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Shaw Reservoir, located west of South Fork, pictured on a bluebird fall day in 2022. A multiparty group purchased the reservoir in December 2021 and is putting the water to use in multiple ways. (Chris Outcalt, The Colorado Sun)

MINERAL COUNTY — On a sunny morning in late October, not far from the summit of Wolf Creek Pass, Heather Dutton walked along a dirt path at the edge of Shaw Reservoir, a modest 681-acre-foot lake perched at 9,800 feet. After reaching the far corner of the lake, Dutton, manager of the San Luis Valley Water Conservancy District, paused to take in the view. “I love how you look out there and it just totally drops off,” Dutton said. “It’s like an infinity pool.” 

An eye-catching Colorado vista is one thing, but in that moment Dutton admired more than just the landscape. She reflected on the years of work that went into the district recently finalizing a multiparty deal to purchase Shaw. The conservancy district partnered with the Bureau of Land Management and The Conservation Fund, a national environmental nonprofit, to buy the reservoir from a small group of local farmers and ranchers who had been using the lake for decades as a supplemental irrigation supply. 

These days in Colorado and across the West, persistent drought and other factors such as warmer temperatures and dry soil conditions mean there’s more pressure on and scrutiny over every drop of water flowing through a stream or pumped out of the ground. Given the circumstances, Dutton feels the group buying Shaw and leveraging the water in several ways — to offset well pumping, as a recreational lake for fishing and boating and to help bolster critical wetlands several miles downstream — can be a model for other communities looking to make the most of an increasingly precious resource. 

“I do think it’s an example of people coming together and really understanding what the other people value and then how to overlap our interests,” Dutton said. “And that’s what we’re going to have to do as we have less water.” 

For example, as Dutton looked out over the reservoir, she explained that while she isn’t much of an angler herself, and that the conservancy district isn’t exactly in the fishing business, she recognizes this lake has tremendous value as a recreation spot. Shaw is close enough to South Fork and Del Norte that plenty of locals and tourists make the drive up to enjoy an afternoon casting their lines. It was important to ensure that that access wouldn’t change under the new ownership arrangement, Dutton said.

“This facility grows some pretty nice fish,” she said. “I’m told there are some monsters in here.”

The Blanca Wildlife Habitat Area, located in the San Luis Valley, is about 15 square miles in area. (Olivia Sun, The Colorado Sun via Report for America)

Matchmaking

The whole thing got started over a round of margaritas at a downtown spot in Alamosa in the summer of 2018. A handful of BLM folks happened to be in the valley for a separate water meeting and approached Dutton to discuss Shaw. The BLM team was considering a play for the water rights but had heard the conservancy district might have been interested in the reservoir in the past and didn’t want to step on toes, Dutton said. As they talked about it that afternoon, the basic foundation of a collaborative deal seemed to naturally line up.

For starters, BLM isn’t really in the reservoir-buying game, which can be costly when factoring in operation and maintenance expenses. The bureau was, however, looking for additional water rights for its effort to restore parts of the Blanca Wetlands, a critical habitat for migratory shorebirds located about 10 miles northeast of Alamosa. Over the years, well pumping and other factors have dropped the valley’s groundwater levels, drying up parts of this special low-lying, marshy area. 

The BLM got a $6.4 million federal grant to help restore the wetlands in 2016 and has looked to acquire water rights as part of that effort ever since. With additional water, BLM can recreate parts of the wetland habitat at certain times of the year that are beneficial to the birds. 

In its search for new water, the bureau specifically wanted to avoid drying up farms and ranches, said Roy Smith, a BLM water rights specialist. That directive made Shaw an attractive target. Since the owners had only used the water as a supplemental supply, buying the rights would not cut off their main source. The farmers would still be able to irrigate their fields. 

“We needed to be sensitive,” said Smith, who worked on the Shaw deal. “We said that what we’d like to focus on is acquiring water supplies that would not have a giant negative impact on historical agriculture and the economy that depends on it.” 

For its part, the conservancy district needed more cost-effective ways to store the water that it already owned the rights to. The district relies on renting space in other reservoirs; a good chunk of its budget, however, goes to paying those pricey storage fees — upward of $65,000 a year just to rent the necessary amount of space, Dutton said. 

“There was just kind of this moment of, ‘Holy cow, is there any world where it actually works for a conservancy district to partner with a federal agency and bring it together?’” Dutton said. “We were all really excited.” 

The Sangre de Cristo Mountains are seen near the Blanca Wildlife Habitat Area, located in the San Luis Valley. (Olivia Sun, The Colorado Sun via Report for America)

Two more partners

Getting from eagerly kicking around the idea over margaritas after a day of meetings to actually signing paperwork required another partner: The Conservation Fund, a national nonprofit with a Colorado-based program headquartered in Boulder. The Conservation Fund specializes in structuring and executing these kinds of complex, multiparty deals. 

“There was some alignment with a vision and we knew we had willing players,” Christine Quinlan, the fund’s associate state director for Colorado, said. “But what was needed was some action and initial investment to get the project moving.” 

