Conversion of Shares into Acre-Feet

People often ask me how to convert shares into acre-feet.  Unfortunately, the answer is not as easy as one might expect.

At the outset, please note that this post focuses on water shares, not water rights.  To understand the distinction, visit here and here.  Water rights should already have acre-foot quantities associated with them--with the exception of certain circumstances, including undefined sole supply amounts for a water right.

The amount of water associated with a share in a water company (irrigation company, ditch company, canal company, etc.) is not consistent between companies.  As an example, there is one water company that I know of where 1 share is equal to 1/10th of an acre-foot of water, and there is another water company that I know of where 1 share is equal to 6 acre-feet of water.  The determination of how many acre-feet are associated with each share in a water company is, for the most part, a function of three components: (1) how many total acre-feet the water company is entitled to under its water rights, leases, contracts, etc.; (2) how many shares have been issued in the water company; and (3) how much water the water company's source(s) are able to produce.

As an example, suppose that a water company's water rights, in total, allow for the diversion of 1,000 acre-feet of water from a river for the irrigation of 250 acres (assuming the water company is in an area of the state where the duty is 4 acre-feet per acre).  Further suppose that the water company has issued 250 shares of stock.  On paper, each share would entitle the owner to irrigate 1 acre with 4 acre-feet of water.  Thus, each share represents 4 acre-feet of water.  But if it is a drought year and the river is running low, each shareholder may not actually receive 4 acre-feet of water per share.

Some water companies know how many acre-feet are represented by each share, usually because of shareholder change applications or other applications that have previously been filed with the Utah Division of Water Rights.  In fact, the Division keeps a list of water companies, and the list includes a spot for information about the number of acre-feet per share.  Some companies have this information (see example below), but most do not.  The reality is that many water companies will not know how many acre-feet are represented by each share, and a determination of this number could take some investigation, research, and calculation.

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.