work in progress…
This is a compilation of information related to water marketization and reallocation and the Verde River. It emphasizes the activities of the new Verde River Exchange Water Offset program, which as is obvious, creates water offsets. The roles of the Nature Conservancy (TNC), Walton Foundation, and Bonneville Environmental Foundation (BEF) are important here, as is that of SRP.
The Walton Foundation has put millions of dollars into Verde River-specific projects in the past few years, in addition to funding TNC and BEF. TNC has a global model for water markets, and seems to want to develop water marketing in AZ.
Water marketization would create opportunities for people to profit from water transactions. Water offsets give businesses or individuals some peace of mind about their “water footprint” through conservation activities. As you’ll see below, this is not as clear cut as it seems.
Aside from specifically developing water marketing, some other interests, to which the markets could contribute, involve:
- water rights adjudication (SRP)
- securing water for housing developments
- securing water for Phoenix
- economic development in the Verde River basin
- protecting the environment
- how do/might water rights shift?
- who profits from these programs?
- how much water actually is dedicated to the environment?
Verde River Exchange Water Offset Program administered by the Friends of Verde River Greenway.
“The program was developed in partnership with and funded by The Nature Conservancy in Arizona, Walton Family Foundation, Environmental Defense Fund and Bonneville Environmental Foundation.” (Source).
The Verde River Exchange offers groundwater users an avenue to reduce impacts to the Verde River by allowing them to purchase offset “credits.” Willing water users, or “sellers,” voluntarily agree to refrain from using a certain quantity of water for a defined period of time, and the reduction is translated into a Water Offset Credit. “Buyers” who wish to reduce their “water footprint” pay for the Water Offset Credit generated by the seller. The Verde River Exchange matches these buyers and sellers, and in so doing creates a voluntary mitigation program for Verde Valley water (Source).
See The Salt-Verde Valley Water Fund section below.
See also my section on ecosystem services.
The Nature Conservancy
Partner of the Verde River Exchange.
The Nature Conservancy (TNC) is interested in developing water markets across the globe, including Arizona.
They released a report in 2016, Water Share: Using water markets and impact investment to drive sustainability, funded by the Rockefeller Foundation.
This report includes a hypothetical model in which they partner with a farmer who agrees to cut consumptive use of water by 15%. Two-thirds of this could be leased or sold by TNC or other NGO to raise revenues for investors’ returns and to compensate farmers. Only the remaining third (of the 15%) is committed to environmental use.
Notice that TNC is portraying the entire 15% as savings, yet only 5% of it really is being “saved” if the other 10% is going to some other consumptive use, such as by a city.
Also consider that there are environmental benefits to evaporation (air moisture, clouds) and to seepage (contributes to aquifer or goes back into the river, or feeds other plants- although it’s true that sometimes these plants are invasive species like Salt Cedar). Authors of Water allocation, transfers and conservation: Links between policy and hydrology stated “Water-management practices that increase water-use efficiency may not actually conserve water, but instead increase water use. Increasing irrigation efficiency results in getting water to the crop when it is needed. Thus crop consumptive use may increase even though less water is diverted. The key distinction is whether water conservation is defined as a reduction in diversions or in consumptive use.” A 2008 article from the Proceedings of the National Academy of Sciences of the United States stated, “Adoption of more efficient irrigation technologies reduces valuable return flows and limits aquifer recharge. Policies aimed at reducing water applications can actually increase water depletions.” TNC is working with the definition of conservation as efficiency, which is more compatible with an economic model than an environmental one. It is about productive use or getting water from point A to point B with a minimum of loss. That which is considered developed water becomes natural water.
Essentially, TNC is appropriating water with the claim that it is being wasted (it is going into the environment), making 2/3 of it available to some other use, and making money for investors, and then 1/3 to the environment. This is not to imply that most agriculture is an environmentally sound practice. What is at issue is that the inefficiencies of agricultural water-use are being used to convert water into a commodity.
Additionally, offset buyers (of the Verde River Exchange) are essentially paying for the water that the farmers are cutting from their consumptive use to be kept in the river or in the groundwater (the Exchange is working on the premise that the river and groundwater are connected). So, is that water kept in the ground or the river? Could it not be exploited further down the line? Hydrological systems are complex and dynamic. How is water consumption or non-consumption quantified and accounted for?
