The Colorado River is in trouble. 

The 1,450-mile river sweeps across the Rocky Mountains into the Gulf of California, providing water to over 40 million people in seven states. 

The river has lost nearly 20% of its water, reaching crisis levels in recent years. If water levels drop too low, there may not be enough water to generate electricity to meet all of the resident’s needs. Climate change has intensified the problem, including a once-in-a-millennium drought from 2011 to 2017. 

Alarm bells are going off for several more reasons. A population boom means more residents in need of drinking water. Water-guzzling agricultural interests such as mega-dairies need 218 million gallons of water every single day for washing and drinking, as Food and Water Watch reports. Industrial farms also guzzle up millions of gallons of water every day, and the oil and gas industry likewise requires mass amounts to operate. 

But it wasn’t supposed to be this way. 

In 1922, the seven states that relied on the Colorado River for water signed a lengthy, complex pact, the Colorado River Compact. Known as the “Law of the River,” the pact was supposed to give each state enough water to meet their needs. 

Unfortunately, it didn’t work out that way. For decades, corporations, environmentalists, Native American tribes, and the states of Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming have fought over water. Each has sent competing proposals to the federal government to help decide the river’s future.

The seven states negotiated a complex agreement among themselves with “interstate compacts, federal laws, court decisions and decrees, contracts and federal actions” to regulate how much water each state was allocated, or their so-called water rights. The agreement also included the water rights to more than two dozen Native American tribes.  

At the time the agreement was signed, there was enough water to meet the needs of all of the states and tribes. But the states severely underestimated how much water was needed to meet the needs of a growing population, thirsty industries, and greedy outsiders.

Part of the problem can be traced to the “water rights loophole.” 

Closing the loophole 

Researchers argue in a paper recently published in the “Water Resources Research” journal there is a “free river condition” loophole in the Colorado Water System that must be addressed, or the problems will worsen. 

“Under these conditions, anyone—whether or not they own a water right—can divert as much water as they’d like until a senior user downstream makes a ‘call’ on the river because they no longer have enough water to satisfy their right,” the paper argues. The authors recommend the government close the loophole and come up with alternative policies. 

If the government does not close the loophole, it is possible that corporations will take advantage of a confusing array of regulations and transfer ownership of water rights to themselves. 

Corporate outsiders buy up water rights

We are already seeing the corporate takeover of “water rights” play out. 

In Cibola, Arizona, Greenstone Resource Partners LLC, an investment company that owns GSC Farm, LLC, purchased nearly 500 acres of agricultural land in 2013 and 2014, the Guardian reported. The town is home to fewer than 300 residents. Greenstone was the “first water brokerage firm to sell rights to the Colorado River,” and almost no one paid attention. 

The company then sold the water rights to the land to the town of Queen Creek, a suburb of Phoenix, for a $14 million gross profit in 2018. 

“More than 2,000 acre-feet of water from the Colorado River that was once used to irrigate farmland is now flowing, through a canal system, to the taps of homes more than 200 miles away,” the Guardian reported. 

Cibola residents were shocked. They thought GSC Farm was a farm. But it was, as the Guardian uncovered, a “water investment firm that had brokered water transfer deals all across the southwest.” 

The company had acquired thousands of acres of farmland across Arizona, operating under 25 other names and affiliates. 

Companies such as Greenstone and others have “been discreetly acquiring thousands of acres of farmland,” to meet the demand of millions of new residents moving into west. 

“Officials challenging the Greenstone transfer in court fear it will open the floodgates to many more private water sales, allowing investors to profit from scarcity,” the Guardian reported. 

It shocked Cibola residents that an outside corporation could siphon their water away from them. But it’s all about water rights passed down since the 1922 agreement was adopted. 

As the water supply shrinks in the west, more corporations may take advantage of confusing water rights regulations and rules, and also inexperienced government officials and residents.   

Conclusion 

If there are more droughts, and as climate change plays havoc with water supplies, there is no doubt that water rights are more valuable than gold. The western states, with input from environmentalists, the government, and other interested parties, must make changes to the original 1922 Colorado River Compact, or water shortages are destined to get worse.

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