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Trickle-Down Economics

Out on the plains, water is Colorado's most liquid asset.

Taking a break from his chores at the kitchen table, Oster says this with a bushy eyebrow cocked and a gleam in his eye as though he expects to be challenged -- that as a descendent of those simple farmers, he could be any less easy to get along with. Schlagel nods in agreement.

Oster's a little testy because he's in the middle of an increasingly bitter battle with some of his neighbors and many of the 102 shareholders in the Platte Valley Irrigation Company, of whose board he is president. And, as has so often been the case in the West, water is the source of the acrimony.

The irrigation company was founded in 1871, with each member owning shares in the Evans Number Two Ditch. But under Colorado's "first in time, first in right" doctrine, the ditch's 1871 priority number was not a very senior water right. Even during an average water year, the river commissioner would usually cut off the ditch from the South Platte by mid-July, only halfway through the season. Farmers had to scramble to find more water or risk poor crops and financial disaster.

That changed after the drought of the mid-'50s, the state's last major multi-year drought, when the company bought 10,340 units at $1.50 each as the Colorado-Big Thompson Project came on line in 1957. Each unit represents approximately three-fourths of an acre-foot of water, and shareholders got thirty shares of CBT water for every acre-foot they owned in the ditch.

Colorado-Big Thompson waters are brought over from high mountain lakes on the west side of the Continental Divide via a system of gravity-fed tunnels, pipes and ditches, then stored in reservoirs on the east side. When shareholders need the water, they have their ditch manager call the Northern Colorado Water Conservancy District office -- which, along with the U.S. Bureau of Reclamation, built and administers the project -- and the requested water is dumped into the South Platte. The CBT project was always intended to be a supplemental water supply so that shareholders in the Platte Valley Irrigation Company, along with other water-users, have a recourse when the ditch's shares are cut off.

Now, however, more than half of the Platte Valley shareholders want to sell their shares -- and they expect to be paid handsomely for what is an increasingly precious commodity. Colorado-Big Thompson water is clean water without a lot of pollutants and is also free of any senior water rights claims, so it's in great demand from developers as a water source. As development booms along the Front Range and spills east, the price of good water also booms. CBT water, the standard by which other sources are measured, had climbed from $7,000 a share a year ago to as high as $15,500 this past spring; prices have since leveled off at about $12,000 a share, still an extraordinary jump.

But developers who need to find an adequate water supply before their plans can be approved appear willing to pay almost any price. And the Platte Valley Irrigation Company's 10,340 units of Colorado-Big Thompson water is a large supply. An acre-foot is the standard measurement for water in the West, enough to cover an acre of ground twelve inches deep. It takes about thirty acre-feet to grow a crop of corn, but a single acre-foot will support a family of four during an average year -- which means the CBT water owned by the company is enough to cover about 7,700 new houses.

"They got dollar signs in their eyes, they do," Oster says of his fellow shareholders. "Their eyes are rolling back into their heads like they were cash registers."

The "let's sell" contingent is led by David Hunt, who moved to the area from Kansas and started a cattle feedlot operation. In a June letter to other shareholders, Hunt announced that he'd begun looking into the possibility of selling the water and claimed that the numbers generated by his research showed that if the company took the money it would get from selling the CBT shares to a developer and invested that money at a 7 percent return, it would be equivalent to making about $700 an acre on their land every year.

"If a farmer cleared $200 an acre, that would be good money," Oster notes. But he and those who side with him, mostly other farmers, don't want to sell. The CBT water is their insurance policy, and like an insurance policy, it pays off only when disaster strikes. In a drought year, the supplemental CBT water represents the difference between full yields and partial yields from the fields -- and, for some, the difference between making a living as a farmer or going broke.

Although snowpack, which normally provides a consistent water supply for the South Platte into July, wasn't much below average in the northern mountains this winter, spring was unusually dry and warm, precipitating an early and heavy runoff that couldn't be captured in already-full reservoirs. The weather remained uncooperative in the area where Oster farms well into summer, releasing only about a half-inch of moisture compared to an annual average of ten to twelve inches.

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