A 2012 article titled, Water funds and payments for ecosystem services: practice learns from theory and theory can learn from practice discusses PES as it relates to TNC-developed water funds:
[TNC and partners] initiated a series of ecosystem services projects called water funds. Water funds are based on the premise that natural ecosystems and conservation management practices by people living upstream in the watershed can help provide a clean, regular supply of water and that downstream service users (including water utility companies, hydropower companies, and other industries) who depend upon these services should pay for their maintenance and persistence… Using watershed conservation as a common objective water funds create… a multi-institutional governing body bringing together public and private partners…
InVEST, a tool developed by The Natural Capital Project (a partnership between TNC, Stanford University’s Woods Institute for the Environment, and WorldWildlife Fund), maps, quantifies, and values the flow of ecosystem services from the landscape.”
TNC was involved in developing a water fund in Arizona related to the Verde River. See the section on the Salt-Verde Valley Water Fund below.
More from the report:
Payments for watershed service projects make up a significant portion of implemented ecosystem services schemes (many others relate to carbon). These schemes often involve water users paying “suppliers” for the delivery of clean, consistent water supplies.
See also my section on Ecosystem Services. TNC president and CEO is Mark Tercek who had embraced the Millennium Ecosystem Assessment early on while working at Goldman Sachs. TNC board members Gretchen Daily and Jane Lubchenco were involved in the development and promotion of the concept of ecosystem services.
TNC’s website also says:
The Conservancy is also working to protect the springs at the headwaters of the Verde River. In 2008 the Wells family, the Conservancy and other partners made an agreement that will forever protect 470 acres surrounding the headwaters of the Verde. The family agreed to a conservation easement, the bulk of which went to the Arizona Game and Fish Department to extend its Upper Verde River Wildlife Management Area.
TNC is funded by the Walton Family Foundation.
Walton Family Foundation
Partnering with the Verde River Exchange.
Verde River Basin Partnership was created by John McCain as part of the Yavapai Ranch Land Exchange but was not funded by him. They got funding from the Walton Family Foundation in May 2010 (with addition funding from the U.S. Geologic Service)…
to fund a water budget analysis for the Verde Valley. The water budget analysis will estimate the amount of water coming into and out of the basin and quantify how much is in storage.
The study will use population projects and water management strategies proposed by the Yavapai County Water Committee to project water usage 100 years into the future.
“What it will do is show the impact of water usage in the Verde Valley so we can better plan for future growth,” Wolfe says (Source).
From Liquid Assets:
Environmental Defense Fund, with support from the Walton Family Foundation, has
been actively exploring the potential to create a voluntary groundwater mitigation bank for protection of the Verde River in Arizona, essentially modeled after successful groundwater banks in the Pacific Northwest (such as the Deschutes Water Bank… Instead of relying on regulatory mandates associated with groundwater use (which are available in the Pacific Northwest, but are effectively unavailable in rural Arizona), the program would create a market in voluntary mitigation “credits” that would demonstrate the commitment of businesses, agricultural enterprises, and other interests to protect the River, building on local campaigns to boost awareness of the importance of the resource and increase tourism and tourism-related revenues associated with the River.
Funding from the WFF:
Walton Family Foundation is the country’s largest water funder, with its entire environment program divided between oceans, freshwater, and the Gulf Coast. In 2014, WFF gave $35 million to freshwater conservation, with an emphasis on rivers, both the Colorado and the Mississippi. While safe and healthy water quality is a priority, Walton gives to a lot of conservation efforts to restore river flows and land surrounding rivers. Large grantees include EDF, Trout Unlimited, and the Western Conservation Foundation (Source).
WFF has funded TNC for many years. They also fund the Bonneville Environmental Foundation (see below).
Here’s a sampling of some of their Verde-specific funding:
- Friends of the Verde River Greenway 668,101
- Verde River Basin Partnership 139,105
- Verde River Institute 49,600
- Verde River Valley Nature Organization 137,200
- Friends of the Verde River Greenway 547,707
- Verde River Basin Partnership 80,000
- Verde River Institute, Inc. 50,000
- Verde River Valley Nature Organization, Inc. 91,650
- Verde Valley Land Preservation Institute 48,000
- Friends of the Verde River Greenway 598,922
- Verde River Basin Partnership 60,000
- Verde Valley Land Preservation Institute 126,538
- Verde River Basin Partnership 24,200
- Verde Valley Land Preservation Institute 168,394
- Verde River Basin Partnership 75,000
- Verde Valley Land Preservation Institute 53,440
- Verde Valley Land Preservation Institute 71,000
Doug Von Gausig (Mayor of Clarkdale 2004, reelected 2008 and 2012)
- was/is a consultant for Walton Family Foundation
- runs a consulting company, Riparian Systems Consulting, which concentrates on river, water resource and ecosystem services issues in Arizona
- did one of the reports funded by Walton that initiated further WFF funding
- executive director of the Verde River Institute
- on the board of Arizona Forward with members of Freeport McMoran and SRP
- Verde River Valley Nature Organization
- Verde River Basin Partnership
- Yavapai County Water Advisory Council
- Northern Arizona Municipal Water Users Association
Walton Family Foundation started getting involved in 2010 with the Verde Valley Land Preservation Institute, then in 2011 with more. TNC was funded by Walton to do work in the Verde Valley in 2009 when WFF’s fresh water initiative began.
