WATER LEASING: OPPORTUNITIES AND CHALLENGES FOR COLORADO’S SOUTH PLATTE BASIN1

Burgeoning populations are increasing municipal water demand in Colorado, a phenomenon that is changing rural and urban economies. Agricultural water is a preferred source for meeting growing demands, but transfers often require formerly irrigated land to be fallowed, thus removing a key industry from rural regional economies. One alternative to such ‘buy and dry ’ strategies that is gaining interest allows farmers to lease a portion of their water portfolio to cities. Water is made available for lease as farmers fallow their land on a rotational basis or reduce the consumptive use of their cropping operations by limiting irrigation. But will farmers adopt limited irrigation strategies if water lease markets materialize? This research considers whether farmers are willing to sign leases if suitably compensated; what remuneration is needed for a farmer to enter into a lease agreement; how much water the farmer will release when compensated; what provisions are desired in a lease agreement; and what characteristics are shared by farmers willing to lease