Water Rights for Sale: Considerations when Buying Water Rights

 

Water rights for sale in Colorado can be purchased by any legal entity, including an individual, group of individuals, corporation or business, organization, government agency, etc.

 

Water rights for sale are considered real property in Colorado and can be bought and sold, or leased to other legal entities. The actual ownership of the water belongs to the state, however a property right exists to use the water on a priority basis. When you purchase water rights for sale, you must file a change of water right application with the water court located in the district in which the water is diverted. Your application must prove that transferring the ownership of the water rights for sale from the previous owner to you will not injure the water rights of the other appropriated users.

 

Absolute or Conditional Water Rights

 

When you acquire water rights for sale, either surface water or ground water rights, they may absolute or conditional water rights. An absolute water right is one that has already been diverted from its source and put to beneficial use. A conditional right is one that may be developed in the future. It maintains its priority until the project is completed. The owner of a conditional right must prove that he or she has been diligently working toward the completion of the project and not just holding the right for speculative purposes, which is illegal. Once the project is completed, the owner of the conditional right may file to have it converted to an absolute right. Then the new absolute right will have the same appropriate date, or seniority, of the original conditional right.

 

A conditional water right could be considered abandoned if the owner failed to show effort to complete the proposed project. And any water right can be considered abandoned if it is not used for 10 years. But the declaration of abandonment of a water right must include the finding that the owner intended to abandon that water right, meaning water rights cannot be forfeited without some proof of intent to do so.

 

Types of Water Rights for Sale

 

Water rights for sale will typically be listed according to category:

 

Surface water – includes water that is pumped or diverted from rivers, streams, or creeks. It also includes tributary water that connects to a river system either above or below ground.


Ground water – includes water from the water table or aquifer
Treated water – raw or wastewater that has been purified
Reclaimed water – wastewater that has been through treatment removing organic chemicals and dissolved solids. It can be used for landscape irrigation and agricultural irrigation of certain crops.
Stored water – surface water that is held in some type of reservoir for later use
Project water – includes water from government-funded projects designed for storage or diversion
Wastewater – water containing waste or that is contaminated by waste contact and has not yet been treated
Banked water – water that is allocated to a person or entity that is not using it but does not want to put up the water rights for sale. Some water banks are created to allow multiple entities to use the same water rights while others are created to store a non-used portion of allocated water.

 

The Asking Price of Water Rights for Sale

 

The entity with water rights for sale, which could be a municipality, a water district, a farmer, etc., will set an asking price in a water rights sale that is based on a number of different factors: They include:


The amount of water available in the river basin in which the water rights for sale exist. The harder it is to obtain water in that location, the more expensive the water rights for sale are likely to be.


The source of the water, as in groundwater versus surface water or private water versus that available as part of a state or federal project. Project water rights for sale are typically cheaper because government water projects tend to be highly subsidized.
The kind of water as water rights for sale; for example, raw surface water versus treated wastewater.

 

Changing Water Rights

 

Because so much of Colorado’s water is over-appropriated, those applying for a new water right will find that a new right is so junior, or at the bottom of the totem pole, that it will rarely come into priority. And priority is what is required to divert water for beneficial use. Therefore, by investing in water rights for sale, you are able to get diversions under the existing water right’s more senior priority.

 

For more information on changing water rights or maximizing a purchase of water rights for sale, contact Water Colorado.