It’s rare to see Front Range water managers like Denver Water and Northern Water joining counterparts on the Western Slope

Jason Blevins

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The calls came in shortly after the story in The New York Times announced Wall Street was on the prowl for “billions in the Colorado’s water.”

“Can you help us? How do we get started?” wondered the New York financiers, pals of Andy Mueller, the manager of the Colorado River Water Conservation District. 

“My response was really that if you want to invest in Colorado, you might want to look at something other than water,” Mueller said. “There is nothing to see here.” 

The national story raised hackles across Colorado. It defined agriculture as a “wrong” use of Colorado River water and detailed a growing swarm of investors eager to inject Wall Street’s strategies into the West’s century-old water laws. The idea of private investment in public water has galvanized the state’s factious water guardians. 

Population growth and persistent drought exacerbated by climate change are stressing the Colorado River, which supports 40 million people in seven states and Mexico and irrigates some 5.5 million acres of crop land. Now, the increasingly parched communities along the 1,450-mile river can add an additional threat: speculation. 

It’s rare to see Front Range water managers like Denver Water and Northern Water joining counterparts on the Western Slope. Heck, neighbors on the Western Slope don’t often agree over agricultural, municipal, recreation and tourism-based uses of water. But everyone involved in the perpetual tug-of-war over Colorado water is ready to fight Wall Street investors eyeing “billions” in the state’s most precious resource.

“We have different interests and we have different things we use water for on the Western Slope,” Martha Whitmore, the Ouray County board member on the Colorado River Water Conservation District Board, said during the board’s quarterly meeting last week. “but the one thing we are really unified on … is we don’t want this to be a New York hedge fund’s new thing.”

Water law requires beneficial use

Colorado has some of the toughest laws to prevent profiteering on water in the West, anchored in a nearly 160-year-old state water law that requires users to put their rights to beneficial use. That definition has expanded from irrigation and home taps to include snowmaking, protecting wildlife and even kayaking in a whitewater park. Beneficial use does not include making money. 

Even with the state’s strict law preventing a gold rush on water, an 18-member Anti-Speculation Law Work Group created by Colorado lawmakers last year is studying how to give the law preventing water profiteering even more teeth. 

Jim Lochhead, the head of Denver Water, agrees with water managers around the state that institutionalized private investment in water “is inherently a problem for the entire state of Colorado.”

“The resource is not owned by any one person,” Lochhead said. “The role of Colorado in complying with the Colorado River Compact is a state role and not the role of any individual entity in the state and certainly not the role of the private sector.”

The 1922 Colorado River Compact — and subsequent agreements — have forged a tenuous but workable system. The so-called Law of the River assigns ownership to every flake of snow that falls on the Rocky Mountains and every drop of water stored in Lake Powell and Lake Mead. 

Of course landowners, farmers, ranchers and other individuals own water rights, which they must put water to beneficial use. They cannot move water across state lines and they definitely cannot store water in federal reservoirs, like Lake Powell. 

“This idea of private capital coming in to buy water rights in order to later sell that water off the land, without regard to the consequence of that, is not something we can tolerate,” Lochhead said.  

The Law of the River, shepherded by veterans of hard negotiations, has allowed the Upper Basin states of Colorado, Wyoming, Utah and New Mexico to develop at their own pace without having to race against downstream metropolises, like Los Angeles and San Diego, to use their allocated water or lose it. (Without The Colorado River Compact and the Law of the River, Southern California, with its senior rights to Colorado River water, would have sucked Colorado dry many decades ago under the doctrine of prior appropriation — which delivers water to whomever was first in line to claim a right.)

The Law of the River could be upended by Wall Street investors buying up and fallowing farmland for water rights, or even worse, buying agricultural water and holding it unused until it makes them rich, like some kind of water-logged bitcoin bros. (Which, by the way, is illegal under Colorado law that doesn’t really allow the sale of actual water as much as the right to use water for beneficial use.)

But, in a way, that buy-and-dry scenario is already part of Colorado’s water landscape. Cities like Aurora and Pueblo often buy water rights to support growth. And more of that is coming. The Colorado River Drought Contingency Plan — part of a historic water management agreement inked in 2019 by federal officials and leaders in seven states — aims to cut water use, by, in part, paying farmers and ranchers and other water users to temporarily suspend their water rights. 

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