Ditch and reservoir companies are an integral part of Colorado’s agricultural landscape and they provide many benefits beyond running water through their canals to their farmer shareholders. These additional benefits, often referred to as positive externalities, enhance local communities and provide eco-system services. The development of more productive relationships with local governmental agencies including a better definition of property rights through local land use code changes can significantly assist ditch companies to prosper in the 21st century. Policies for inducing change should be crafted so that as much benefit is produced with the least amount of cost. The impact of the report’s recommendations appears to be widespread and meaningful while the cost of implementing them is fairly insignificant.
DARCA is pleased to provide you with the DARCA Model Land Use Codes. Many ditch company problems are local ones requiring local solutions and municipalities and county governments need to play an active role in helping ditch companies prosper. This report explains: 1) the importance of ditch companies to Colorado’s citizens; 2) provides model code principles; and 3) lists actual land use codes from across the state.
DARCA presented four workshops in Grand Junction, Fort Collins, Canyon City, and Glenwood Springs.
Why Have This Workshop?
Ditch companies provide benefits to society, both directly and indirectly. Despite this, the recipients of these benefits are usually not required to provide direct compensation for these positive externalities. Ditch companies and their linked agricultural economies support many rural cities and towns and provide them with a cultural backbone. Farms and ranches produce food and fiber and support more than just the farm and ranch owners; a range of employees, seasonal workers, and associated businesses also depend on them, as do local governments that are sustained by the taxes they pay. Ditch systems provide environmental benefits in the form of riparian corridors for flora and fauna, wetlands, and reservoirs that lead to more livable communities and tourism dollars. Irrigation may also provide water for late season return flows that extend recreational and irrigation seasons while supporting additional environmental flow needs.
Urbanization issues, municipalities seeking ditch company water for domestic use, and the increasing cost of doing business in today’s regulatory and legal environment have complicated the matter of running ditch companies in Colorado. Many of these companies find it difficult to carry on business as usual and adequately protect their company and shareholder interests. Many ditch company problems can be traced to a limited financial ability to adequately deal with problems, pressures, and opportunities.
Ditch company disputes come in many shapes and sizes, including: encroachment on ditch easements, poorly defined property rights, lack of local ordinances that protect the activities of ditches, incompatible zoning, and decisions made without the input of the ditch company or irrigation district. Such issues force ditch companies – many of which are organized as nonprofit 501(c)(12)s – to expend significant time and money on external management and compliance. Although most ditch companies are resource rich with their water portfolios, many have limited financial resources to deal with these controversies.
Until ditch companies are able to better handle the complexities of the 21st century and resolve their local disputes in more efficient manners, they will continue to spend their limited financial capital on non-productive dispute management activities rather than pursuing long term goals of improving financial viability, enhancing shareholder value and providing water to their farmer shareholders as inexpensively and efficiently as possible. Managing these controversies severely limits the time and resources available for maintaining and upgrading the ditch system, the pursuit of infrastructure subsidies and alternative funding support, and other creative management opportunities
To reduce transaction costs and allow ditch companies to better take advantage of opportunities to improve their infrastructure and remain competitive, better processes and systems for resolving these disputes are needed. DARCA embarked on a listening tour and workshop series to develop guidelines and standards to streamline relationships between ditch and reservoir companies and urbanizing communities. The guidelines and standards developed will begin to forge more productive relationships between ditch companies and neighbors that allow for the mutually beneficial continuation of profitable irrigated agriculture and the public benefits it provides. In effect, reduced conflict should allow for ditch companies to be more able to focus on necessary ditch system maintenance and upgrades.
Tools to compensate ditch companies for these positive externalities can be monetary and non-monetary policies implemented by local government. These micro-subsidies at the local level can complement the few state and federal government supports, such as property tax exemptions and federal tax exemption respectively. One example of a non-monetary micro subsidy that does not burden local taxpayers is the development of local land use ordinances that provide more certainty to vague existing ditch company law.
Local governmental entities, developers, and citizens are also the beneficiaries of more certainty in local land use codes. The complexity, time, and resources spent on local land use issues can all be reduced by the creation of a streamlined process and clarifying open-ended development/land use processes.