A Texan's Guide To WATER AND WATER RIGHTS MARKETING

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A Texan’s Guide ToWATER AND WATER RIGHTS MARKETINGIntroduction.A Brief History of Water Rights in Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Types of Surface Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Various Forms of Water and Water Right Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . .Factors to Consider in the Sale or Purchase of Water and Water Rights.Factors that Influence the Price or Marketability of Water and Water Rights.The Texas Water Bank and Texas Water Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Future of Water Marketing in Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

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IntroductionFresh water supply is said to be the next global crisis. With increasing populations, demandfor water is beginning to exceed developed water supply. This is particularly true in thewestern United States, which at the beginning of the 21st Century contains seven of its fastestgrowing states, including Texas. If present trends continue, populations in the western UnitedStates will increase by more than 30 percent by 2020, and in Texas the population will almostdouble by 2050. Meanwhile, there has been no significant increase in available water suppliesin Texas since the “dam building era” ended in the early 1980s. As a result, municipal watershortages are developing at a dramatic rate.Water has been the basis for municipal, agricultural, and industrial development in Texas fromthe Spanish Colonial period to the present. This precious resource will continue to shape,contour, and define the Lone Star State. As we embark upon the 21st Century, the challengefor Texas is to provide water to a growing population and economy in the face of increasinglylimited supplies and a need to protect our natural resources. The following key findings in the2002 State Water Plan make clear the magnitude of this challenge: During the 50-year periodbetween 2000 and 2050 thetotal statewide demand forwater in Texas is expectedto increase 18 percent, fromnearly 17 million acre-feet in2000 to 20 million acre-feet; In this same time period,water supplies from existingsources in Texas are expectedto decrease 19 percent, from17.8 million acre-feet to 14.5million acre-feet; and By 2050, almost 900 cities(representing 38 percentof the state’s projectedpopulation) and otherwater users will need either to reduce demand (through conservation and/or droughtmanagement) or develop additional sources of water supply.The 2002 State Water Plan suggests that the projected shortfall between water supplydemands and existing sources of supply can be met essentially in two ways: 1) by developingnew sources of water supply, and/or 2) by utilizing existing supplies in more efficient or costeffective ways.Developing new sources of water by constructing reservoirs or by means of other similarwater development projects is no longer considered as viable an option as in the past dueto physical, economic, and environmental constraints, changing land use patterns, and theemerging viability of such alternatives as water conservation, brush control, desalination,precipitation enhancement, and water marketing.Water marketing has been proposed as one of the key strategies to meet Texas’ future waterneeds. Several forms of water and water right transfers – including the sale and lease of water3

and water rights, water banking, dry-year option contracts, and redirection of conserved water– may be used to move water use from one party to another.This document is intended to provide basic information regarding the marketing of surfacewater and groundwater in Texas. It is divided into the following sections: Section I relates through historical reference how the right to use water in Texas evolvedfrom a royal entitlement to a marketable commodity;Section II contains a description of the different types of surface water rights.Section III contains information regarding the various forms of water and water righttransfers;Section IV contains information regarding factors to consider in the sale or purchase ofwater and water rights;Section V contains an overview of the principal factors that influence the price ormarketability of water and water rights. In addition, this section examines attributes ofriver authorities, the Texas Commission on Environmental Quality (TCEQ) Rio Grandewatermaster program, the Edwards Aquifer Authority, and groundwater conservationdistricts that affect the marketability of water and water rights;Section VI contains information regarding the Texas Water Bank and Texas Water Trust(water programs administered by the Texas Water Development Board) and providessuggestions on where one may find additional information or assistance regarding waterand water rights marketing in Texas; andSection VII contains a brief overview of the future of water and water rights marketing inTexas.4

