Water speculators could face more obstacles based on work by new group

2020 bill directs state to study improvements to Colorado’s water anti-speculation law

By: - September 12, 2020 2:14 pm

A photo of boaters on the upper Colorado River in Colorado in July 2018. (Bob Wick/BLM)

Some feel like it’s something straight out of a dystopian movie. Others say it’s already happening: out-of-state companies purchasing Colorado water rights as an investment for when water gets so scarce that the price skyrockets.

Sen. Kerry Donovan represents the 5th District in the state Senate.

“Water speculators aren’t in the business of using the water, they’re in the business of owning the water for future times when they can sell it,” said state Sen. Kerry Donovan, a Vail Democrat. “And that’s why you see hedge funds coming into the state and buying water in a portfolio. That is what is concerning me.”

This week, the Colorado Department of Natural Resources announced an 18-member work group to conduct a study of how to strengthen Colorado’s water anti-speculation law. Currently, Colorado water law prohibits speculation by requiring water to be used for a beneficial purpose. 

Donovan said the purpose of a recent bill that created the work group was to make sure that Colorado’s water speculation law has enough legal teeth to “go after” any speculative behavior.

Members of the committee must produce a report of their recommendations by Aug. 15, 2021. 

Anti-Speculation Law Work Group Members

Kevin Rein (Co-chair), state engineer, Division of Water Resources
Scott Steinbrecher (Co-chair), assistant deputy attorney general, attorney general’s office
Tracy Kosloff, deputy state engineer, Division of Water Resources
Erin Light, Division 6 engineer, Division of Water Resources
Lauren Ris, deputy director, Colorado Water Conservation Board
Amy Ostdiek, deputy section chief, Colorado Water Conservation Board
Alex Funk, agricultural water resource specialist, Colorado Water Conservation Board
Justice Gregory Hobbs Jr., retired Colorado Supreme Court justice
Joe Bernal, Bernal Farms
Daris Jutten, Lazy K Bar Land and Cattle Co.
Joe Frank, general manager, Lower South Platte Water Conservancy District
Larry Clever, general manager, Ute Water Conservancy District
Alex Davis, water resources division manager, Aurora Water
Peggy Montaño, Trout Raley
Peter Fleming, general counsel to the Colorado River District
Adam Reeves, Maynes, Bradford, Shipps and Sheftel LLP
Drew Peternell, Colorado director, Trout Unlimited
Kate Ryan, senior attorney, Colorado Water Trust

The effort is a result of legislation that was signed into law by Gov. Jared Polis on March 11.

The bipartisan bill was cosponsored by Donovan in collaboration with Sen. Don Coram and Rep. Marc Catlin, both Montrose Republicans, and Rep. Dylan Roberts, an Avon Democrat.

Colorado is home to the headwaters of four major river basins and supplies water to more than 40 million people and nearly 5.5 million acres of farmland across the western United States and Mexico, according to a press release from the Bureau of Reclamation. 

A recent study published in Science estimates that the Colorado River flow decreases by 9% with every temperature increase of 1.8 degrees Fahrenheit. Between 1913 and 2017, the natural flow of the river decreased by 20%, according to the study. 

“A scenario that’s not too far fetched, because it’s just basic free markets, is that the scarcer commodities become, the more expensive it is because it’s more valuable,” said Donovan, who also operates a small cattle ranch in Vail. “And water speculation increases that scenario because you have people who are going to hold an asset to profit off of it.”

Since 2017, a New York-based hedge fund called Water Asset Management has spent $16.6 million buying up 2,222 acres of irrigated agricultural land in the communities of Fruita, Loma and Mack, in western Colorado, according to reporting by KUNC and Aspen Journalism in June.

This summer, Donovan said the tiny creek her ranch relies on dried up. “It’s not going dry because of overuse or over appropriation. It goes dry because of climate change and drought,” she said.

Joseph “Joe” Bernal, owner of Bernal Farms in Loma and a member of the new working group, said he’s looking forward to learning more about Colorado’s anti-speculation law and if there is a need to strengthen it.

“We must protect our water rights for our land and our community. That’s why it’s important,” Bernal said. “If there’s a law that the Colorado Senate thinks needs to be looked at, well then, I’m all for discovering what the needs are.”

He said where he is in Mesa County, water speculation hasn’t been a big issue. But he said it’s still worth looking into.

“There’s different people buying or different entities buying land with water attached to it,” said Bernal, whose farm has been in his family since 1925. “But from what I can tell, all the water has stayed where it’s at right now.” 


Members of the new anti-speculation working group were appointed by Dan Gibbs, executive director of the Colorado Department of Natural Resources.

“Our goal is to have a transparent and thoughtful process over the next year,” said Gibbs, in a statement.

Donovan said the working group was meant to be “law heavy.” 

“This is a technical detailed legal group to examine current law and practice, not a stakeholder group trying to determine policy,” Donovan said.

“We need to send a message that if a hedge fund is looking towards Colorado, that we’re working on water speculation preventative measures, and hopefully that gives them pause before they just waltz into Colorado thinking that they’re going to make a buck off of buying our limited resource.”

Editors note: This story has been updated to include Aspen Journalism along with KUNC as a contributor to reporting about Water Asset Management.


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Moe Clark
Moe Clark

Moe Clark is a freelance journalist and former Colorado Newsline reporter who covered criminal justice, housing, homelessness and other social issues.