Thursday, April 30, 2015

Water Right vs. Water Share - revisited

One of the my most visited blog posts is a post I wrote back in 2010 entitled "What Is the Difference Between a Water Right and a Water Share?"  The post explained that the two terms are not interchangeable, and that there are important differences between water rights and water shares.  Understanding the difference between water rights and water shares continues to be the most common confusion I encounter when speaking with people about Utah water.  Accordingly, I have decided to revisit my prior post, and this time provide some visual elements to help with the explanation.

Water rights are rights granted by the State of Utah, through the Utah Division of Water Rights (also known as the State Engineer's Office), that allow a person to use a specified amount of water from a specified source at a specified place for a specified use.  For example, the State may grant you a water right that allows you to divert 1 acre-foot from a well to use on your residential parcel to irrigate 0.25 acres.  Thus, a water right is granted directly from the State to the water right owner, as depicted below.

With water shares, the State issues water rights to a water company (ditch company, canal company, irrigation company, etc.).  So the company is the owner of the water rights.  The company issues shares to its shareholders.  By virtue of owning shares, the shareholders are entitled to receive and use a portion of the company's water rights. 

Many times people say "I have 3 shares of water," when what they really mean is that they own a water right that allows them to divert and use 3 acre-feet of water.  Conversely, many times people say "I have 5 water rights," when what they really mean is that they have 5 shares in a particular irrigation company.

The distinction between water rights and water shares is important in many contexts, including how the water rights or water shares are transferred, how change applications are filed, and whether the water transfers automatically with the land when the land is sold.

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