The Evolution of Water Rights in TexasSurface Water RightsWater has been Texas’s lifeline since the days of man’s earliest presence upon the land.Invariably, archeologists discover evidence of prehistoric human habitation near permanentsources of clean and abundant water such as rivers, streams, and springs. Access to areliable source of clean water was a decisive factor in the selection of sites for settlementduring the Spanish Colonial, Mexican, and Anglo-American periods in Texas. Legal scholars suggest that the history of water regulation in Texas began in the 1600s withthe establishment of Spanish missions and presidios in dry areas of the state where waterwas available for irrigation. Spanish water law at that time encouraged the formation ofcommunity irrigation ditches, or acequias. Under Mexican rule (1821-1836), law establishedunder Spanish rule continued to govern the use of both land and water. In the Spanishsystem land was classified as irrigable, temporarily irrigable, or suitable for grazing, thenapportioned by government grant with or without specific rights for water access.The Republic of Texas adopted the English common law in 1840, including the doctrine ofriparian rights. Thus, landowners with lands granted by the Republic and subsequently thestate of Texas, which bordered streams, were allowed to use the ordinary flows (but notflood flows) of the streams for domestic, livestock, and ultimately irrigation purposes (a basestream-flow was required to be passed downstream for other potential users). The statecontinued to recognize the legality of any rights to use water on lands granted from Spain andMexico.Beginning in the mid 1880s, the Texas legislature began to adopt a system that authorizedthe appropriation of water from the state, and the procedure to acquire such rights. In 1895,the Texas Legislature declared that lands patented from the state after July 1, 1895, did notinclude riparian rights, thus making the appropriation system the only means to acquire waterrights on later patented lands. The appropriations system (or prior appropriations system)requires those wishing to use the State’s surface waters to file or seek state permission. Underthis system, the right granted earlier in time has the greater priority to use the water.The riparian and appropriation system continued to co-exist in Texas. However, the natureof riparian rights made it difficult to determine the extent of such rights, and to manage thestreams of Texas. When claimed water rights exceeded water available in the Rio GrandeValley during the drought of the 1950s, an extensive lawsuit brought by the state resulted inan adjudication of the all rights to the Rio Grande. In 1967, the Texas Legislature passed the5

Adjudication Act, which merged riparian and appropriation systems together on a statewidebasis.The 1967 Act required any person claiming a riparian right other than for domestic useand livestock watering to file a claim for the right by 1969 with the Texas Water RightsCommission, a predecessor agency to the Texas Commission on Environmental Quality(TCEQ). Prior to this Act, riparian water right claimants did not have to file any claim forwater. All riparian and appropriative rights were then reviewed, and final rights issued in theform of certificates of adjudication.With the passage of the 1967 Act, Texas consolidated the allocation of surface water into aunified water permit system. Anyone wishing to use surface water in Texas henceforth wasrequired to hold such a certificate or receive new permission from the state in the form of a“water right.” Exemptions to this requirement include diversion of water for domestic and/orlivestock use, wildlife management purposes, and for emergency or some other specified use.(Note: ‘wildlife management purposes’ was added in 2001 under Senate Bill 2.)In general, under the prior appropriation system, water rights are granted by state license.This license, or permit, grants to the holder the use of a specified amount of water, at aspecific location, and for a specific purpose. The different types of appropriated water rightsare discussed in more detail in Section II.{For additional Information please see Handbook of Texas Water Law: Problems and Needs, byRonald A. Kaiser, Texas Water Resources Institute, Texas A&M University}Groundwater Rights:The common law rule with regard to groundwater in Texas, called the “rule of capture” or“English Rule” allows landowners to withdraw water under their property with little regardto other groundwater users, as long as the water is beneficially used and isn’t intentionallywasted or negligently result in the subsidence of neighboring lands.The Texas Supreme Court explicitly adopted the rule of capture in 1904 in Houston Texas& Central Railway Co. v. East. Subsequently, in 1955, the Texas Supreme Court affirmedthe rule of capture and in its decision stated that, “percolating waters are regarded as theproperty of the owner of the surface who may, ‘in the absence of malice,’ intercept, impede,and appropriate such waters while they are on their premises, and make whatever use of themthey please, regardless of the fact that use cuts off the flow of such waters to adjoining land,and deprives the adjoining owner of their use.”In its rulings relevant to the rule of capture, the Texas Supreme Court has stated that thelegislature has the authority to regulate groundwater if it chooses to do so. In 1949 the TexasLegislature passed the Texas Groundwater Act, which authorized the formation of groundwaterdistricts with limited power to regulate withdrawals. Since 1949, the Texas Legislature hassignificantly expanded the powers of groundwater districts, particularly in the late 1990s.Senate Bill 1, enacted in 1997, explicitly recognizes groundwater districts as the state’spreferred method for managing groundwater resources in Texas.By 2001, 87 Texas groundwater districts covered roughly half the state’s land area andregulated a great percentage of water withdrawn from Texas’ nine major and 20 minoraquifers. The powers exercised by these districts vary, but in general, consist of regulationsto prevent the depletion of water tables, the loss of artesian pressure, waste, and subsidence.These regulations often take the form of rules that may restrict pumping, require permits for6

