Water "Portfolios" Can Help Ease Droughts
Water is like money.
Everyone needs it to live, it follows the same rules of supply and demand, and local governments can mix up the ways they receive it.
With California and a few other states facing record droughts and extreme water shortages, many ideas and steps are being taken to increase water supply.
Or the localities are implementing strict rules to conserve water.
Either method, while a good start, is limited by the way the location receives water in the first place.
There are three basic ways a city receives water: permanent rights, options, and leases.
Permanent rights have two subcategories in the United States: riparian or land based rights and prior appropriation rights.
Riparian rights are based on England's common law and are generally used in the eastern part of the US whereas prior appropriation rights are used in the west.
Riparian rights basically state that the people who own the land own the water.
Conversely prior appropriation rights state that water is a commodity that is available to be sold or traded.
Under these rights, whoever bought the water first is entitled to use it first and so on down the line of appropriations.
In years of drought this means some of the newer appropriations may get less or none of the water they purchased.
In essence, under all categories, a permanent right is purchasing a percentage of a water source.
Options are when city planners pay now for water they plan to use later.
According to Penn State professor Patrick Reed, "It takes the volatility out of pricing and they (planners) can buy a volume of water at the original price later in summer when demand is high.
" Leases are similar in that an individual with water rights temporarily rents those rights to a city or locality.
Any one of these methods of water rights are viable options for a government faced with supplying water to its citizens, however the most drought-proof and best method is a mixture of these.
Just like placing all your money into one particular stock can be risky, so can one water right method be a risk for the authorities.
As Patrick Reed explained in a recent report detailing water portfolios, "Right now, cities don't necessarily diversify their risk through the ways in which they buy water.
" For many states and counties faced with dwindling water supplies and serious drought conditions, a varied water portfolio might provide a simple solution.
Everyone needs it to live, it follows the same rules of supply and demand, and local governments can mix up the ways they receive it.
With California and a few other states facing record droughts and extreme water shortages, many ideas and steps are being taken to increase water supply.
Or the localities are implementing strict rules to conserve water.
Either method, while a good start, is limited by the way the location receives water in the first place.
There are three basic ways a city receives water: permanent rights, options, and leases.
Permanent rights have two subcategories in the United States: riparian or land based rights and prior appropriation rights.
Riparian rights are based on England's common law and are generally used in the eastern part of the US whereas prior appropriation rights are used in the west.
Riparian rights basically state that the people who own the land own the water.
Conversely prior appropriation rights state that water is a commodity that is available to be sold or traded.
Under these rights, whoever bought the water first is entitled to use it first and so on down the line of appropriations.
In years of drought this means some of the newer appropriations may get less or none of the water they purchased.
In essence, under all categories, a permanent right is purchasing a percentage of a water source.
Options are when city planners pay now for water they plan to use later.
According to Penn State professor Patrick Reed, "It takes the volatility out of pricing and they (planners) can buy a volume of water at the original price later in summer when demand is high.
" Leases are similar in that an individual with water rights temporarily rents those rights to a city or locality.
Any one of these methods of water rights are viable options for a government faced with supplying water to its citizens, however the most drought-proof and best method is a mixture of these.
Just like placing all your money into one particular stock can be risky, so can one water right method be a risk for the authorities.
As Patrick Reed explained in a recent report detailing water portfolios, "Right now, cities don't necessarily diversify their risk through the ways in which they buy water.
" For many states and counties faced with dwindling water supplies and serious drought conditions, a varied water portfolio might provide a simple solution.
