KEARNEY, Neb. — Instead of Colorado and Wyoming, imagine drought-stricken California abutting western Nebraska.
Now imagine California launching a high-stakes bidding war for access to water that flows into and past Nebraska from the Rocky Mountain West.
California, of course, is more than 1,000 miles up Interstate 80 from Nebraska, but in this 21st century world of weather extremes mixed with desperation and big money, the Golden State and the Cornhusker State could just as well be neighbors — and it doesn’t mean a day at the beach for Nebraskans.
That’s the scenario Nebraska’s former lead water litigator laid out in Kearney recently to nearly 200 men and women responsible for managing the state’s water resources.
David Cookson, who was involved with all of Nebraska’s interstate water disputes and environmental issues since the late 1990s while serving in the State Attorney General’s Office, said water transfer options that were mere dreams or half-baked ideas a generation ago are closer to reality than many realize. Nebraska’s best defense against potential raids on the water supply that fuels the state’s No. 1 industry — agriculture — is to cooperate and remain flexible, he said.
“We can stop the wolves at the door,” Cookson said. “They will come. We need to be prepared.”
Cookson said water managers in Colorado, Wyoming, South Dakota and Montana — source states for Nebraska’s Platte and Missouri Rivers — are discussing what to do about California when it comes in search of water. Although its treasury is cash-strapped, California is flush with people willing to spend a lot of money to ensure that the state has water, he said.
California’s water prospectors would start in Utah, Arizona and Nevada, none of which is rich in water. Then the hunt would move upstream to Colorado, Wyoming, Montana and South Dakota.
The Missouri River forms in Montana and flows across North and South Dakota before running along the eastern edge of Nebraska. The North Platte and South Platte rise in Colorado and join to create the Platte River flowing across the width of Nebraska. Together, they provide drinking water for most Nebraskans. The Platte is also heavily tapped to irrigate cropland, and it replenishes aquifers.
“The ripple effect of California looking to buy water could be a tsunami of disaster for us if we’re not prepared,” Cookson said.
Nebraska’s vast underground sea, known as the Ogallala Aquifer, has attracted interest over the years from developers with ideas to pump water from the Sand Hills — which act like a sponge, filtering precipitation into the aquifer — to Denver, Phoenix, Los Angeles and other places near and far. The schemes were never economically viable.
“They may be economically viable now,” Cookson said.
To be sure, California could experience a significant rebound in precipitation this winter, replenishing reservoirs and aquifers. El Niño conditions in the Pacific Ocean indicate an extremely wet year in California. Even a very wet year, however, is unlikely to erase the effects of the state’s multiyear drought, according to state government and water agencies.
“They’re going to look for water,” Cookson said.
That’s when Wall Street steps in. When investors find a commodity, such as water, with steady or growing demand, they’re willing to spend money, Cookson said.
“The demand for water never goes down. Ever,” he said.
Hedge funds sitting on billions of dollars could attempt to artificially inflate the value of Nebraska water from roughly the current $40 to $50 an acre foot that was established in the Republican River dispute with Kansas to $10,000 to $15,000 an acre foot, Cookson said. Oil companies in northeast Colorado are talking about spending thousands of dollars an acre foot to protect their water sources by buying agricultural water rights before California shows up, he said.
Cookson said every water entity and farmer in Nebraska could pool their money and never outbid a hedge fund.
“It’s just not going to happen,” he said. “So we work together, not apart. We can’t out-negotiate the external threats. But we can out-manage them. We can be more flexible than they can be. We can outsmart them, which we’ve always done. That’s how we’ve stopped these threats.”
Water used for irrigation in agriculture plays a critical role in Nebraska’s economy. The ability of farmers and ranchers to irrigate contributed $11 billion to Nebraska’s economy in 2012, during one of the worst droughts in the state’s history. Nebraska’s 8 million acres of cropland under irrigation leads the nation. California ranks No. 2.
Cookson’s theme of cooperation and regulatory flexibility was echoed by Mark McHargue, a farmer and irrigator from Central City, and Lyndon Vogt, general manager of the Central Platte Natural Resources District in Grand Island. The three were part of a panel discussing the economics of water. They addressed the joint convention of the Nebraska State Irrigation Association and the Nebraska Water Resources Association in Kearney last week.
Vogt said Nebraska has done well in managing its water and has plenty to share across rural and urban landscapes.
“Once we decide what’s best for Nebraska ... we can take care of our problems,” he said. “We’ve got the water to do it. We’ve got the water to be sustainable. Nebraska is in a position to be envied by most states. The problem is working together.”
McHargue said it is imperative that Nebraskans seek to understand the state’s water resources and wisely govern and manage them.
“We are sitting on a gold mine,” he said.
McHargue said most farmers want to manage the water under their land in a way that ensures it will be there for the next generation.
“They know how valuable irrigation is to the farming economy,” he said. “How water is managed is critically important to them. As agriculture goes, so goes the economy of Nebraska.”
Cookson compared Nebraska’s water with North Dakota’s oil and natural gas boom.
“The reason why they never took the shale oil gas out of the North Dakota fields is it never made sense at $50 a barrel. At $100 a barrel it makes financial sense,” he said. “It’s the same for water, except ... water is worth a lot more than $100 a barrel.”
Nebraska’s water is vital to an agricultural state that exports globally, but feeding the world doesn’t factor into decisions made by a hedge fund with billions of dollars to invest, he said.
Cookson, who is now focusing on interstate water issues with the Bruning Law Group in Lincoln, said water officials and lawyers in eastern states constantly ask how Nebraska — which they perceive as a desert — has successfully managed its water. They note that their East Coast states receive twice as much precipitation as does much of Nebraska but still struggle.
“It’s simple,” Cookson said. “They haven’t managed. They haven’t regulated. They haven’t marketed and they haven’t augmented. They haven’t done any of the flexible things that we’ve done.”
Flexibility is the bedrock principle of water management in the state.
Nebraska recognized years ago that it needed a variety of tools and management structures to accommodate a land mass 500 miles wide that ranges from semi-arid in the west to semi-humid in the east.
In the Republican River basin, for example, the water managers regulated heavily by establishing moratoriums on drilling new irrigation wells. Some of the nation’s strictest pumping allocations were set. Flows in the Republican have recently been augmented by pumping underground water to the river.
“We are light years ahead of other folks with the structure we have,” Cookson said. “Obviously we need to make sure we’re doing everything the best we can, not just for our benefit but for what the future holds.”
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