wells, delineate well spacing, establish maximum rates of water use, and define out-of-districtexport requirements.{For additional information, please see A New Chapter for Texas; The Rule of Capture,Groundwater Conservation Districts, and Sipriano v. Great Spring Waters of Texas, TexasSenate Research Center; March 1999}Confirmed GroundwaterConservation DistrictsPending GroundwaterConservation Districts1. Anderson County UWCD81. Brazoria County GCD172. Barton Springs/Edwards Aquifer CD82. Crossroads GCD *DALLAMSHERMAN HANSFORD OCHILTREE LIPSCOMB3. Bee GCD83. Hays Trinity GCD4. Bexar Metropolitan Water District84. Lavaca County GCD *545. Blanco-Pedernales GCD85. Lower Seymour GCDHARTLEYMOORE HUTCHINSON ROBERTSHEMPHILL6. Bluebonnet GCD86. Post Oak GCD *7. Brazos Valley GCD87. Southeast Trinity GCD318. Brewster County GCD(Still Pending) Middle Trinity GCDOLDHAMPOTTERCARSONGRAYW HEELER9. Clear Fork GCDFailed election in Bluebonnet GCD5510. Clearwater UWCDFailed election in Tri-County GCD11. Coastal Bend GCDARM* Districts Failed Initial Confirmation ElectionCOLLINGSDEAF SMITHRANDALLSTRONG12. Coastal Plains GCDDONLEYWORTH13. Coke County UWCD1414. Collingsworth County UWCDCHILDPARMER15. Cow Creek GCDCASTROSW ISHERRESSBRISCOEHALL16. Culberson County GCDHARDEMAN17. Dallam County UWCD No. 118. Edwards Aquifer AuthorityBAILEYLAMBHALEFLOYDMOTLEYCOTTLE80 WILBAR19. Emerald UWCDW ICHITAGERFOARD3320. Evergreen UWCDCLAYLAMAR21. Fayette County GCDRED RIVERMONTAGUECOOKEGRAYSONFANNINCOCHRAN HOCKLEYLUBBOCKCROSBYARCHERDICKENSKINGBAYLORKNOX22. Fort Bend Subsidence DistrictBOW IEDELTA23. Fox Crossing Water District66TITUS24. Garza County Underground And Fresh WCDJACKTHROCKW YOUNGHUNTSTONEW ALL HASKELL25. Glasscock GCDMORTONCAMP246826. Goliad County GCD6771ROCKRAINSMARIONWALL27. Gonzales County UWCDW 28. Guadalupe County GCDDAW SONBORDENSCURR YFISHERJONESSTEPHENSFORDKAUFMAN VAN ZANDTHARRISON4929. Harris-Galveston Coastal Subsidence District942GREGG8530. Headwaters GCDSMITHHOODJOHNSONELLIS31. Hemphill County UWCDANDREW SMARTINEASTLANDHOW ERATHRUSK32. Hickory UWCD No. 1VEL785744NAVARRO33. High Plains UWCD No.1EL PASOHILLCOMAN- 52GLASS1 53CHEROKEESHELBYCHE3534. Hill Country UWCDBOSQUELOVINGECTORW 5. Hudspeth County UWCD No. 1COLEMANBROW NFREESTONE13HAMILTONDOCHES25SAN36. Irion County WCD73AUGUSLIMESTONEMcLENNANW ARDHUDSPETHTINECULBERSONMILLS37. Jeff Davis County UWCDSABINE58CRANE50 HOUSTONCORYELLTOM GREEN 40UPTONREAGAN38. Kimble County GCD23ANGELINALEONREEVESCONCHOIRIONFALLS7039. Kinney County GCD16LAMPASAS69McCULLOCHTRINITYSAN SABA3640. Lipan-Kickapoo WCDROBERT32BELLMADISONSON1041. Live Oak UWCDTYLERSCHLEICHERPOLKMENARDMILAM42. Llano Estacado UWCDW ALKERPECOS7BURNETJEFF DAVIS4859CROCKETTMASONLLANOW ILLIAMSON43. Lone Star GCDSAN61 BRAZOS GRIMESJACINTO3751KIMBLE44. Lone Wolf GCDBURLESONSUTTON19HARDIN4345. Lost Pines ANGE46. McMullen GCDLIBERTYTERRELLTON3445647. Medina County GCDBAS TROP5 83JEFFERSONPRESIDIOH AYS 2KE RRAUSTIN48. Menard County UWCDEDW ARDS30 KENDALLHARRIS63FAYETTEVAL VERDE87CALDW ELL49. Mesa UWCDREALCHAMBERS62BREW STER15 COMALBANDERA2950. Mid-East Texas GCD6021 COLORADO72 76GUADALUPEFORT BEND51. Middle Pecos GCD886GALVESTON28GONZALESBEXAR2252. Middle Trinity GCDLAVACA18MEDINAUVALDEKINNEYW HARTON53. Neches & Trinity Valleys GCD274BRAZORIA84W ILSON5654. North Plains GCD77114739DE W ITT8155. Panhandle GCDJACKSON12KARNESATASCOSA56. Pecan Valley GCDFRIOZAVALAVICTORIA75 MATAGORDA20MAVERICK57. Permian Basin UWCDGOLIAD8258. Pineywoods GCD26CALHOUN59. Plateau UWC And Supply District79BEEDIMMITMcMULLEN LIVE OAKREFUGIOLA SALLE60. Plum Creek CDD EV E L O3PMR61. Post Oak Savannah GCD65ARAN46E41SAN62. Presidio County UWCDSASPATRICIO63. Real-Edwards C and R DistrictJIM64. Red Sands GCDW EBBNUECESWELLSDUVAL65. Refugio GCD66. Rolling Plains GCDKLEBERG67. Salt Fork UWCD68. Sandy Land UWCD69. Santa Rita UWCDJIM HOGGBROOKSZAPATAKENEDYDISCLAIMER70. Saratoga UWCD71. South Plains UWCDThis map was generated by the Texas Water Development Board.No claims are made to the accuracy or completeness of the72. Springhills Water Management District64information shown herein nor to its suitability for a particular use.STARR73. Sterling County UWCDW ILLACYThe scale and location of all mapped data are approximate.HIDALGO74. Sutton County UWCDBoundaries for groundwater conservation districts areapproximate and may not accurately depict legal descriptions.75. Texana GCDCAMERON76. Trinity Glen Rose GCDMilesMap updated February 19, 2003Boundary changes and updates are01530609012077. Uvalde County UWCDcurrently being reviewed by the TCEQ.78. Wes-Tex GCD79. Wintergarden GCD80. Tri-County GCDCONFIRMED AND PENDINGCONFIRMATIONGROUNDWATER CONSERVATIONDISTRICTSMORRISFRAN KLINJASP ERX A S WATOT B AR DTENEWTONWALLEREN7

