FY 2002 Columbia Plateau proposal 25074

Section 1. General administrative information
Section 2. Past accomplishments
Section 3. Relationships to other projects
Section 4. Budgets for planning/design phase
Section 5. Budgets for construction/implementation phase
Section 6. Budgets for operations/maintenance phase
Section 7. Budgets for monitoring/evaluation phase
Section 8. Budget summary

Reviews and Recommendations

Additional documents

Title	Type
25074 Narrative	Narrative
25074 Sponsor Response to the ISRP	Response

Section 1. Administrative

Proposal title	Deschutes Water Exchange
Proposal ID	25074
Organization	Deschutes Resources Conservancy (www.dbrc.org) (DRC)
Proposal contact person or principal investigator
Name	Gail Achterman
Mailing address	PO Box 1560 Bend, OR 97709-1560
Phone / email	5414800694 / [email protected]
Manager authorizing this project	Gail Achterman
Review cycle	Columbia Plateau
Province / Subbasin	Columbia Plateau / Deschutes
Short description	Develop an active water market in the Deschutes Basin to reallocate water cost effectively from out-of-stream to instream use in order to improve stream flows and water quality.
Target species	See Deschutes River Subbasin Summary Table 2, page 186. Priority will be placed on restoring streamflows for Deschutes River Summer/Fall Chinook, Mid-Columbia Spring Chinook, Middle Columbia River Steelhead, Redband Trout, Pacific Lamprey and Bull Trout.

Project location

Latitude	Longitude	Description
		Headwaters of the Deschutes Basin
		Mouth of the Deschutes River at the Columbia River
		Entire Deschutes Basin Hydrological Unit
45.6389	-120.9151	Deschutes River

Reasonable and Prudent Alternatives (RPAs)

Sponsor-reported:

RPA
Action 28
Action 151

Relevant RPAs based on NMFS/BPA review:

Reviewing agency	Action #	BiOp Agency	Description
NMFS	Action 151	NMFS	BPA shall, in coordination with NMFS, experiment with innovative ways to increase tributary flows by, for example, establishing a water brokerage. BPA will begin these experiments as soon as possible and submit a report evaluating their efficacy at the end of 5 years.

Section 2. Past accomplishments

Year	Accomplishment
1998	Conserved water for instream flows = .82 cfs
	North Unit Irrigation District Piping Project installs 20,235 feet of pipe to replace an open ditch. Instream right is .82cfs
1998	Annual Water Leasing Program = 5.53 cfs
	Irrigators donated water rights of 5.53 cfs to improve instream flows
1999	Conserved water for instream flows = 8.73 cfs
	Squaw Creek Irrigation District Thompson Ditch Project returns water to 6 miles of Squaw Creek, eliminating the Thompson Ditch and replacing flood irrigation with a sprinkler system to conserve .61 cfs
	Tumalo Irrigation District pipes a section of the Bend Feed Canal to conserve 5.8 cfs senior water rights
	Central Oregon Irrigation District replace 15,860 feet of ditch with pipe to conserve 2.32 cfs
1999	Water Rights Acquisition = 1.81 cfs
	Purchased 1.81 cfs in the Smith-Barclay Ditch for instream flows
1999	Annual Water Leasing Program = 5 cfs
	Irrigators donated water rights for 5 cfs to improve instream flows
2000	Conserved water for instream flows = 19.8 cfs
	Squaw Creek Irrigation District Cloverdale Piping Project replaces 15,840 feet of open ditch with pipe saving 3 cfs
	Tumalo Irrigation District Phase II of Bend Feed Canal piping saves 16.8 cfs junior water rights
2000	Water Rights Acquisition = .99 cfs
	Purchased Camp Polk Water Right of .99 cfs to be returned instream
2000	Annual Water Leasing Program = 4.38 cfs
	Irrigators donated water rights for 4.38 cfs to improve instream flows
2001	Conserved water for instream flows projected savings = XXX cfs
2001	Water Rights Acquisition estimate = XXX cfs
2001	Annual Water Leasing Program anticipated flow contribution =22 cfs
	Total permanent instream flow improvements = 32.15 cfs