That was the year  the Walton Family Foundation, the philanthropic organization begun by Walmart’s founders, started a river conservation and restoration program called the Freshwaters Initiative. The Verde was named one of the project areas and over the past six years, the foundation has invested $5.8 million in local efforts to support tourism, river flow improvements and restoring riparian habitat, said Morgan Snyder, the foundation’s project lead for the Verde.
One of the recipients of that money has been the Nature Conservancy, which in 2009 started working with agricultural producers, municipalities and ditch organizations on flow restoration… (Source).
After reading the report, the Walton Family Foundation agreed with many of the recommendations and has since put $189,000 into the institute, which covers Von Gausig’s position at the organization’s helm. (Source).
“WFF also funded a project under the banner of American Rivers that anticipated a more regional river protection effort, called the Verde River Blue Trail Access Plan” (Source).
WFF has also funded a number of studies/reports on water markets for Arizona, the Colorado River Basin, and the West.
Bonneville Environmental Foundation
Bonneville Environmental Foundation is partnering with the Verde River Exchange.
Bonneville Environmental Foundation (BEF) sells water offsets called Water Restoration Certificates to companies such as Coca Cola and Whitewave.
They have at least three restoration sites on the Verde River.
BEF gets funding from the Walton Family Foundation.
See also my section on Ecosystem Services.
The Salt-Verde Valley Water Fund
The Salt-Verde Valley Water Fund follows the pattern of other water programs the organization has used to aid waterways and communities on other continents. The fund starts with the non-profit’s own donations, grants and commitments from corporations — $600,000 so far — and will grow if the cities benefiting from a more secure supply chip in.
So far PepsiCo Recycling, Avnet and Boeing have contributed.
The Nature Conservancy’s financial goal is $7 million to prove the potential water savings in the next few years, then $13 million more by Year 10. The money would enable efficiency upgrades on more farms (Source).
“Projects could include…acquisition of water rights to help settlement agreements and create a mitigation to better manage groundwater use by developing a “river friendly water market”(Source).
Regarding water rights, please see the SRP section below about their interest in having their water rights adjudicated.
Note that the Verde River Exchange is listed as a project of this Salt-Verde Valley Water Fund.
This fund may be meant to fulfill the role of the investment fund in their water market model.
Below is a diagram representing the Water Sharing Investment Partnership TNC created in Australia for the purposes of water marketing.
“…SRP fears growing upstream demand will shortchange its members.” (Source).
Richard M. Hayslip, TNC board of Trustees, SRP Assistant General Manager (also Council member of Resources for the Future)
Scott Deeny, water lawyer used to represent SRP now works as Water Program Lead with TNC.
Majority of water rights to the Verde River are held by SRP- though not adjudicated. http://arizonastateparksfoundation.org/docs/Verde_River_Eco_Values.pdf
The pipeline proposal has sparked threats to sue from both the Center for Biological Diversity and the Salt River Project, a Phoenix utility that gets 30 to 40 percent of its surface water from the Verde and whose rights to the Verde date back a century (Source).
Others around the valley suspect that outsiders are trying to wring water out of the Verde at their expense, Hauser said.
Some think it’s a Salt River Project plot, considering that Phoenix-area supplier’s claims to Verde water.
“There’s a few people in every room who think the Nature Conservancy is trying to dry up our ditch and SRP’s going to take our water.” Or, Hauser added sardonically, that “Obama’s going to take our water. Whatever.”
Pecan grower and trained hydrologist Richard Tinlin is one Verde Valley neighbor who doesn’t trust the program. He said it could backfire, and he accused those who cooperate of selling the valley’s water.
“They’re just handing us on a platter to SRP,” he said.
Tinlin also rejects the notion that diverting less water is much good for the river or anyone downstream. Eventually most of the farm water seeps back into the river anyway, he said…
SRP water-supply director Bruce Hallin said his agency has consulted with the Conservancy about types of equipment that it has found effective improving water efficiency.
The water supplier has claims to the Verde dating to the late 1860s, just after some of the river valley’s earliest farmers’. Those waters won’t be secure until there’s a court ruling, Hallin said, and in the meantime more people keep dipping into them to build homes upstream.
The conflict puts at risk water that helps supply nearly half of the metro area, including parts of the city of Phoenix.