Major River Basins In RAYWHEELERDEAF ARCHERBAYLORKNOXGRAYSONRED ORDPARKERPALO LNOLANTAYLORJOHNSONERATHHARRISONVAN LLCOMANCHEEL ONEMcLENNANMILLSCORYELLTOM GREENREAGANLAMPASASSAN NCOTERRELLWASHINGTONKENDALLVAL KMcMULLENLIVE OAK3. SulphurMATAGORDA17GOLIADBEEDIMMITLA SALLE15KARNESATASCOSA1. Canadian2. Red11LAVACADE WITTLegend9FORT TGOMERYTRAVISGILLESPIECALHOUN20REFUGIOARANSAS4. Cypress5. Sabine6. NechesSAN PATRICIOWEBBJIM WELLSNUECESDUVALKLEBERG7. Neches-Trinity8. Trinity9. Trinity-San Jacinto22JIM HOGGZAPATABROOKSWILLACYHIDALGO13. Brazos-Colorado14. Colorado15. Colorado-LavacaTECAMERON16. Lavaca17. Lavaca-Guadalupe18. Guadalupe19. San AntonioERD EV E L OPMOT B AR DSTARRX A S WATKENEDYEN10. San Jacinto11. San Jacinto-Brazos12. BrazosMap prepared by Mark HayesTexas Water Development BoardGIS SectionE:\Projects\Surface Water\Major River Basins 8.5 x 11.mxdJuly 200220. San Antonio-Nueces21. Nueces22. Nueces-Rio Grande23. Rio GrandeSAN LOCHSCHLEICHERHOUSTONLEONCONCHOIRIONJEFF DAVISNACOGDOCHESTINEUPTONSHELBY6SAN OCK150MilesDISCLAIMERNo claims are made to the accuracy or completeness of the datanor to its suitability for a particular use. The scale and compilationof all information shown herein is approximate.

