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Water Banks: Why You May Need One

October 6, 2017

Overview

Water banks are not new—they have been around a long time. Water banking is a practice used to effectively manage water supplies throughout Western states. Water banking has long been used to solve water issues ranging from allocating water within a water basin to maintaining emergency water supplies during a drought. What is new about water banks is that suddenly rural property owners may be required to find a water bank to be allowed to develop land, at least here in Washington state. Here are the basics on water banking.

Water rights in the United States are divvied up according to two regimes: riparian rights and prior appropriation rights. Western states operate on a prior appropriation regime, where first in time means first in right. Water rights are managed by the state and secured through the issuance of a water rights certificate, which determines the purpose, volume, and place of use for the water. If all or a portion of the water right go unused for a period of years (as determined under state law), the right to the water may be lost.

Reallocation of water may occur where the land on which the water rights certificate has been issued—where the water has been used—changes. For example, consider a property that has historically been used for farming and that has a 100-year-old water right for irrigation, but that is more valuable today for residential purposes than for farming. If the property is converted to residential use, there may be more water available on the property under the certificate than is needed for the new use.

To make efficient use of water, excess water is transferred to a water bank, to be used for other purposes within that water basin. The excess water is transferred to the bank and is then made available to other users for a variety of purposes, including in-stream flows for fish passage, mitigation of groundwater availability, and creation of a water supply during drought years.

Here, we focus on the mitigation of groundwater availability. In Washington, even if you can drill a well, and the well has plenty of water, that does not mean you can use it. Some water basins are “closed,” meaning there cannot be any net effect on water use. But if you can find a water bank in that basin, you can buy a mitigation certificate for your well water use and you will not be denied building permits on that basis.

Under Washington law, water banks are established and managed through the state’s Trust Water Rights Program (TWRP). Through the state’s TWRP, privately held water rights are transferred to the state in trust. Importantly, the holder of the right does not lose any water right volume, or the right itself, by transferring it to the trust. Under a trust agreement with the state, the bank determines the water available to market, the geographic market for the water, the price, and the use.

If you need water, or have water, you will want to consider water banking as an option. This article skims the surface (pun intended) of the basics of water banking. If you need or have water, consult a professional to help you make appropriate decisions that best preserve water, fisheries, wildlife habitats, and development rights.

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