Conservation and Profit Along the Colorado River

The challenge of sustaining the Colorado River can seem crushing — there is a projected shortfall in supply of one trillion gallons to meet new demands of the region’s diverse and growing economy and warmer future by 2060.

Like the challenges of a struggling family deep in credit card, college loan, car payment, and mortgage debt, each step forward can seem pointless and overwhelmed by the larger problem. For that family, one of the best strategies is to pay off the smallest debts first, creating momentum to take on the bigger debts — a ‘snowball’ effect. It’s the same for Colorado River water conservation — small steps taken to solve pieces of the river’s supply-and-demand problem can snowball into larger and larger solutions that move the region toward a sustainable shared future. Private, for-profit investment is one part of the solution, and it can help to get that water conservation snowball rolling downhill faster.

In the Colorado River basin and across the country, water providers and thousands of farmers and ranchers already act on their own accord to make water conservation part of their everyday operations. More recently, however, private investors s have entered the picture and are conserving water for our communities and environment in ways that challenge old assumptions about who can make an impact in the conservation of our water supplies.

For example, in Washington, D.C., private investors are paying for green infrastructure to capture and clean polluted urban stormwater runoff.  Even pension funds, like the New Mexico Teachers Retirement Fund now invest in and see a return on investment in conservation projects. Nationwide, private businesses and venture capitalists have profitably invested in the restoration of more than 800,000 acres of wetlands, sometimes earning a return of 10 or 20 percent. Globally, private investment is expected to exceed $5.6 billion in water and land conservation and sustainable food production over the next five years.

What would it take for conservation of the Colorado River and its ecosystem to attract more private investment? Investors prefer to fund water conservation activities if the saved water can be sold to another user, but in many parts of the West it is difficult and expensive to make such transfers happen or the saved water gets allocated to someone else. But this can be addressed. For example, Colorado’s new state water plan identifies a diversity of alternative water transfer methods, which could be a model for other states should the governor and state legislature codify these farm- and water conservation-friendly ideas.

The private sector also funds profitable state and private land conservation. For example, when state and local highway agencies propose to build or expand a road, government regulators work with the highway contractor to first limit the effect of the construction work on nearby streams and wildlife habitat, and also require the contractor offset the damage caused by funding restoration work elsewhere. Hundreds of privately-funded habitat and wetland “banks” have sprung up across the country to make these kinds of offsets easier. Unfortunately, at least two factors have hindered the development of private funding for such offsets in the Colorado River basin: 1) clear standards from the federal government and/or states to measure the financial value of local habitat improvement and consistent application of those standards. Wyoming has such standards but other states are still playing catch up. If those two issues are addressed, private investors could work cooperatively with those who have water rights to hundreds of miles of streams in the Colorado River basin and fund their protection and restoration.

Lastly, the region needs billions of dollars in new funding for water conservation infrastructure including riparian restoration and conservation, groundwater recapture, and irrigation efficiency projects. Such projects could be ripe for private investment alongside matching federal or state funds. Large scale private investment in the Colorado River could provide billions in new funding for water conservation that benefits farmers, ranchers, urban and rural communities and our environment. Although private finance is not a silver bullet, it can make a contribution alongside thoughtful government and community conservation actions that help sustain the hardest working river in the West.

Timothy Male formerly served at the White House Council on Environmental Quality, overseeing conservation finance, environmental markets and Western drought issues. He now leads the Environmental Policy Innovation Center.  

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