Hundreds of growers in Colorado’s San Luis Valley could see their water costs nearly quadruple under a new plan designed to slash agricultural water use in the drought-strapped region and deflect a potential legal crisis on the Rio Grande.

A new rule approved by the area’s largest irrigation district, known as Subdistrict 1, and the Alamosa-based Rio Grande Water Conservation District, sets fees charged to pump water from a severely depleted underground aquifer at $500 an acre-foot, up from $150 an acre foot. The new program could begin as early as 2026 if the fees survive a court challenge.

“It’s draconian and it hurts,” said Sen. Cleave Simpson, a Republican from Alamosa who is also general manager of the Rio Grande water district.

The region, home to one of the nation’s largest potato economies, has relied for more than 70 years on water from an aquifer that is intimately tied to the Rio Grande. The river begins high in the San Juan mountains above the Valley floor.

Both the river and the aquifer are supplied by melting mountain snows, but a relentless multi-year drought has shrunk annual snowpacks so much that neither the river nor the aquifer have been able to recover their once bountiful supplies.

And that’s a problem. Under the Rio Grande Compact of 1938, Colorado is required to deliver enough water downstream to satisfy New Mexico and Texas. If the aquifer falls too low, it will endanger the river’s supplies and push Colorado out of compliance. Such a situation could trigger lawsuits and cost the state tens of millions of dollars in legal fees.

Subdistrict 1 has set state-approved goals to comply with the compact. Within seven years, it must find a way to restore hundreds of thousands of acre feet of water to the aquifer, a difficult task.

An acre-foot equals nearly 326,000 gallons of water, or enough to cover an acre of land with water a foot deep.

The specter of an interstate water fight is creating enormous pressure to reorganize the Valley’s farming communities in a way that will allow them to use less water, grow fewer potatoes, and still have a healthy economy.

For more than a decade, Valley water users have been working to reduce water use and stabilize the aquifer. Many have already started experimenting with ways to grow potatoes with less water by improving soil health, and to find new crops, such as quinoa, that may also prove to be profitable.

They have taxed themselves and raised pumping fees, using that revenue to purchase and then retire hundreds of wells. In fact, the district is pumping 30% less water now than it was 10 years ago, according to Simpson.

But the pumping plans, considered innovative by water experts, haven’t been enough to stop the decline in aquifer levels. The Rio Grande Basin is consistently one of the driest in the state, generating too little water to make up for drought conditions and restore the aquifer after decades of over pumping.

With the new fees, the region will likely have some of the highest agricultural water costs in the state, said Craig Cotten, who oversees the Rio Grande River Basin for Colorado’s Division of Water Resources.

Perhaps not as high as water in the Colorado-Big Thompson Project on the northern Front Range, where cities and developers and some growers pay thousands of dollars to buy an acre-foot of water.

Still, it is much higher than San Luis Valley growers and others have paid historically. Fees at one time were just $75 an acre foot, eventually reaching $150 an acre-foot. The prospect of the fee skyrocketing to $500 is shocking.

“That is high,” said Brett Bovee, president of WestWater Research, a consulting firm specializing in water economics and valuations. Typically, such fees across the state have been in the $50 to $100 range, he said.                                       

But Bovee said the water district is taking constructive action while giving growers opportunities to find their own solutions to the water shortage. “It’s putting the decision-making power into the hands of growers and landowners, rather than saying ‘everybody take one-third of your land out of production.’”

Subdistrict 1 is the oldest and largest of a group of irrigation districts in the Valley, according to Cotten. Its $500 fee has triggered a lawsuit by some growers, who believe the district is applying the new fees unfairly.

“The responsibility for achieving a sustainable water supply is to be borne proportionately based on (growers’) past, present and future usage,” Brad Grasmick, a water attorney representing San Luis Valley growers in the Sustainable Water Augmentation Group and the Northeast Water Users Association, said, referring to state water laws. “But we believe the responsibility is being disproportionately applied to our wells.”

Those growers are now trying to create their own irrigation district and they are suing to stop the new fee.

 “I think that more land retirement and more reduction in well pumping is needed and that is what my group is trying to do,” Grasmick said. “No one wants to see the aquifer diminish and continue to shrink. If everybody can do their part to cut back and make that happen, that is the way forward. My guys just want to see the proportionality adhered to.”

To date, tens of millions of dollars have been raised and spent to retire wells in the San Luis Valley, with Subdistrict 1 raising $70 million in the last decade, according to Simpson. And in 2022 state lawmakers approved another $30 million to retire more wells.

But it’s not enough. With each dry year, the water levels in the aquifer continue to drop.

Similar issues loom for Eastern Plains irrigators

The San Luis Valley is not the only region faced with finding ways to reduce agricultural water use or face interstate compact fights. Colorado lawmakers have also approved $30 million to help growers in the Republican River Basin on the Eastern Plains reduce water use to comply with the Republican River Compact of 1943, which includes Kansas, Nebraska and Colorado.

Lawmakers are closely monitoring these efforts to reduce water use while protecting growers.

Sen. Byron Pelton, a Republican from Sterling, said the combined money that is going to the Rio Grande and Republican basins is critical. But the potential for legal battles, he said, is concerning.

“Agriculture is key in our communities,” Pelton said. “But the biggest thing is that we have to stay within our compacts. Sometimes you’re backed into a corner and that is just the way it has to be. I hate it, but we have to stay in compliance.”

How much irrigated land will be lost as wells are retired isn’t clear yet. Simpson said growers who have access to surface supplies in the Rio Grande will still be able to irrigate even without as many wells or as much water, but the land will likely produce less and farms may become less profitable.

And it will take more than sky-high pumping fees to solve the problem, officials said. The Division of Water Resources has also created another water-saving rule in Subdistrict 1 that will force growers to replace one-for-one the water they take out of the aquifer, instead of allowing them to simply pay more to pump more.

Cotten said the hope is that the higher fees combined with the new one-for-one rule will reduce pumping enough to save the aquifer and the ag economy.

Valley growers are already shifting production and changing crops, said James Ehrlich, executive director of the Colorado Potato Administrative Committee in Monte Vista, an agency involved in overseeing and marketing the region’s potato crops.

Still the new fees could jeopardize the entire potato economy, Ehrlich said.

“There are a lot of creative things going on down here,” Ehrlich said. “But we have to farm less and learn to survive as a community together. And Mother Nature has not helped us out. We’ve stabilized but we can’t gain back what (state and local water officials) want us to gain back. It is just not going to happen.”