Types of Surface Water RightsThe right to use water often depends on whether the source of the water originates fromabove or below ground. In general terms, surface water found in defined watercourses isowned by the state and subject to state permitting requirements, whereas diffused-surfacewater and groundwater are generally attached to land and subject to ownership by thelandowner.Surface WaterFor surface water rights permits, Section 11.134 of the Texas Water Code provides that theTCEQ may grant an application for a new or additional appropriation of water only if:1. the application meets all necessary requirements;2. unappropriated water is available at the source of supply;3. the water will be beneficially used;4. the use will not impair an existing water right or vested riparian right;5. the use will not be detrimental to the public welfare; and6. the applicant provides evidence that reasonable diligence will be used to avoid wasteand achieve water conservation.In its consideration of an application for a new or amended water right, the TCEQ shall alsoassess the effects, if any, of the issuance of the permit or amendment on:1. freshwater inflows to bays and estuaries;2. existing instream uses;3. water quality; and4. fish and wildlife habitatsSpecial conditions may be included in the new or amended water right to minimize or avoidimpacts to existing uses and/or the environment.In Texas, there are two primary types of appropriated surface water rights: perpetual rights,including certificates of adjudication and permits; and limited-term rights including termpermits, temporary permits, seasonal permits, contractual permits, and emergency permits.Perpetual appropriated water rights generally have the following features in common: An assigned priority date. This date determines the holder’s priority for available water.Regardless of the priority date, whenever there is less water than is needed to satisfy allwater rights in a basin, each appropriated right is subordinate to domestic and livestockusers for the available water.A specified volume of water that the holder may take or use within each year and adiversion rate if there is diversion of water; access to this volume of water is subject tovarying degrees of reliability depending upon the availability of water and the holder’spriority date.An ability to impound water (for example, to store it in a reservoir above a dam), to divertwater (for example, to pump it from the stream), or both.A right to impound water is called an impoundment right. An impoundment right will specifythe location of the holder’s dam, the capacity of the holder’s reservoir, and any specialconditions placed on the holder’s right to impound water—for example, a permit may state thecondition that the holder “may impound only the portion of the stream flow that exceeds 100cubic feet per second.”9

A right to divert water is called a diversion right and is often referred to as a “run-of-the-river”right. A diversion right will specify where the holder may divert water (that is, the holder’sdiversion point), the rate at which the holder may divert water, and any special conditionsplaced on the holder’s right to divert water—for example, a permit may state the condition thatthe holder “may divert water only between October 1 and November 30 of each year or whenthe stream flow is at a certain level.”Perpetual rights, and to an extent groundwater and limited-term rights, are regarded asproperty interests, and as such may be bought, sold, or leased.Surface water rights, in whole or part, may be cancelled by TCEQ for non-use after ten yearsunder the authority of Subchapter E, Chapter 11 of the Water Code.{For additional information please see Rights to Surface Water in Texas; Texas NaturalResource Conservation Commission, Publication: GI-228; May, 2002}10

