Water Rights Review, And What Are They Worth?

This is a review of what kinds of water rights we have in California, discussed here some months back in Water Rights – Why Do They Exist?  Which Kinds Are There?  As a water right holder, you are really interested in what kind of right you have.  Knowing what other water rights are is sort of academic, interesting but not necessary for day-to-day operations and the success of your farming or ranching business.

Even so, when the water supply is scarce you need to know what your neighbors’ water rights are both upstream and downstream of you.  We’re putting aside the issue of someone stealing water, and conflicts over diversion amounts.  Deferring the possibility of arguments, do they have a higher priority or seniority, compared to your water right?  Do other diverters have riparian rights, which would be senior to an appropriative water right?  The previous post in this blog is a good way to understand various surface water rights.  It’s always helpful to read another description in someone else’s words , and here is a really good list from Sandy Denn at the Family Water Alliance:  http://familywateralliance.com/water-rights-revisited/

The article has a brief and very handy description of beneficial use that is easy to remember:

“STATE CODE AND BENEFICIAL USE
The California water code was adopted in 1914. Since that time, water rights have evolved through many and varied decisions of case law and State Water Resources Control Board (SWRCB) actions which can carry the weight of law. A water right in California is a property right. For certain purposes, the right is treated as a real property right, yet for other purposes, it is purely usufructuary (i.e., a right to use). To preserve the right to use water, a beneficial use must be shown. Article X Section 2 of the California Constitution declares that the general welfare of the state requires that its water resources be put to beneficial use. In 1928, the voters of California approved a Constitutional amendment mandating that all waters in the state be “put to beneficial use to the fullest extent to which they are capable and that waste or unreasonable use of water be prevented…”

The kind and quantity of water right you have also affects the value of your land.  Sometimes, land with a good water right can be worth more than double the price per acre of an adjacent parcel with no surface water right.  In other locations, groundwater is used by most irrigators and surface water rights have less impact on the land value.  You may be interested in selling your property or buying someone else’s, so where can you find good information on how to value your water right?  This is what appraisers do, and the Northern California Chapter of the Appraisal Institute has a very good presentation on what goes into valuation:  http://www.norcal-ai.org/amass/doc-get-pub/article/252/Water_Rights_021010.pdf

This slide show also includes a discussion of highest and best use.  Water used for irrigation usually does not have to be used for the highest possible value or income, but it can be profitable to know what value the water could have.  This information is also good to have in your pocket if you face the issue of some or all of the land being taken by eminent domain, or by a mandated change of use , such as taking by the state or federal government for environmental benefit.  Here is one very useful quote from the presentation:

“…

Highest Highest and Best Use Analysis Analysis
If the value of the water right on the open market is worth more than its contributing value to the larger parcel under its existi ng use, then maximum value is attained by selling the water right separately.
 Example ‐ sell the appropriative water right for a beneficial use and convert the land to dry land grazing

…”

If you have any questions or comments, please comment here or contact me at RightsToWaterEng1@gmail.com.  It’s sprinkling here right now, and I hope that 2016 is a good water year for you.