Section 3. Relationships to other projects

Project ID	Title	Description
199908800	Oregon Water Trust Water Acquisition	The Water Trust project is systemwide. This project is limited to the Deschutes and will create market institutions that the Water Trust and others can use. It will work cooperatively with the Water Trust on all Deschutes acquisitions.
28	2000 FCRPS Action 28: BOR shall pursue water conservation improvements at its projects and shall use all mechanisms available to it under state and Federal law to ensure that a reasonable portion of any water conserved will benefit listed species	The DRC is funded through the BOR. The Deschutes Water Exchange will assist federal and private irrigation districts in implementing their conservation plans with at least 50 percent of conserved water going to instream flows.
151	2000 FCRPS Action 151: BPA shall, in coordination with NMFS, experiment with innovative ways to increase tributary flows by, for example, establishing a water brokerage.	The Deschutes Water Exchange will establish a water brokerage to develop and implement transactional strategies for securing tributary and mainstem flows and improving water quality in the Deschutes River Basin.

Section 4. Budget for Planning and Design phase

Task-based budget

Objective	Task	Duration in FYs	Estimated 2002 cost	Subcontractor
1. Establish Market: create an active, organized exchange to allow water rights holders to buy and sell water rights within the basin to improve instream flows.	Task 1a: Develop a framework for the exchange based on general theories of creating markets, research water markets. Develop product and services. Develop operating procedures, recordkeeping, transactional agreements, operating procedures.	January - June 2002	$75,400	Yes
	Task 1b. Design and construct information database. Develop a means of accessing the database on-line. Collect price information for inclusion in database.	January-June 2002	$40,000	Yes
	Task 1c: Design, develop, install and test a website to be the primary vehicle for exchange activities. Market and promote website use.	January-April 2002	$38,000	Yes
	Task 1d: Develop and market water brokerage service. Draft consulting contracts. Prepare marketing plan and fee schedule. Meet prospective clients.	January-April 2002	$55,000
2. Acquire water rights for instream flow restoration.	Task 2a: Meet with ODFW and OWRD to refine streamflow acquisition priorities.	January- April 2002	$9,000

Outyear objectives-based budget

Objective	Starting FY	Ending FY	Estimated cost
Establish Market	2003	2006	$297,000
Aquire water rights	2003	2006	$30,000

Outyear budgets for Planning and Design phase

FY 2003	FY 2004	FY 2005	FY 2006
$81,000	$80,500	$82,000	$83,500

Section 5. Budget for Construction and Implementation phase

Task-based budget

Objective	Task	Duration in FYs	Estimated 2002 cost	Subcontractor
1. Establish market	Task 1a-Market Framework: Undertake appropriate transactions; evaluate and revise products, services, documentation, processes, systems as needed.	June-December 2002	$22,000
	Task 1b-Information Database: Install manual or automated systems and load data to begin operation. Test and launch	June-December 2002	$71,000	Yes
	Task 1c-Website: Install system developed, test and launch and observe usage	April-December 2002	$10,000	Yes
	Task 1d-Water brokerage: Seek a role in transactions identified and begin deal negotiations.	April-December 2002	$28,000
2. Acquire water rights for instream flows.	Task 2b. Promote and expand water leasing program to add 2,860 acres @ $35 per acre.	January-April 2002	$120,100
	Task 2c. Acquire 10 cfs of water rights for instream flows through conservation or purchase @ $50,000 per cfs	January-December 2002	$531,500

Outyear objectives-based budget

Objective	Starting FY	Ending FY	Estimated cost
1. Exchange operations	2003	2006	$352,000
2b. Continue to expand water leasing program	2003	2006	$815,000
2c. Increase instream flows by acquiring 10 cfs per year	2003	2006	$2,205,000

