Monday, October 12, 2015

Unbundling Water Rights = Unrestrained Exploitation

When the appointments to the Nevada Drought Forum did not include anyone from Rural Nevada areas at risk of having our water taken, we in Rural Nevada were suspicious. Now we know why. The Nevada Drought Forum has recommended that we cast aside Nevada water law (that has served us for over a century) and start over with a new set of rules – which they call the “unbundling of water rights.”

Again and again we have seen in America that when the law doesn't allow the greedy to take what they want, the greedy try to change the law. They usually try to do this behind the scenes – with the least amount of democratic process. And they try to convince us this is all for our own good – by wrapping themselves in the “freedom” flag of “free” trade. But for decades now, we have seen that “free” trade has nothing to do with “fair” trade. Follow the money. The filthy rich are getting richer, and the rest of us are not.

Over a decade ago, we saw the world reject water privatization as an instrument for price gouging, anti-competitive behavior, corrupt practice, and fraud. But being discredited doesn't stop the greedy. They just repackage the scam, come up with new terms, and try to change the laws again.


It's blatantly obvious that “unbundling” of water rights is an intentionally obscure term for the commodification of water. And commodification is the key to unrestrained exploitation. With commodification there can be speculation. With speculation, expect high prices. But that's just the tip of the exploitation tsunami.

The Michael Young – Nicholas Institute for Environmental Policy Solutions/Duke University report Unbundling Water Rights: A Blueprint for Development of Robust Water Allocation Systems in the Western United States proclaims that “the key difference between the current and proposed governance systems is the appointment of boards that take over many of the responsibilities currently undertaken by the courts.” Now think about that… an appointed board (The Nevada Drought Forum) recommends that appointed boards take over the duties of the courts. This “take over” implies that the greedy have been losing in the courts.

Repeatedly, the Southern Nevada Water Authority (SNWA) has been losing in the courts in their attempts to take water from Rural Nevada with their Groundwater Development Project (The SNWA Watergrab). One of the primary reasons Nevada Courts have ruled against SNWA has been the potential detrimental effects on senior water rights holders. So; now we have an appointed board (The Nevada Drought Forum), essentially headed by SNWA General Manager John Entsminger, recommending that we effectively get rid of senior water rights and the courts. The implications are obvious.

But we don't have to speculate. Unbundling has been practiced elsewhere. There are examples worldwide. The Michael Young/Nicholas Institute/Duke University Unbundling Water Rights report cites Australia as a successful example. But not everyone considers the “unbundling” of water in Australia to be such a success. In fact, ABC Australia reported that “The water market conspicuously failed to live up to the expectations of the National Water Initiative, driving down water storages in the Murray-Darling Basin to critically low levels at a time when conservation should have been paramount. The dire consequences for the environment, communities and economy of the Basin were clear for all to see… For eight long years the nation's most vital river was not allowed to flow into the sea.”

Now wait a minute. The Michael Young report repeatedly uses the word “robust” to define unbundling. They even define “robust” to mean; “that the resultant water rights, allocation, and governance systems are designed to work well during times of extreme stress.” Of course, they didn't define what “work well” means. Allow me to help. It appears “work well” in Australia's case means outside investors made lots of money.

A large number of offshore players have been quite active in Australia's water market. But the greedy have been keen on covering their tracks. Australian water law prohibits public access to details on water rights holders.

Back in the days of water privatization; foreign companies came in and bought up water companies and did a poor job of delivering water to consumers at hyper-inflated prices. Now, with unbundled water rights, foreign companies can simply buy up water rights and sell them back to consumers at hyper-inflated prices. The big difference is that now those companies don't have to deliver any water. All they have to do is speculate. In other words, unbundling is actually easier to exploit than privatization.

And what about the Michael Young/Nicholas Institute/Duke University Unbundling Water Rights report that claims that unbundling will “improve environmental outcomes”? The claim sounds impressive, but there wasn't any explanation of how this would inevitably happen because of unbundling. Moreover, Adrian Walsh of the University of New England, in The Commodification of the Public Service of Water: A Normative Perspective, states: “Commodification will, in most cases, be at odds with commonly endorsed environmental values and will limit any government's ability to act in an environmentally sensitive and sustainable manner.” Admittedly, the Unbundling Water Rights report did mention that the environment could be protected if Nevada writes separate “plans” (laws) to protect the environment. But don't expect any significant environmental protections in a State with a Republican Governor, Senate, and House. (Of course, we didn't expect the Democrats to protect us either. The last Democratic candidate for Governor was a former head of SNWA.)

So, after Australia's environmental misery with unbundling, commodification's bad reputation, and no foreseeable responsible environmental legislation in Nevada; could Michael Young be whitewashing the potential environmental risks? It certainly looks like it. And if so, this casts doubt on the whole Unbundling Water Rights report to Nevada.


Michael Young recommends in the Unbundling Water Rights report that these new policies be “rolled out quickly” in Nevada. And why? So that we can be “leaders”. He also recommends that; “Rather than preparing a single integrated water resource bill for consideration by the Nevada's Legislature, it may be more appropriate to prepare separate bills”. And why? No reason given. These look like “Shock Doctrine” tactics – which are to wait for a crisis to ram through exploitative laws that benefit only the greedy. And if they separate these bills, it will be even more difficult for Nevadans to fight them.