Forms of Water TransferSale of a Surface Water RightThe sale of a surface water right may be conducted between a willing seller and a willing buyerby arranging a contract for sale. In addition, sales may proceed via other mechanisms, suchas condemnation through the right of eminent domain. To the best of our knowledge nomunicipality in Texas has exercised the condemnation and eminent domain authority providedin Section 11 of the Texas Water Code to arrange the sale of a surface water right.If the sale of a surface right does not involve a change in purpose of use, amount ofuse, or place of use, then a simple change of ownership is required to be filed with theTexas Commission on Environmental Quality (TCEQ). However, most surface water righttransactions have historically involved a change in use or location; such as the conversion of awater right from irrigation to a municipal use.Transactions that require a change in purpose or place of use of surface water are subject tosignificant administrative oversight, because they alter the grant of authority from the State ina fundamental way. Surface water right permit amendments require approval of TCEQ and theapproval process involves a substantive review of the proposed change.Contract Sale of Surface WaterIn Texas, vast quantities of water are sold by way of wholesale contract. These sales aremade separately, and apart from the transfer of any interest in the water right itself. Typically,one or more entities that own underlying water rights develop a water supply and then sellthe water to others. Obvious examples are the development of reservoirs and well fields byregional entities such as river authorities and large municipalities who subsequently lease thedeveloped water, but not the underlying water right, to contracting parties.General common-law principles of contracts, as well as certain public utility interestrequirements, apply to these transactions. TCEQ has some oversight of surface water supplycontracts. For instance, if a contract meets agency rules and is consistent with the termsof the underlying surface water right, TCEQ’s Executive Director will simply file it with theagency’s records.In general terms, TCEQ’s rules regarding contract sales of surface water require that thecontract terms specify a per unit cost of water; effective date and termination date; allowablediversion rate; annual average quantity of water to be furnished; location of purchaser’sdiversion point; and a general statement of compliance with applicable rules and statutes.Lease of a Surface Water RightLease of a surface water right is a transaction in which a willing lessor and willing lessee agreeto a short or long term transfer of a surface water right for financial or other considerations.During the term of the lease the lessee would get the use of the water right. At the end of thelease term, use of the surface water right would revert to the lessor, normally the owner, whowould regain full use of the water right unless he chooses to renew or renegotiate the leasecontract with the lessee. If the lease involves a change in use, location, or amount of waterdiverted it would require a surface water right permit amendment to be authorized by TCEQ.11

Interbasin Transfer of Surface WaterSenate Bill 1, enacted by the Texas Legislature in 1997, imposed stringent standards on newinterbasin transfers of surface water. Any interbasin transfer application submitted to TCEQmust be accompanied with economic and environmental analyses, as well as a water-rightanalysis.Provisions in Senate Bill 1 authorize TCEQ to grant an interbasin transfer, in whole or in part,but only to the extent that 1) detriments to the basin of origin are less than the benefits to thereceiving basin, and 2) the applicant has prepared drought and water conservation plans thatwill result in the highest level of water conservation and efficiency.In addition, a permit amendment for an interbasin transfer would result in the assignment of ajunior priority date to the surface water right to be transferred from the basin of origin.Dry-Year Option Contracts—Surface WaterGenerally, dry-year option contracts are used by municipalities to secure reliable sources ofadditional water to augment their existing supplies during times of drought. A municipalitydoes this by negotiating an agreement with a water right holder (generally an irrigator) toacquire the use of the water right holder’s water, during and only during, a specified dry-yearperiod. In this way, the municipality augments its ability to meet its water supply needs duringa drought and the water right holder enjoys the financial benefits of the contract and the rightto continue using the water during non-dry-year periods. These contracts normally entailcompensation for the option to use water plus a payment for the quantity of water used, whenthe option is exercised. Again, if the contract contemplates a change in the use of water fromwhat is authorized in the original permit, a water right amendment is required.Transfers of Conserved Water — Surface Water or GroundwaterIn several parts of the State, there are viable water conservation strategies that can beimplemented, and the water saved may be marketed. The general practice, historically,has been for municipalities or industries to acquire water by financing the modernization ofirrigation systems in exchange for the right to use all or part of the water that is conserved.In the Lower Rio Grande Valley, for example, irrigation districts have utilized this approach tofinance improvements that both conserve water and improve canal distribution efficiencies.Sale/Lease of GroundwaterIn Texas, rights to groundwater may be severed from the land and made available for sale.Likewise, it is possible to purchase a lease for the right to withdraw groundwater. Historically,however, it has been much easier for prospective groundwater users to merely purchase aparcel of land and mine the groundwater available there, than to purchase groundwater viacontract with an existing landowner. However, in the future, due to the expansion in useof local regulatory authority, groundwater transactions might primarily occur via a contractwith an existing landowner. Contracts could specify an actual amount of groundwater to bewithdrawn, a withdrawal rate, a term certain for proposed withdrawals, etc. - similar to surfacewater contracts.{For additional information please refer to the subsection on Groundwater in Section IV.}12

Some Important Sale and Purchase ConsiderationsThis section examines the issues a buyer or seller should consider before deciding whether tobuy or sell a surface water right. These issues and considerations include: ownership of bothirrigation and non-irrigation water rights, the scope of the water right, contract negotiations,and title conveyance. This is followed by a brief discussion of issues tha

Water marketing has been proposed as one of the key strategies to meet Texas' future water needs. Several forms of water and water right transfers - including the sale and lease of water . 4 5 and water rights, water banking, dry-year option contracts, and redirection of conserved water

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