PARCHED: Anticipated tab for state water plan doubles in less than two years

Implementing Gov. John Hickenlooper’s ambitious water plan likely will cost at least twice what the administration projected.

When releasing the statewide strategy in 2015, James Eklund, then director of the Colorado Water Conservation Board [CWCB], estimated that amassing enough water to avoid a critical shortfall mid-century would cost $20 billion. He didn’t indicate what that amount would pay for, saying the figure was more of a “back-of-the-napkin analysis” than the sum of specific costs for specific projects in a set list of priorities.

Eklund resigned in March, taking his $20 billion napkin with him.

Now, less than a month into the job, his successor Becky Mitchell is setting more realistic cost projections for a plan that seeks to glean massive amounts of water not just to accommodate population growth, but also to keep farms and ranches in business and to protect Colorado’s rivers and the ecosystems that rely on them.

Mitchell is putting the anticipated price tag at $40 billion, and “maybe more.” Some $18 billion is likely to be paid by existing sources such as municipalities, water utilities, and ditch companies that deliver water to farms and ranches, she said. She described the remaining $22 billion as an “unmet funding need.”

“Cost projections have always been just estimates, and part of that is because not all the information is in,” Mitchell said. “What we’re already seeing as folks are solidifying our numbers is that it’s going to be more than earlier predictions.”

It’s not clear what Eklund’s $20 billion estimate included, but it seems to have reflected costs only for brick and mortar projects such as dams, reservoirs, ditches and other infrastructure needed to meet growing demands for municipal and industrial water use. It apparently didn’t include conservation programs, public education and keeping water in rivers for recreational and environmental purposes. It also didn’t factor in ambitious programs to encourage farmers and ranchers to collaborate with environmentalists on conservation, Mitchell said. “Those creative solutions will be high-dollar projects,” she added, and they “are coming in higher than predicted.”

Eklund now works at a prominent law and lobbying firm, but still represents Colorado in interstate water negotiations. Asked this week to explain the disparity between his $20 billion cost projection and Mitchell’s $40 billion, he said, “Boy, that’s a good one. I haven’t heard about the new figure.”

His estimate may have been “conservative” and “low,” he acknowledged.

“Maybe too low,” he said.

Gov. Hickenlooper told The Colorado Independent today that while he expects the estimated cost of the plan to change with inflation and as projects are added or deleted, the additional $20 billion comes largely from the cost of water treatment projects, which help turn wastewater into potable water. Such projects, he said, were not part of the original estimate “and were never intended to be part of the water plan.”

The governor’s water advisor, John Stulp, told The Independent in the spring that water treatment projects likely would add $8 billion to $12 billion to Eklund’s original, $20 billion estimate.

Hickenlooper ordered Colorado’s first statewide water plan in May 2013 as an attempt to thwart a shortfall that state water officials project for 2050. When he and Eklund heralded the release of the final version in November 2015, the governor made it clear that he didn’t want it to sit on a shelf gathering dust.

The plan aims to secure enough water to keep up with rampant growth, which is expected to boost the state population of 5.5 million people last year to as many as 10 million by 2050. It also needs to satisfy farming and ranching water rights, environmental necessities, increasing thirst brought about by climate change, and contractual water obligations to other states. Putting it into place will require enormous financial investments.

Eklund’s $20 billion price tag was daunting enough to politicos and policy advocates in a state that rejected a water bond issue in 2003. Referendum A sought voter approval for $2 billion in revenue bonds for water projects. Coloradans voted 2 to 1 against the measure, which failed in every county in the state.

Coming up with funding for $40 billion in water projects would require unprecedented unity among Colorado’s factioned rural and urban water users, leadership from the governor’s office and the legislature, and buy-in from Coloradans.

“It will be a much harder task to actually implement the water plan than it was to write it,” said Ted Kowalski, a water lawyer who now leads the Walton Family Foundation’s initiative on the Colorado River, which provides about half of Colorado’s water supply.

The doubling of the estimated cost of that implementation underscores the urgency of having conversations about sustainable funding now, Kowalski added, “so that we don’t have to be having these conversations during a crisis.” The philanthropy of Walmart heirs has taken an increasing role promoting balanced water policies, conservation, and watershed health in the seven states that rely on the river, as well as in other watersheds nationally and internationally.