In this case, the fund conducted some preliminary legal and appraisal work as well as an engineering analysis. What’s more, the fund engaged each of the reservoir’s shareholders and got them to arrive and remain at the negotiating table, Quinlan said. Without Quinlan, the whole thing might not have come together, Dutton said. 

With The Conservation Fund navigating the waters of an eventual deal, the parties finalized an agreement in December 2021. In the end, the district got the reservoir and the associated water rights and then transferred those water rights and 49% of the storage space to BLM. The district’s cost was about $770,000 and BLM’s final price was about $1.35 million. 

The parties will start to fill the reservoir this month. It’s about half full at the moment. Meanwhile, BLM is working through the necessary process in state water court to change the legal designation on its new water rights, known as a “decreed use” in water parlance. The change case will allow BLM to use the water for wetland irrigation, augmentation and recreation; previously, the water’s only decreed use was supplemental irrigation. 

After closing the initial deal, there was one more element to sort out. Colorado Parks and Wildlife had a previous arrangement with the old Shaw owners that helped keep the reservoir as full as possible for recreational use. The way it worked was that whenever the original owners wanted some of their Shaw water, instead of pulling it out of the lake they’d call CPW, which has a portfolio of other water rights in the valley. CPW would get the farmers their water from some other source so the level at Shaw would remain stable, said Rick Basagoitia, CPW’s San Luis Valley wildlife manager. 

Knowing this had been a CPW priority, Dutton and the state agency worked to arrange something similar. The district agreed to store some of its water rights in Shaw, water that it would only need in an extreme drought year such as 2002. That year, the Rio Grande River slowed to a trickle in the valley and the aquifer levels plummeted. In exchange, the district got some additional storage in a CPW-owned lake down the road, Beaver Creek Reservoir. 

“It’s incumbent on all of us to figure out how many uses we can get for every drop of water,” Basagoitia said. “That requires partnership and we are getting really good at doing that here in this valley.”

CPW and BLM struck a similar arrangement. 

“I think all of us are like, ‘I think I got the better deal,’” Dutton said. “It’s so cool that we were able to structure something in a way that everybody’s really excited about — and at the end of the day is better for the people of this basin.”

Blanca Peak glows during sunset on Oct. 25 near Alamosa. Over 14,300 feet in elevation, Blanca is the highest point of the Sangre de Cristo Mountains. (Olivia Sun, The Colorado Sun via Report for America)

Over appropriated

The reason the San Luis Valley Conservancy District needs a bunch of water storage has to do with the way water is administered in this part of Colorado. The state has long since considered the San Luis Valley, which sits atop a sizable aquifer and is home to the early stretches of the Rio Grande, over-appropriated, meaning there is more demand for water than there is water available. 

The state requires any new water uses to offset that use, which helps sustain the aquifer and makes up for the potential damaging effects of wells sucking up water that would otherwise flow in a surface stream. Last year, similar state rules kicked in that now apply to all pre-existing, nonexempt wells. 

As far as new uses go, let’s say you wanted to move to Del Norte and open a cheese factory. Well, you’re going to need water, and because of that whole over-appropriated thing, acquiring the water to get your factory up and running takes some maneuvering. That’s where the local conservancy district comes in. For a fee, Dutton and her team figure out the water maneuvering for you; meanwhile, you go about your cheese business. 

It’s called an augmentation plan. The district has run one for nearly 40 years to accommodate water users in the area, everything from greenhouses, guest ranches and campgrounds to entire towns and some snowmaking operations at the Wolf Creek Ski Area, Dutton said. All told, the conservancy district augments around 1,100 wells in five counties. 

“Some really smart people came together and said ‘Wait a minute, if nobody can have a new use of water without offsetting their injury, that means there’s going to be a ton of augmentation plans, because it’s not realistic that we’re closing our doors and no one can move here,’” Dutton said. “There had to be a mechanism for people to have an additional impact on our water supply and mitigate that injury.”

Notably, though, prior to the Shaw deal, the district did not have a way to augment existing wells on the South Fork of the Rio Grande. Being able to release water out of the CPW-owned Beaver Creek Reservoir or Shaw Reservoir, which both flow into the South Fork, fixes that.

Aside from just solving a problem, Dutton said the Shaw project was enjoyable to work on because the group was so focused on addressing any challenges by finding creative solutions that worked for everyone involved. She said the group is already discussing other opportunities for collaborative projects. 

Reflecting back on it all, BLM’s Smith said he was ecstatic that they were able to pull off such a major partnership, a somewhat unusual arrangement he hopes others around Colorado will consider emulating. 

“It was a really complex arrangement, but because we started early and we looked at it from the perspective of what does everybody have to gain from this, it ultimately worked out,” Smith said. “I hope that it’s a model for addressing the situation that we have a limited water supply.”

Chris Outcalt

Chris Outcalt covers Western water issues for The Colorado Sun. He began his journalism career in New Hampshire, then moved West and became a reporter at the Lafayette News. He...