Enhancing the Viability of Ditch Companies: Part II

To ensure that ditch companies are better able to access current and potential future funding sources for infrastructure improvements, DARCA will conduct a series of three workshops for west slope ditch companies.  These workshops will focus on development of guidelines and standards that reduce transaction costs and risks by providing more certainty in local regulations, property rights disputes, taxation and lender relationships.  Guidelines and standards will take the form of model regulations and laws, as well as conceptual principals that may encourage more effective cooperation between ditch companies and local communities.  These guidelines and standards will lay the groundwork for more flexible ditch companies and irrigators that are able to take advantage of subsidies and capital investment in return for the public benefits they provide.  In addition, by further demonstrating the need for such funding, expanded investment in infrastructure needs may be encouraged.  As a result, local communities, downstream users, and the recreation and tourism economy will continue to receive the myriad benefits provided by healthy ditch systems and productive agriculture into the future.

In the face of local and state-wide pressures, ditch and reservoir companies must find ways to prosper and reap the rewards of the many public benefits they provide.  Ditch companies and their vibrant 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 and constructed wetlands 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.  These benefits will be enhanced by more efficient irrigation infrastructure that will simultaneously operational benefits and environmental benefits in the form of increased flows and reduced salinity.

But, a number of threats to irrigated agriculture and ditch companies make it difficult for them to be properly compensated for these public benefits.  First and foremost among these challenges is the need for investments to modernize irrigation infrastructure.  Among the many difficulties of remaining afloat and profitable in today’s changing economy and ongoing drought, aging infrastructure is one of the most pressing concerns for irrigators nationwide.  The Upper Colorado River Basin is no exception: in fact, much of the Upper Basin’s irrigation infrastructure was constructed in the first half of the 1900s and has operated without major repairs or modernization since.  Some limited funding exists in the form of USDA Farm Bill programs and limited state water infrastructure programs.  However, this funding is insufficient to meet irrigator and public needs and eligibility and access to these sources is often complex and time-consuming.  In the future, both private investment (possibly in the form of low interest loans) and local subsidies will be needed to fully compensate irrigated agriculture in the Colorado River Basin for the benefits it provides by defraying the costs of infrastructure improvements.

Local urbanization issues and the increasing cost of doing business in today’s regulatory and legal environment have complicated the matter of running ditch companies in Colorado.  A number of ditch companies, particularly in areas where farmland is being converted to ranchettes or suburbs, are also shackled by a range of disputes, many of which are based on local regulations, taxation, and uncertainty.  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.  Managing these controversies severely limits the time and resources available for the pursuit of subsidies and alternative funding support.

Until ditch companies are able to resolve some of their local disputes and become more flexible, they may have difficulty taking advantage of resources and infrastructure subsidies.  To reduce transaction costs and allow ditch companies to take advantage of opportunities to improve their infrastructure and remain competitive, better processes and systems for resolving these disputes are needed.  These workshops and outreach series by DARCA will provide a needed forum to help ditch companies gain flexibility by providing a framework towards the resolution of many of these disputes.  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.