By Karrigan Börk

Water right exactions are a proposed tool to mitigate costs associated with water rights and water infrastructure that would also help users make better decisions about how much water to use. But first, what are exactions? Exactions are a land use permitting tool used by cities and other permitting agencies to ensure developers bear some of the public costs of new development, like increased traffic, a need for more parks, or increased sewage from new residents. Technically, an exaction is property (money or other property) given by a developer in exchange for a discretionary permit (i.e., a permit that the permitting entity can decide whether or not to issue). So, when developers seek a permit from a city to build a new development, the city might require the developer to build a park in the new development or install a stoplight at the entrance to the new development. These requirements, called exactions, mean that the developer is bearing some of the costs of the development by paying for public amenities that mitigate new costs.

The short argument for water right exactions goes like this: 

• Water use and associated infrastructure imposes significant costs on the public.
• Many of these costs are externalities, i.e. costs borne by the public, not the person making the decision to use the water or build the infrastructure.
• These costs can sometimes be mitigated, through approaches like physical habitat improvement or careful flow management.
• Exactions on water rights and associated infrastructure can make users bear some public costs, helping them to make better water use decisions and providing money or water for mitigation.
• Thus, water permitting agencies like the State Water Resources Control Board (SWRCB) could improve water management by imposing exactions on both new and existing water rights based on the public costs associated with those water rights.

Like new residential and commercial developments, water use and infrastructure impose significant costs on the public, from impaired ecosystems to subsidence to a loss of beach sand. This dynamic creates several problems. First, because the public pays these costs, and water users are generally not paying for them, water users aren’t aware of the real cost of water and so use more than they otherwise would. Second, although some of the public costs of water use and infrastructure can be mitigated, doing so takes money, time, and often dedicated water. Importing the exactions tool from the land use setting to the water rights setting offers a method to address both problems. 

Charging water users for some of the public costs of water use and infrastructure would incentivize less water use overall; increasing the price of water is a sure-fire way to reduce water use. And exactions don’t have to be monetary; like the developers who build parks and dedicate the land to the public, water users could, in some cases, do habitat work or dedicate some of their water right to mitigate the costs of water use. The funds and water from water right exactions would provide dedicated resources for mitigation.

While the idea might seem farfetched, several existing water management approaches apply a similar framework to new and existing water rights:

• In the Upper Colorado River Endangered Fish Recovery Program, as part of the federal Endangered Species Act permitting process, new large diversions supply replacement water to mitigate impacts of their water use, while new small diversion supply money for the same purpose. Together, they fund roughly half the cost of the recovery program for four protected endemic Colorado River fishes: the humpback chub, bonytail chub, razorback sucker, and the Colorado pikeminnow.
• In Oregon, water users seeking to protect their right to conserve water and seeking to transfer or otherwise use the water can seek a discretionary permit from the state through an expedited process; the state takes 25% of the water for instream uses, like ecosystem protection, and in return the user gets protection for their water right and a right to transfer their portion of the conserved water in the future.
• Finally, here in California, after the Supreme Court’s landmark Mono Lake decision, the Water Board required Los Angeles to give up some of its water right and carry out physical habitat improvements on LA’s land and on some public land in order to keep the rest of their water right.

In all three of these cases, water users are giving up some property (either money or water) in exchange for a discretionary permit from the state. That sure sounds like a water right exaction. In some ways, this idea tracks other proposals, like charging for the use of environmental water by other users during a drought or encouraging the Water Board to require more mitigation for water rights.

Of course, there’s always a risk that mitigation efforts might fail. In the land use setting, cities require performance bonds to ensure that infrastructure and other work by developers will be of high quality and last well into the future. Water right exactions (and other mitigation) should carry similar protections.

There are other reasons to consider water right exactions, from addressing fairness concerns to complicated legal arguments about water rights and their regulations. See a detailed analysis here. In short, however, deploying exactions more widely would incentivize better water use decisions and address the public costs of water use. 

UC Davis Acting Professor of Law Karrigan Börk’s publications run the gamut from the definitive text on the history and application of California minimum streamflow requirements to a hatchery and genetic management plan for the reintroduction of spring-run Chinook salmon in the San Joaquin River. Professor Börk graduated with Distinction and Pro Bono Distinction from Stanford Law School in 2009 and completed his Ph.D. dissertation in Ecology at UC Davis in September 2011. He works on legal and ethical issues in ecological restoration, including local governance issues in ecosystem management. His current work focuses on Western water law.

Further Reading

Adell Louise Amos, Freshwater Conservation: Oregon Water Law and Policy (2009), https://perma.cc/A5FQ-8CEE.

John Loomis & Jeffery Ballweber (2012), A Policy Analysis of the Collaborative Upper Colorado River Basin Endangered Fish Recovery Program: Cost Savings or Cost Shifting?, 52 NAT. RES. J. 337.

Karrigan Bork, Water Right Exactions (2023), 47 Harv. Envtl. L. Rev. 63.

Swimming Upstream: The Story of the Upper Colorado River Endangered Fish Recovery, Colo. River Recovery (2022), https://perma.cc/NED7-K89L.

Bruce Aylward, Restoring Water Conservation Savings To Oregon Rivers: A Review Of Oregon’s Conserved Water Statute (2008), https://perma.cc/TZ6VLTS5.

Amendment of the City of Los Angeles’ Water Right Licenses for Diversion of Water from Streams Tributary to Mono Lake (Water Right Licenses 10191 and 10192, Applications 8042 and 8043) City of Los Angeles, Licensee, No. D-1631 (Cal. State Water Res. Bd. Sept. 28, 1994).

Brian Gray, Jennifer Harder, and Karrigan Bork, Implementing Ecosystem-Based Management, 31 Duke Envtl. L. & Pol’y F. 215 (2021).

Cal. State Water Res. Control Bd., Order No. WR 98-05 (1998).

Grantham, T., J. Howard, B. Lane, R. Lusardi, S. Sandoval-Solis, E. Stein, S. Yarnell and J. Zimmerman (2020), Functional Flows Can Improve Environmental Water Management in California, CaliforniaWaterBlog.com, November 29, 2020 https://californiawaterblog.com/2020/11/29/functional-flows-can-improve-environmental-water-management-in-california/

Horne, A., Webb, J. A., Stewardson, M., Richter, B., and Acreman, M. (2017). Water for the Environment: From Policy and Science to Implementation and Management. Academic Press.

Obester, A., S. Yarnell, and T. Grantham(2020), Environmental Flows in California, CaliforniaWaterBlog.com, March 18, 2020, https://californiawaterblog.com/2020/03/18/environmental-flows-in-california/

Yarnell, S.M., Stein, E.D., Webb, J.A., Grantham, T., Lusardi, R.A., Zimmerman, J., Peek, R.A., Lane, B.A., Howard, J., and Sandoval-Solis, S. A functional flows approach to selecting ecologically relevant flow metrics for environmental flow applications. River Res Applic. 2020; 1– 7. https://doi.org/10.1002/rra.3575