an additional 300,000 people or so, while overall water demand hasn’t increased. I think awareness of infrastructure is probably higher now than it ever has been- a lot of water providers see visibility as a negative: “people are only aware of us if we screw up” or something like that. That being said, most of the Front Range water providers are now using tiered rate structures (where the price per gallon increases the more you use) and rebates (for efficient appliances and irrigation practices) to provide an incentive for active conservation. It’s probably impossible to know how much of the per capita use improvements are due to awareness and how much are due to the almighty dollar.

      More on conservation from Denver Water, no doubt the most active/ progressive water provider in Colorado: http://www.denverwater.org/Conservation/

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