In setting water priorities, the water board takes its cue from collaborative working groups called “roundtables” in Colorado’s eight river basins, plus another group in the Denver metro area. Those groups are in the process of telling the water board what projects – with price tags – they need to meet the goals set forth in the water plan, such as keeping up with growth, conserving water, and ensuring environmental protections on rivers. Their proposals are “flooding in,” Mitchell said, and have been giving her agency a clearer sense of how much the water plan will cost to implement. The water board will let each working group set its own priorities before deciding which projects should receive state funding.

In the meantime, what, specifically, the $40 billion would pay for still remains unclear. Mitchell said her staff will “gain more clarity” after the nine roundtable groups have come up with lists of proposed projects expected in 2018.

“I’d be very interested in how they got from $20 to $40 billion so fast, and what new projects will be included,” said Gary Wockner, a Colorado-based ecologist and activist for healthy rivers.

Pat Mulroy, a water policy expert for the Brookings Institution and former head of the Southern Nevada Water Authority, said, “I would have had my head handed to me on a platter if I said we’re going to spend $40 billion in the next 30 years and people asked what are you going to spend it on and I said ‘I’ll let you know.’”

Also unclear is where $40 billion would come from.

The state collects severance tax revenues for its water supply reserve fund, which is up to $10 million. But that’s just a drop in the water plan’s symbolic bucket. Mitchell said Colorado’s Department of Transportation, Colorado Parks and Wildlife, and Colorado Department of Public Health and Environment may need to take responsibility for some costs associated with the water plan. And she hopes that the federal government, under the Trump administration’s public works agenda and looser regulatory policies, “might also play a role.”

While running the water board – the agency leading water policy in the state – Eklund focused on promoting public-private partnerships to fund projects. Those are the water equivalent of toll roads. Whether the partnerships ultimately come to fruition and how much they could fund remain to be seen.

In the last several months, the Walton Family Foundation and philanthropies tied to the Rockefeller, Gates (as in Gates Rubber, not Microsoft), and other ultra-wealthy families have been discussing how to be part of the funding solution. Walton recently announced that it’s investing $100 million on the Colorado River from Colorado to Mexico. Kowalski, the foundation’s water man in Colorado, said Walton and other benefactors may be able to fund small pilot projects in hopes that they spur public investment, but can’t be relied on to help bankroll the billions of dollars Colorado needs.

“We’re trying to increase awareness and help generate conversations along the river,” Kowalski said. Those efforts include a recent Walton-funded study trip about the Colorado River for 18 journalists, including this reporter.

Ultimately, implementing the water plan will require public funding. The Nature Conservancy has been studying options such as a bottle tax, a tourism tax, and a surcharge on water rates. A ballot measure or referendum could go to voters as early as 2018, but the 2020 election is more likely given Colorado’s new law making it tougher to put such measures before voters.

Carol Hedges, executive director of the Colorado Fiscal Institute, said the multi-billion-dollar price tag for water projects “is one more instance of how we’ve delayed making the public investments we need in a changing economy. And as a result of that delay, it’ll come at a substantial cost for all Coloradans.”

Mitchell is an engineer by training, accustomed to working with hard facts and figures, and to devising solutions. She knows that coming up with $40 billion to address Colorado’s water woes is a solution that, if achievable, will entail an epic level of political heartburn. Having to double the cost projection in her first month as CWCB director has given her a taste of the challenges before her.

“It’s not productive to get hung up on the cost. That’s divisive,” she said. “What’s more productive is framing this around how much progress we’ve made coming together around this plan. We have to look at the whole picture right now. We just have to.”

Those who watch water policy in Colorado say Hickenlooper won’t be moving the needle on water simply by having ordered the state’s first water plan.

“Action. There needs to be action,” Wockner said.

Added Kowalski: “It would be great if (Gov. Hickenlooper) could secure his legacy as a water leader by having sustainable funding.”

Editor’s note: The Colorado Independent’s series PARCHED looks at how Colorado is preparing for a looming water shortage brought on by population growth and climate change.

Photo by Allen Best