The next time a water exportation project is pitched to move water from the San Luis Valley – and there will be a next time – the speculator will learn the value of that water to the six-county region measures into the billions of dollars.
A new report by American Rivers and senior economist Claire Sheridan of One Water Econ captures for the first time the economic value of the water that runs through the San Luis Valley. It was a study prompted in 2022 by the threat of water exportation from the Upper Rio Grande Basin by Renewable Water Resources.
As part of its proposal to export and sell 20,000 acre-feet of water every year from the Valley, RWR offered to establish a $50 million community fund that it argued would fairly compensate the Valley for its water. The study, “The Economic Value of Water Resources in Colorado’s San Luis Valley,” pegs fair compensation of the RWR proposal at around $1.3 billion per year. (More on that figure below)
“It’s a really complex question to answer. What is the value of water in the San Luis Valley?” said Heather Dutton, manager of the San Luis Valley Water Conservancy District. “The value of water in the San Luis Valley is so much greater than a one-time payment of $50 million.”
Dutton, Sheridan from One Water Econ, and American Rivers’ Emily Wolf presented the findings of the report at the annual Rio Grande State of the Basin Symposium held March 29 at Adams State.
The study goes beyond putting a dollar value to water for the Valley’s agricultural purposes. It also examines the value of water as it relates to the Valley’s outdoor recreation industry and wildlife and natural habitat surroundings.
And it looks at “water-dependent” industries that are key to the Valley’s economy and their reliance on water for their customers and sanitation services. Those “water-dependent” industries like San Luis Valley Regional Medical Center and Adams State University account for approximately 21 percent of total direct economic output and 23 percent of employment in the Valley, according to the study.
“Capturing the value of water as it is used in homes, businesses, and for environmental purposes can add important information to conversations about the future of the Valley and its water resources,” noted the study’s authors.
The study puts into perspective how valuable water in the Upper Rio Grande Basin is when you apply it to the Valley’s economy and livelihood. According to the report, the San Luis Valley economy generates $4.5 billion in total annual economic output, largely driven by hospitals, electric power companies, insurance, crop farming and cattle ranching. Alamosa and Rio Grande Counties account for 60 percent of the population and 67 percent of total economic output in the region.
Other insights from the report:
- Agriculture in the San Luis Valley, including cattle ranching, generates 10 percent of all output in the region (although this varies significantly by county) and makes up 39 percent of Colorado’s total agricultural output.
- Agriculture is the single largest private employer in the SLV, and irrigated agriculture employs 8 percent of the total workforce (an estimated 2,322 jobs per year). Approximately 64 percent of these jobs are in the category of all other crop farming (which represents alfalfa and grass hay) and 34 percent are in vegetable farming (mostly potatoes).
- The agriculture, forestry, fishing, and hunting sector generate over 4,000 jobs each year. This sector also leads in economic output, generating $566 million annually.
- The value of clean drinking water in the San Luis Valley is estimated to be over $3,600,000 per day.
The analysis also found that water-related habitat in the Valley is valued at more than $49 million annually and the annual Crane Festival generates $4 million in direct revenue from visitor spending.
“It’s just apparent that just as water flows through this community, so do the dollars that are generated from that water,” said economist Claire Sheridan.
Sheridan did the math for the audience at the Rio Grande Symposium in explaining how far under value RWR’s $50 million community fund pitch was when considering the value of water to residents of the Valley.
She used a model FEMA goes by in its emergency management work that factors in two components in creating a value for water to a community: One component is a willingness to pay for clean and safe drinking water. “If you go to your tap and turn on your water, what are you willing to pay to make sure that you can drink that water? What is that worth to you?” The other component is “avoided replacement cost” that factors in costs if a resident has to go buy water.
For the San Luis Valley and its estimated population of 46,600, those two components combined come out to about $77.23 per person, per day, said Sheridan. When you apply $77.23 to the Valley’s population, the value for clean drinking water in the San Luis Valley is about $3.6 million per day or $1.3 billion annually.