A move to dry up water speculation once and for all in Colorado ended at the legislature despite intense supply pressures from drought and water developers, as lawmakers said they’re loath to hurt farmers’ ability to sell their most valuable asset.

The Senate Agriculture and Natural Resources Committee tabled the anti-speculation bill after first accepting an amendment to turn it into a between-sessions study of the problem. Technically, the measure could be revived, but the bill’s sponsors say the issue is over for this year.

As the headwaters of the most important rivers in the West, serving tens of millions of people Colorado “is the prime target” for water speculators, said sponsor Sen. Don Coram, R-Montrose.

“There is a real danger of those billion-dollar funds coming in and taking possession of that water,” Coram told the committee last week.

Lawmakers and water conservation district representatives who work with farmers countered that water courts already prevent outright speculation, and that making sale of water rights harder would be a blow to the biggest property right that state farmers and ranchers possess. The biggest issue for farmers right now, they said, is competing with wealthy cities for a limited water supply.

“We don’t see speculation,” said Joe Frank, director of the Lower South Platte Water Conservancy District in northeastern Colorado. “Instead we see pressure from municipal providers buying up agricultural supply for future dryups.”

Colorado already has anti-speculation laws that require people to put their water rights to “beneficial use,” such as irrigating a farm, delivering tap water for a city, or releasing more water into rivers for recreation.

Water courts require those filing for a new use of a water right to show they have a customer for the new beneficial use. But there’s not a clear agreement on when legal brokering looks more like a speculative transaction.

State water experts say unanswered questions include how long a water buyer has to use the right before selling it to another party without the deal being considered an illegal flip. There is also no clear consequence if a buyer later changes the use of the water that they expressed when acquiring the water right.

The bill backed by Coram and Sen. Kerry Donovan, a Vail Democrat, aimed to target situations where a water right is purchased specifically with the intent to make a profit in a later sale or transaction.

Coram claimed in backing the bill last week that it’s already happening. He pointed to Water Asset Management, an out-of-state investor that has bought up shares in the Grand Valley Water Users Association. The New York investor currently leases the water rights back to local farmers, has said it is involved in agriculture for the long term, and has worked on water conservation improvements. But Coram said there’s little to stop the investor from getting paid by downstream states to let the water flow down the Colorado River instead of watering in-state crops.

Those wanting to curb speculation also bring up the San Luis Valley, where private investors from the Front Range want to use well water rights they’ve bought up to pipe over to Douglas County or other fast-growing suburban buyers.

“Somehow, somewhere, we need to put the guardrails on to protect the water for the people of Colorado,” Coram said. He noted he has worked on anti-speculation legislation unsuccessfully since 2019, and that at the current pace, the legislature won’t do anything until “after the water has already left the state.”

Donovan said increasing drought and growth pressures threaten Colorado with a compact call in coming years, meaning state or federal authorities will cut off local uses of Colorado River water to satisfy agreements with Lower Basin states like California, Nevada and Arizona. When Colorado needs to find water in a compact call, Donovan said, the state should not “find ourselves negotiating in a time of crisis with someone who just wants the highest price.”

Coloradans are understandably nervous, she added, about curtailing the assets of farmers, and she understands that “water always takes a long time to figure out.” But she was disappointed, she said, that even the amendment for further legislative study couldn’t move forward.

“I was hopeful that by having a bill we’d force conversation,” she said.

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