Astonishingly, Nevada's State Engineers haven't simply waited for this “Shock Doctrine” water crisis. Actually, they have historically enabled it by over-allocating water rights in Nevada. In defense on the Nevada State Engineers, they haven't really had the political power to say no. But in places like Diamond Valley, where the USGS claims that sustainable use is about 35,000 acre feet per year, State Engineers have allocated 70,000 acre feet per year, and actual use may be as high as 100,000 acre feet per year! Disastrously, this water crisis was enabled by those who were supposed to protect us from this very thing.

It appears that Nevada bureaucrats have created a water crisis which our politicians are now being enticed to make worse by passing bills to further enable unrestrained exploitation.

...But it's even less democratic than that. The Michael Young Unbundling Water Rights report states: “Under existing legislation… the state engineer could declare a groundwater resource to be a critical management area and could require preparation of and implement a water resource sharing plan… the state engineer would appear to have sufficient authority to pilot test the proposed right system in the Diamond Valley and the Humboldt Basin.”

In other words, initially, we the people don't have any say in this comprehensive change in Nevada water law. Of course, the Michael Young/Nicholas Institute/Duke University Unbundling Water Rights report explains that an election could be held after five years – where a majority of water rights holders could change things back to senior/junior water rights. But there isn't even a mention of any options for those with minority opinion. It's like the lamb and the pack of wolves voting on what to have for dinner. If senior water rights holders realize they've been taken advantage of; they likely won't be able to go to court, they will likely be in the minority in the valley, and if foreign speculators buy up junior water rights in their basin, senior water rights holders could eventually be in the minority to foreign water investors, hedge funds, or even big cities.

But the water users most likely to suffer from unbundling are the small family farms. Anthony S. Kiem's article Drought and Water Policy in Australia concludes; “there are also some significant limitations and the people and industries that are negatively impacted by water trading are hit hard.” And; “However, these benefits are limited to the larger, well-informed irrigators at the expense of the smaller “family farm” organizations”... I wouldn't vote for that. But nobody gets to.

In the Humboldt Basin, the Michael Young Unbundling Water Rights report recommends; “the existing authority (the 15-person Humboldt River Basin Water Authority) be disbanded and replaced.” Now I'm pretty sure no one on that existing authority voted to be reduced to an advisory position on a “community reference panel.” This takeover is unnecessary. It is effectively a coup d'état that seizes power away from local control and puts it in the hands of the State politicians and bureaucrats that got us into this crisis!
...But at least the former board of the Humboldt River Basin Water Authority will still have some input – unlike environmentalists and Native Americans – that didn't even get mentioned.

Of course, the Michael Young/Nicholas Institute/Duke University Unbundling Water Rights report did include some good ideas. Nevada's water resource plan should:

  • “Allow water account holders to carry forward as many unused water allocations as desired from one season to the next.”
  • “Require all significant water use to be metered and recorded in a robust accounting system.”
  • “Discourage intentional overuse by setting the penalty for a water account deficit of more than 21 continuous days at three times the cost of restoring the account to a zero balance.”

These are good ideas. But we don't have to unbundle water rights to accomplish them.

Nevada has been offered three spoons of sugar to go with our tainted Kool Aid.
We need to realize the obvious: The long-term answers to our water issues do not include selling it off to anyone who wants to buy it.

Allow me to speculate for a moment:
What if this “unbundling” process is really a surreptitious effort by the big cities to buy up Rural water rights for cheap? What if the big cities and the speculators have devised a way to copy the Los Angeles buy up of Owens Valley water by purchasing those water rights on the open market? What if this whole unbundling scheme is all a scam to force the hyper-exploitation of Rural Nevada?

For some unexplained reason, the Michael Young/Nicholas Institute/Duke University Unbundling Water Rights report states; “Well written plans give priority to the water needed for conveyance.” And they define conveyance as; “water delivered to other systems or states”. This one statement reveals the blatant bias of this report. They want us to accept that water to be shipped out of a basin should have priority over water that stays in the basin. A basic understanding of sustainability dictates that exported water should have the lowest priority. One can't sustain an environment, or an economy, when the highest priority is shipping out the deserts' most valuable resource – water. So, why would Michael Young want to give priority to the water “needed” for conveyance? He didn't say. But maybe it has something to do with the financial support he received.

The Michael Young/Nicholas Institute/Duke University Unbundling Water Rights report was funded by:


These foundations have done many good deeds. Their general intentions are good. But there is no guarantee that these foundations are above reproach on every issue. These are not grass roots organizations. And it only makes sense that the best place to hide bad intentions is in an organization delivering on good intentions. Considered separately, these financial supporters (excluding the Bechtel Foundation) don't arouse many suspicions. However, when considered together (along with the unrestrained exploitation recommendations of the report), one might feel compelled to question the integrity of those who donated money to support this report – and of course, the integrity of those who wrote this report.

There is potentially big money in water – the 21st century's oil.
Yet water is life.
We had better be very careful who's advice we take.



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