As Colorado water rights costs rise, speculators step in. But it's not easy

After the auctioning of 90 shares of Colorado water rights in Boulder County on Wednesday, thoughts turned to the rising cost. Some of the rights -- with associated fees -- sold for more than $80,000.

"We thought it was a good time to maybe buy more to increase the volume of water we can irrigate our land with," said farmer Don Martin, who was a buyer.

Water rights helped Colorado ranchers and farmers raise livestock and grow food through the years by channeling water from creeks and rivers to their property. Rights allow them to take a portion of the water and irrigate their land. Through the years, however, water rights have helped fuel growth on the Front Range. 

"There's ranches that sell their water rights, and they dry up their land. And then the city of Colorado Springs or Denver. Somebody uses that water for people's drinking water and watering their lawns," said former water commissioner Dave Kelley, who owns a ranch in Buena Vista.

As prices of rights have risen from the low thousands 30 years ago to current levels, speculators have stepped in.

"It depends on whom you're buying it from. If they're buying it and thinking they're going to sit on it for however many years until it's worth more money then I think it's a pretty risky investment." 

That's because water rights have their own requirements. Unlike property rights, they can be lost if not utilized. The rights specify how they are to be used. Among the uses are agriculture or municipal or industrial use.

"If they don't do that, and they just buy the water, and then don't do anything with it, and don't go to water court to change it and they don't continue to irrigate, then it could be taken by the courts, because they're not putting it to beneficial use after 10 years," said Kelley.

There are six water courts in Colorado that monitor water's use.

At the auction Wednesday buyers had to show they had a current need for the water. But in some parts of Colorado, land with water rights has been purchased by speculators. But they have to keep drawing water for the use allowed by the permit. If not, there is the chance the water rights may be put on an abandonment list and potentially have to be surrendered. For non-resident owners, "They need to lease that water back to the landowner so that he can continue to irrigate it so that they can continue to show that they've used it for beneficial use until the time that the people that bought it decide they want to go ahead and change it in water court."

And seeking permission in the water courts is not easy either. Other users on the system can object to change in the right's permitted use.

But giving up water rights has through the years allowed the importation of water from the mountains and even plains, to grown Front Range communities. And future growth is limited due to access to water rights that will provide an appropriate supply.

"It is unless you're willing to give up all of the land and the ranches in the state so that you have water," said Kelley. "And then you got to wonder where what you're going to eat."