Blue gold: Put water rights to good use

SALEM — The most important asset farmers own is not the land, said Peter Mohr, a natural resources attorney. “It’s the water right.”

Because water is considered blue gold, it provokes disputes across the U.S.

“Water rights are a serious business,” said Mohr. “I came from the intermountain West in Colorado, where people bludgeon, kill and maim over this stuff.”

Mohr was speaking to a crowd of farmers at the Northwest Ag Show Jan. 16 in Salem, Ore.

Know your rights
Mohr said he gets numerous calls from landowners who don’t understand their water rights.

Farmers who inherit land, said Mohr, don’t always know the historic water use for their property. Those who buy land, he said, often don’t understand the water rights connected to the property.

“Realtors don’t know jack about water rights,” said Mohr. “I’ve seen people buy properties and set up operations just to see that the water right is nowhere near what they thought it was. Farmers need to know the rights.”

‘Use it or lose it’
Because water is a precious resource, legally, a farmer has to put the water to beneficial use or lose the right to it. Irrigation, for example, can be approved by the Oregon Department of Water Resources as an official “beneficial use.”

According to ORS 540.610, one of Oregon’s statutes regarding water rights, if a farm fails to use all or part of its water right for five successive years, the farm can forfeit its right.

“What about me?” asked an Oregon sheep farmer who did not wish to be identified to protect his water rights. “I have an 85-acre sheep farm. When I had 180 head of sheep, I used the water all the time. But I’m getting older, so now I’m down to 30 head with just 35 acres of irrigation. If I irrigated the whole 85 acres, I’d have to make hay, sell it, buy fertilizer. It’s stupid for me to irrigate. So how can I keep my water rights?”

To keep the rights, answered Mohr, farmers like this one have to get creative.

Turning water into money

If you decide to sell or lease out your water right, Mohr advised, get a true appraisal first. He said too many farmers accept an undervaluation of their water rights.

But more often, farmers have had the water rights to their property held in the family or business for generations, and are unwilling to give up the rights. This is when farms need to strategize how to monetize their unused water.

One option, said Mohr, is for a farm to temporarily transfer its rights to another user. This cannot just be done by casually inviting a neighbor to use the excess water. To keep the right, the farmer who holds the deed to the water must apply to get the transfer approved by the state.

A farm can even temporarily transfer water rights to the state in exchange for payment.

Another option is for a farmer, working through an attorney, to set up an agreement with a water conservation agency that benefits the agency, the farm and fish.

One of Mohr’s clients in John Day, Ore., did exactly this. The water supply was insufficient to sustain the local fish population during dry seasons. The farm did not always max out its water rights. So Mohr negotiated an agreement in which Oregon Water Trust, a conservation organization, would pay the farm to release a portion of its water to the fish when the flow reached a specific low point. The payment, said Mohr, was enough not only to compensate the farm for any lost crop profits, but to outfit the farm with “a real slug of money” every year.

Mohr said he hopes other organizations, such as Bonneville Power Administration, set up agreements like this — using monetary incentives to help both farmers and the environment.

“Ag has all the marbles,” said Mohr, addressing the farmers. “You guys own the most important asset in the West. Know it and use it well.”