“You’re talking 2 million people,” Hallin said. “A portion of their water supply comes from the Verde.”
SRP’s main focus is to get everyone’s rights legally established, he said. It also supports the new conservation program, though (Source).
The SRP wants the federal government to get the water rights it wants, because that decision would help them secure the water rights in the northern part of the state like the Verde area (Source).
While SRP continues to represent its own “special interest,” originally driven by agriculture, it appears to be doing so in ways that avoid the need for litigation. Working on both sides of the mountain, SRP is actively working with communities to develop plans and strategies that satisfy competing interests as much as possible…
…despite this incremental approach to policy making and changing well-entrenched water use behaviors, some citizens question the rationale and legitimacy of conservation efforts especially when they believe that their conservation of water use simply results in more water being available for new development to consume or for SRP to use in satisfying the needs of their customers in the Phoenix metropolitan area (Source).
SRP opposes the Big Chino Pipeline (source).
2005: Notes on TNC, SRP, AZ State Parks Verde River collaboration: Pat Graham “He believes that, because of the mitigation opportunities, there is a way to be creative in terms of creating finances through, potentially, mitigation banking and other mechanisms that could be used to acquire and protect the greenway and create funding sources that could be used to help manage the properties in the forefront.””SRP has a mandate to protect this Willow Flycatcher, which becomes an opportunity.” “SRP is under the gun to ensure that whatever they do they get credit for mitigation of the Willow Flycatcher. They want to ensure that that is first and foremost in what they do. To the extent that they can do that, they want to enter into a partnership with ASP. Staff want to continue the partnership with TNC who has a good and long-standing relationship with SRP.”
Environmental Defense Fund
Environmental Defense Fund, with support from the Walton Family Foundation, has been actively exploring the potential to create a voluntary groundwater mitigation bank for protection of the Verde River in Arizona, essentially modeled after successful groundwater banks in the Pacific Northwest (such as the Deschutes Water Bank, discussed in Section V(D)(1)). Instead of relying on regulatory mandates associated with groundwater use (which are available in the Pacific Northwest, but are effectively unavailable in rural Arizona), the program would create a market in voluntary mitigation “credits” that would demonstrate the commitment of businesses, agricultural enterprises, and other interests to protect the River, building on local campaigns to boost awareness of the importance of the resource and increase tourism and tourism-related revenues associated with the River.
Mining conglomerate Freeport-McMoRan has set aside a conservation easement on the upper Verde River as a contribution to the quality of life the surrounding community hopes to maintain and carry into the future (Source).
US Fish and Wildlife Service STRATEGIC HABITAT CONSERVATION VERDE RIVER WATERSHED FOCUS AREA PLAN, ARIZONA, 2009, Freeport McMoran listed as partner (with SRP, TNC…)
The current owner of this remarkable property, Freeport-McMoRan Copper and Gold Inc., has leased this prime riverfront land to Clarkdale for $10 a year so that it can open the 4.5-mile Verde River @ Clarkdale. The project is, in fact, a collaborative effort between private funders (American Rivers and the Walton Family Foundation), Clarkdale, the mining company, the U.S. Fish and Wildlife Service, the Arizona Game and Fish Department and Arizona State Parks. This sort of collaboration is emblematic of a new trend in conservationism: The more people at the table these days, the better.
…Verde River conservationists and Freeport-McMoRan, which now owns the lake and the dam, are trying to figure out how to sustain Pecks Lake in a more modern, eco-friendly way, perhaps using solar-powered pumps and removing the dam entirely (Source).
2008 Ecological Implications of Verde River Flows The Nature Conservancy, Verde River Basin Partnership, Arizona Water Institute, Haney et al, 2008
2009 Verde River Ecosystem Values Project, Final Report Northern Arizona University, Landsward Institute, January 2009, Patricia West, et. al. (partially SRP-funded) (uses Millennium Ecosystem Assessment)
2009 Verde River Watershed Conservation Plan. The Nature Conservancy
2010 A Further Analysis of the Verde River Watershed Ecovalues. Working Paper Series—10-04 | March 2010 (partially SRP-funded)
2011 Policy Options for Water Management in the Verde Valley, Arizona The Nature Conservancy; Limnbrunner, Heberger and Henderson, 2011
David and Lucile Packard Foundation, Pacific Institute
2011 Verde River Economic Development Study (VREDS) Final Report Doug Von Gausig, Becky O’Banion, Casey Rooney, 8/12/2011 (Walton-funded)
2012 Verde River Background and Policy Assessment Doug Von Gausig, Riparian Systems Consulting, 1/2012. Describes the current status of the Verde River flows and explores some of the challenges and solutions to preserving those flows.