QUIZ: Which factors impact water values? A) location B) priority date C) yield D) all of the above
Answer: D) Generally speaking, the value of water rights depends on a combination of all these, as well as other factors such as the current water market.
For many water rights holders, this is the big question: How much is my water worth? Whether you’re negotiating a private sale or working with municipalities or commercial developers, you may need to conduct a water valuation. Similar to real estate, water has a market value, and that value can change over time.
There’s no public database of water sales or quick way to determine the value of water, so banks and water rights owners call upon experts like us to conduct water valuations. While no two valuations are the same, there are some common factors we consider when conducting valuations. These might give you an idea as to how much your water is worth:
- Generally speaking, the value of a water right depends on its priority date, location, decreed use, and yield. Water sale comparisons are typically done based on a cost per consumptive use yield.
- Like real estate experts, we look at comparable sales of other water rights. We research past sales, talk with water brokers, water rights engineers, municipalities, and others to determine the comparative sales value.
- An evaluation of whether or not the water right has been changed in water court, and the transferability and consumptive use yield of the water right
- Location, location, location! Water rights located near municipalities or within a large service area tend to procure a higher value. This is due to higher demand for augmentation water and water for municipal or industrial purposes, such as for oil and gas operations.
- The availability and capability to store water will typically increase the value of the water.
All of the variables described above are collectively used in determining the value of a water right. To learn more about water valuation, contact us.