Buying and Selling Water in Montana

Chris Corbin

water resource

management

montana water trust

chairmanbitterroot

water forum

MBAwr

specialist

consultant, freelance marketer, entrepreneur

Chris Corbin

moose drool

business acumen

water ingenuity

Differentiation

Working and Not Working

What is…

Every shovel has two sides.

1. Clearly defined water rights

Not Working

dynamic

surface and groundwater

simultaneous

interdependencie

s

Physical Challenges

Water is Complex

Never trust a water right.

Adjudication decrees flow rates and themarket trades volumes.

Historical water user has passed away or…

moved away or..

aren’t measuring their water use.

Market opportunities will lead to greater water stewardship.

Standards will create market efficiency.

2. Physical supply and demand

Working

“The West is the fastest growing part of the country. It is also the driest.”

- National Geographic Magazine

Steve Running (2009)

Steve Running (2009)

water market demand

Agricultural

Urban & IndustrialEnvironmental

Ravalli County

Agricultural

Environmental

Urban

Gallatin County

Agricultural

Environmental

Urban

Missoula County

Agricultural

Environmental

Urban

169,886 irrigated acres

USDA, Economic Research Service (2009)

297 miles of blue and red ribbon streams226 miles of dewatered streams

Montana FWP, 2009

59% growth since 1990

Montana Cenus” US Census Montana Census. (2009) 6 April 2009 http://www.census.gov/

Agricultural

Urban & IndustrialEnvironmental

3. Regulatory Structure

Working

last best place market

private leasing law

21

Brokered over 25,000 acre-feet

Basin Closure and Mitigation

more valid water right claims than water is available . . .

over appropriated

Mitigation and Aquifer recharge

Future water demand will be met or mitigated by existing water rights.

private water marketing law?

Instream flow transactions 1987-2007

Scarborough, Brandon. Environmental Water Markets Restoring Streams Through Trade. Publication. Vol. 46. Bozeman, MT: PERC, 2010. Print. PERC Policy Ser.

Private involvement drive water markets.

4. Transferability of rights

Not Working

Transferability is critical to reallocate water rights to meet new and growing demands.

regulatory uncertainty

Barriers to trade

costly transfer process

3 of 45 applications approved HB831 applications approved as of 01/14/10.

Data provided by Terri McLaughlin, DNRC

22 approvals

2-10 month turn

14 correct and complete upon receipt

HB 40 applications 7/09 - 7/10

Data provided by Terri McLaughlin, DNRC

Transparency is good.

5. Enforcement of rights

Not Working

6.Easy flow of information

Not Working

Average Lease Prices 2003-2008

0

5

10

15

20

25

30

35

40

45

2002 2003 2004 2005 2006 2007 2008 2009

Year

Price ($/AF)

All prices based on Lotic LLC’s comparable sales database.

Lease Prices 2008

$0.41

$64.16

All prices based on Lotic LLC’s comparable sales database.

Sale Prices 2003-2008

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2002 2003 2004 2005 2006 2007 2008 2009

Year

Price ($/AF)

All prices based on Lotic LLC’s comparable sales database.

Sale Prices 2008

$133

$7,000

All prices based on Lotic LLC’s comparable sales database.

7. Market Expertise (Education)

Not Working

Water runs with the land?

First documented Montana Water Rights Transfer: 1895

8. Water Market

Working

Big Sky Brewing Company

water restoration certificates

Photo courtesy of the Montana Water Trust

Dewatered stream

Photo courtesy of the Montana Water Trust

Restored stream flow

Water in Beer = Water in Stream

4 million gallons of water restored

Grass Valley French Ditch CompanyRoots

Missoula: 1901

Missoula: Now

Missoula

Urban

Grass Valley French Ditch Co.

Grass Valley French Ditch Co.

20% reduction in revenue

A SharesB Shares

Restructured Shares

20%

80%

A SharesB Shares

Current Purpose of Use

irrigation and stock

?

A SharesB Shares

Current Purpose of Use: Irrigation and Stock

irrigation and stock

?

A SharesB Shares

Future Purpose of Use: Marketing

irrigation and stock

mitigation

Reinvest in irrigation infrastructure

Grass Valley French Ditch CompanyRoots

chris corbinchris@loticwater.com

406.531.9156www.loticwater.com

www.activelymovingwater.com