The Interior Department announced Wednesday its plans to funnel part of the $4 billion in drought funding it received through the Inflation Reduction Act into a program that would pay Lower Colorado Basin water users to leave portions of their water deliveries in Lake Mead. 

The Lower Colorado Basin System Conservation and Efficiency Program would allow water districts, farmers, municipalities and tribes that currently have delivery contracts with the Bureau of Reclamation or the Central Arizona Project to sign one- to three-year agreements for each acre-foot of water they relinquish.

“This significant investment from the Inflation Reduction Act enables the Bureau of Reclamation to improve water management and conservation efforts in the Colorado River Basin today — and for the future,” Reclamation Commissioner Camille Calimlim Touton said in a release Wednesday.

Reclamation would pay water users $330 per acre-foot under a one-year agreement, $365 per acre-foot under a two-year agreement and $400 per acre-foot under a three-year agreement. The agency set a November 21 deadline for the first round of proposals through the program.

The agency also said it would accept proposals for other water conservation and efficiency projects. It did not specify what it would pay for these, but noted that they could involve a "variety of pricing options."

The announcement comes as Reclamation searches for a way to conserve between 2 and 4 million acre-feet of water by next year to protect water levels in Lake Powell and Lake Mead, the two largest reservoirs in the Colorado River Basin. 

Touton tasked the seven basin states in June with determining where and how to make the necessary cuts, giving them 90 days to collectively propose a solution. But she and state water officials admitted in August that negotiations had failed, leaving the decision in Reclamation's hands.

The agency did receive a bargaining chip to use with Colorado River Basin states after a group of Western lawmakers pushed for $4 billion to be included in the Inflation Reduction Act to bolster the agency's water-saving efforts in the region. The agency also received $8.3 billion in money last year through the Bipartisan Infrastructure Law. 

Interior's program is targeted toward Arizona, California and Nevada, which collectively used 7.5 million acre-feet of water in 2021. But John Boelts, who farms in Arizona's Yuma County, believes the payments are too low to draw participation from most of the region's producers.

"They're pitching a program that's not going to be well received," Boelts said. "It doesn't even meet close to the economic threshold of what one acre foot is worth to a producer in the southwest that uses Colorado River Water."

A coalition of Yuma County water districts met with Reclamation in August to propose a different program, which would pay farmers $1,500 for each acre-foot of water they conserved over a four-year period. But the group's coordinator, Wade Noble, told Agri-Pulse that Reclamation was "less than enthusiastic" about the idea. 

Disagreements over the value that voluntary conservation programs like  this one hold for reducing water use have been a major sticking point in state water reduction negotiations. 

Arizona, for instance, has called for the Bureau of Reclamation to step in and enforce mandatory cuts on water use in the river. Ted Cooke, the general manager of the Central Arizona Project, told reporters in August that state water negotiators are uncomfortable with the "uncertainty" that comes with voluntary agreements. He also mentioned that voluntary programs can create "unreasonable price expectations" from water users.

"That funding needs to go toward more durable solutions, even some things that might have lasting or even permanent impacts," Cooke said of the $4 billion in funding that Congress gave the Bureau of Reclamation.

California, on the other hand, prefers the idea of paying water users to voluntarily conserve water. J.B. Hamby, who serves on the Imperial Irrigation District’s board of directors, says state negotiators want to make sure that water users are compensated for the losses, since cuts can have a large impact on their livelihoods.

"The farmers and growers need to be taken care of," Hamby said. "They're not just taking a water cutback, but an income payment cutback and losing the ability to put food on their own tables."

California's Colorado River Board, which is in charge of negotiating water agreements on behalf of the state, did present Interior Department officials with an offer earlier this month to conserve 400,000 acre-feet of the state's allocation. California's proposal, however, is contingent on a "clear federal commitment" to keep toxic dust from being kicked up from the bed of drying Salton Sea by the powerful winds of Southern California.

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California water officials also proposed the 400,000 acre-foot reduction in negotiations with states earlier this summer, according to Hamby. But it failed to garner approval from negotiators from Arizona, who didn't feel it was enough. 

Robert Schettler, the public information officer for California's Imperial Irrigation District, said the Interior department faced a "big task" when deciding how to use the IRA funding. He said the agency's conservation program will be a good first step in reducing water use along the river.

"This is going to be very helpful," Schettler said. "They've really done a good job working together with everybody. It's a good start."

Arizona Department of Water Resources Director Tom Buschatzke, who serves as the state's lead Colorado River negotiator, said in a statement that he believes Interior's program will better illuminate how much water Lower Basin users are willing to give up voluntarily. 

"This announcement will start the process in which water users can put their water on the table for voluntary conservation, bring clarity to how much water can be conserved and identify how much more needs to be done in a voluntary way," Buschatzke said. 

The Interior Department, in its announcement, did say it would provide some funding for "long-term system efficiency improvements." The agency will begin accepting proposals for that program early next year.

Interior also said it plans to spend at least $500 million on conservation measures in the upper basin states, but did not provide any additional details. These four states — Colorado, Utah, Wyoming and New Mexico — collectively used around 3.5 million acre-feet of the river's water in 2021.

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