Outyear budgets for Construction and Implementation phase

FY 2003	FY 2004	FY 2005	FY 2006
$779,000	$823,000	$867,000	$903,000

Section 6. Budget for Operations and Maintenance phase

Task-based budget

Objective	Task	Duration in FYs	Estimated 2002 cost	Subcontractor

Outyear objectives-based budget

Objective	Starting FY	Ending FY	Estimated cost

Outyear budgets for Operations and Maintenance phase

Section 7. Budget for Monitoring and Evaluation phase

Task-based budget

Objective	Task	Duration in FYs	Estimated 2002 cost	Subcontractor
1. Establish Market	Task 1a-Market Framework. Evaluate and revise as experience dictates	2003-2006	$0	Yes
	Task 1b-Information Database. Evaluate performance according to outcomes desired and revise as indicated	2003-2006	$0	Yes
	Task 1c-Website. Evaluate function and productivity of site regularly and revise as indicated	2003-2006	$0	Yes
	Task 1d-Water Brokerage. Evaluate transactions completed in terms of outcomes desired. Revise processes, documentation and fees as appropriate. Design new programs consistent with original objectives that meet emerging needs	2003-2006	$0
2. Water rights acquisition.	Tasks 2b & 2c. Water leasing and acquisition. Evaluate effectiveness and costs of various acquisition methods.	2003-2006	$0

Outyear objectives-based budget

Objective	Starting FY	Ending FY	Estimated cost
1. Establish instream water rights	2003	2006	$124,600
2. Water acquisition	2003	2006	$31,000

Outyear budgets for Monitoring and Evaluation phase

FY 2003	FY 2004	FY 2005	FY 2006
$34,800	$36,800	$37,000	$47,000

Section 8. Estimated budget summary

Itemized budget

Item	Note	FY 2002 cost
Personnel	FTE: staff hours 2760 @ $50 per hour	$138,000
Fringe	calculated at 25 percent	$34,500
Supplies	2 computers, laptop, software, printing, advertising and promotion	$35,000
Travel	12,000 miles per year @$.32	$3,840
Indirect		$36,660
Capital	Water rights leasing and acquisition	$600,100
NEPA	Provided by BOR and other agencies	$0
PIT tags	# of tags: NA	$0
Subcontractor	website design and construction; financial and business planning services	$146,500
Other	Audit	$5,400
		$1,000,000

Total estimated budget

Total FY 2002 cost	$1,000,000
Amount anticipated from previously committed BPA funds	$0
Total FY 2002 budget request	$1,000,000
FY 2002 forecast from 2001	$0
% change from forecast	0.0%

Cost sharing

Organization	Item or service provided	Amount	Cash or in-kind
OWEB	funding for water bank	$55,000	cash
Irrigation districts	funds for conservation projects	$0	cash
OWRD	support for database development	$0	in-kind
DRC	funding for water acquisitions	$500,000	cash
BOR		$200,000	cash
OWEB	funding for water acquisition	$100,000	cash

Other budget explanation

Any contribution by the DRC to this project is contingent upon continued federal appropriations to the BOR for the DRC. No funds have been committed yet by irrigation districts or OWEB for further water acquisitions. The estimated cost shares are based upon the DRC's past experience.

Reviews and recommendations

This information was not provided on the original proposals, but was generated during the review process.

REVIEW:
ISRP Preliminary Review (ISRP 2001-6)

Recommendation:
Fundable only if response is adequate

Date:
Jun 15, 2001

Comment:

Fundable if adequate responses are given to ISRP concerns. This proposal uses the opportunity to develop markets for water rights as a means to converting water to in-stream flow use. The project is directed toward the goal of reallocating water in the Deschutes Basin from out-of-stream to instream use to improve stream flows and water quality. Trout Creek is only major tributary with private rights below Pelton Dam. The project would conduct two major activities: create the market infrastructure for exchanging water rights; 2. purchase water rights. Market infrastructure would be developed through a water brokerage that provides market information and assistance in conducting exchange transactions. Purchased water rights will be converted to in-stream flows directed at a quantitative objective of 1000 cfs. The water exchange would require the hiring of a project manager. Major budget items are for the purchase of water rights, which would be permanently converted to in-stream flows.

