By Nelson Harvey, excerpts pulled from an originally published piece in the Summer 2016 issue of Headwaters magazine

go time bugColoradans put far too much work into Colorado’s Water Plan for it to simply gather dust on the shelf of some government office. Yet the plan, whose final draft was released in late 2015, remains a non-binding advisory document. That means those who helped shape it must take responsibility for acting on it as well. In a fourth part of our ongoing series on the water plan’s implementation, we examine what we as a state must do to achieve the goals for one of the plan’s nine defined measurable outcomes: funding. Colorado’s water plan sets the goal of sustainably funding its own implementation.

Read the first parts of the series on meeting the water plan’s conservation goals, meeting the plan’s environmental and recreational goals, and meeting the plan’s storage goals.

Funding: Paying the way to a sustainable water future

A man votes his ballot in the U.S. midterm elections at a polling place in Westminster
Credit: REUTERS/Rick Wilking 

Colorado’s economy may depend on water, but water management also relies on an essential ingredient: money. With that in mind, Colorado’s Water Plan sets the straightforward goal of funding itself. This means finding ways to pay for the vast array of priorities that the plan identifies, from new reservoir storage, conveyance, and treatment facilities to recreational projects, watershed plans, and river improvements.

Colorado officials estimate it will cost state and local entities about $20 billion by 2050 to maintain and improve Colorado’s existing water infrastructure while constructing new projects currently on the drawing board. And that’s just to get the projects in place—it doesn’t include the ongoing costs of treatment and distribution.  

Generating that money may require a new public funding source dedicated exclusively to water. Existing water-related loans and grants from the Colorado state government are largely funded through revenue from severance taxes on oil and gas, which oscillate wildly with the price of oil and can be siphoned away to pay for other budget priorities. Because of that, state funding for water projects has varied widely in recent years: In 2009 it was $319 million, but it plummeted to just $36 million in 2010.

A new “water-only” funding source would likely require voter approval and could take many forms: One idea that nearly made the state ballot in 2010 was a volume-based fee on bottled beverages. Legislative economists estimated that charging a penny for every six ounces of liquid and capping the charge at 50 cents per container could raise about $110 million a year. That cash could be divided between priorities like additional investment through Colorado Water Conservation Board (CWCB) loans and grants, more money in the state Water Supply Reserve Account for Colorado’s nine basin roundtables to invest regionally, and a legal fund to protect Colorado’s water rights under interstate compacts.

“We knew that there had to be a new dedicated, independent revenue source that would not be competing with K-12 education, transportation, Medicaid and things like that,” says Dick Brown, a lobbyist for the Pike’s Peak Regional Water Authority who led the container fee campaign in 2010 along with former Arkansas Basin Roundtable chair Gary Barber.

The container fee didn’t make the ballot in 2010 due to opposition from the bottled beverage industry, which convinced the Colorado Supreme Court that it violated the “single-subject test” for ballot initiatives by altering more than one area of state law. Brown says backers need time to educate voters, but a similar measure could reappear in 2017.

Even if voters aren’t willing to raise taxes for water, the water plan proposes a suite of new ways to use existing state revenues. One is a repayment guarantee fund, where the state would put up money to back the repayment of bonds issued to finance multi-partner water supply projects. Currently, participants in projects like the Windy Gap Firming Project, which involves 13 northern Colorado water providers, can’t issue bonds collectively (they still can individually) because the lower credit rating of smaller water providers makes it tough to obtain a favorable interest rate, making borrowing more expensive.

The water plan also suggests a green bond fund to help pay for environmental and recreational projects: The state or an affiliated entity would issue bonds offering slightly below market-rate returns in the hopes of attracting socially minded investors.  

Finally, the water plan notes that the state should use incentives like low-interest loans and extended repayment periods to encourage multi-purpose, multi-partner projects that accomplish more with each scarce dollar—and each drop of water.

A recent collaboration in the Rio Grande Basin illustrates the potential of multi-partner projects. To combat heavy metal contamination from the Summitville Mine and rehabilitate the local fishery, the watershed group Alamosa Riverkeeper acquired water rights to boost streamflows. But the group lacked a place to store the water in order to time its most effective release. In 2013, they partnered with the irrigation company that operates Terrace Reservoir southwest of Alamosa and secured state and federal money to improve the reservoir’s spillway. That permitted the irrigation company to store more water, and in exchange the company granted Alamosa Riverkeeper 2,000 acre-feet of free storage.

Cindy Medina, Alamosa Riverkeeper co-founder, says the project was successful in attracting state funding because it served both environmental and agricultural uses. “I think the state wants to get the biggest bang for their buck these days,” she says, “and projects like this are the ones that will succeed from here on out.”

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2 thoughts on “Go Time for Colorado’s Water Plan: Meeting the Plan’s Funding Goals

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