More detail should be provided on the following:

What are the major factors limiting the development of private water markets? Why is public funding for market infrastructure necessary? If it is necessary, does this project have endorsement from OR Water Trust or other potential user?
Would you anticipate that private brokerages would eventually take over this function? How will this transition be made, and at what point?
What are the existing mechanisms used to permanently transfer water to in-stream flow?
How will the alternatives of lease, conservation or direct purchase be prioritized to obtain in stream flow? In general, long-term leases or direct purchases would seem to be more appropriate than conservation. Purchases should also include riparian habitat protections when possible.
What is the current source of information on water transactions? Will this project duplicate existing services?
What is meant by a "non-profit" water market?
How is the current water shortage likely to affect voluntary donations?

REVIEW:
CBFWA Funding Recommendation

Recommendation:
High Priority

Date:
Aug 3, 2001

Comment:

Project addresses a bi-op recommendation (I.e., establishing water banks). This project addresses RPA 151.

REVIEW:
ISRP Final Review (ISRP 2001-8)

Recommendation:
Fund

Date:
Aug 10, 2001

Comment:

Fundable. This proposal uses the opportunity to develop markets for water rights as a means to converting water to instream flow use. The project is directed toward the goal of reallocating water in the Deschutes Basin from out-of-stream to instream use to improve stream flows and water quality. Trout Creek is the only major tributary with private rights below Pelton Dam. The project would conduct two major activities: 1. create the market infrastructure for exchanging water rights; 2. purchase water rights. Market infrastructure would be developed through a water brokerage that provides market information and assistance in conducting exchange transactions. Purchased water rights will be converted to in-stream flows directed at a quantitative objective of 1000 cfs. The water exchange would require the hiring of a project manager. Major budget items are for the purchase of water rights, which would be permanently converted to in-stream flows. The response was adequate, detailed, and thoughtful. The response indicates that all information on water rights transfers will be made available to interested parties. It will be particularly useful to have the information on water rights transfers made available to research economists so that information gained from this effort can be transferred to potential efforts elsewhere.

REVIEW:
NMFS Review

Recommendation:

Date:
Oct 1, 2001

Comment:

Statement of Potential Biological Benefit to ESU
Develop an active water market in the Deschutes Basin to reallocate water cost effectively from out-of-stream to instream use in order to improve stream flows and water quality.

Comments
Project addresses BiOp RPA #151 -- This proposal correctly interprets 151 to include the opportunity to develop markets for water rights as a means to converting water to instream flow use.

Already ESA Req? no

Biop? yes

REVIEW:
BPA Funding Recommendation

Recommendation:
Rank C

Date:
Oct 16, 2001

Comment:

This proposal addresses an important topic of water use throughout the Columbia River Basin. If successful, this concept could and should be expanded to many other critical water sub-basins. However, this proposal should be deferred for consideration by the Regional Water Entity that is created in response to RPA 151. The Exchange could seek local entity status under the Water Entity RFQ. Some aspects of the proposal, not directly dealing with water transactions, could be considered for separate funding within the Provincial Review process.

REVIEW:
NWPPC Funding Recommendation

Recommendation:
Do Not Fund

Date:
Jan 3, 2002

Comment:

Staff Recommendation: Council staff believes that proposal 25074 (Deschutes water exchange) will meet BiOp needs by responding to RPA action item 151. This new project would appear a prime candidate for funding under the Regional Water Entity. Bonneville also believes the Deschutes Resources Conservancy project should be funded under the Regional Entity and the Council would encourage Bonneville to consider the DRC project for funding under that process. Because it is unclear how or when the Regional Water Entity will be funded at this time, the project funding recommendation is not shown to have an effect on the base Columbia Plateau budget.

Budget effect on base program (Project 25074):

FY 2002	FY 2003	FY 2004
No effect	No effect	No effect