Richael Young is the Cofounder and CEO of Mammoth Water, the smart market platform that delivers a smarter, simpler way to track and trade water. On this episode of Reversing Climate Change, Richael joins Alexsandra and Christophe to discuss the ins and outs of water markets and explain why strong governance is crucial to their success.
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change podcast by the team at Nori, the carbon removal marketplace. This is a show about the innovators and entrepreneurs developing solutions to climate change.
Christophe Jospe: This is like behind the scenes now because we’re making water sounds. Welcome to the Reversing Climate Change podcast. My name is Christophe Jospe. I’m sitting here with my lovely co-host Alessandro Guerra. We are in the Techstars office. It is week 12 of Techstars. Holy cow, like this is flown by.
Alexsandra Guerra: Yeah, it’s been too fast and I’m getting really sad. The other day I was here with our guest, Rochelle Young, who’s CEO of Mammoth Water, and we were just chatting and she’s like, can you believe we’re halfway through program? And then I repeated it and I told her immediately to shut up. And that was five weeks ago. That was so sad.
Christophe Jospe: We’ve got two weeks left. Hey, quick promo for Nori. Not sure when this is going out, but I’m sure you could participate in the lightning sale and go to nori.com slash remove dash carbon.
Alexsandra Guerra: Yeah. Okay, so interesting switch from our plug, but Mammoth Water, or Rochelle here, has been helping us and rooting us from the sidelines. One of the many companies here in the TNC Techstars cohort.
Richael Young: Oh, y’all are great.
Alexsandra Guerra: Welcome, Rochelle. I’m so happy to have you here.
Richael Young: It’s a pleasure to be here. Thanks for having me.
Alexsandra Guerra: So we usually start out with people’s stories. Can you tell us what is your story?
Richael Young: Yeah, I think I have a really... Unusual beginning in working in environmental issues and that the first time I can remember actually caring about The environment was not growing up outdoors. I didn’t do that. We didn’t go camping as a family because we had many horrific experiences doing it. And so we decided that was not the type of family we were. So it wasn’t through outdoor activity.
Alexsandra Guerra: I’m so curious. Like, what are these horrific stories? But I’ll save that for later.
Richael Young: Okay. We’ll get to that. Maybe off the record so I don’t embarrass my poor parents. Okay. But yeah, it was actually sitting in church. And my pastor at the time was talking about the importance of tithing and how God required us to be good stewards of our finances and the resources that he gave us. And it just hit me that – I think I was 17 at the time, maybe 18 – and it just hit me that, geez, if we were supposed to be good stewards of something that was man-made, which is finances and currency, how much more are we supposed to be good stewards of what God has made and upon which all of our wealth is derived?
And it was at that moment that I decided – I wanted to devote my life to a career working on environmental conservation and protection.
Christophe Jospe: That’s beautiful.
Alexsandra Guerra: Oh, I’m kind of smiling here because you just stopped and I want to hear so much more. So can you tell us a little bit about what mammoth water is and let’s see where we go from there?
Richael Young: Sure. Well, mammoth water is the smarter and simpler way to track and trade water. When I got into the space of working in water resources, I thought that it was all about improving efficiency within the household, that if we flush the toilet less or we’re better about turning water off when we’re washing dishes or in between brushing our teeth, that was going to be the way to make a big dent in water conservation. But it turns out that accounts for a really small percentage of our annual water use as humans.
And when we look at Where we can make the biggest difference is in agriculture. Agriculture in the United States and globally uses about 70% of our annual water use. And so if you want to make a difference in water conservation, it’s really in this space that we have the biggest opportunity. You can make small improvements in ag and get a large overall effect. And so I started really working in agricultural water, working a lot on the ground with our farmers and ranchers. And Really trying to equip them with the tools that they need for 21st century water management.
Christophe Jospe: So, Rochelle, you’re sitting on the Reversing Climate Change podcast and ostensibly water has something to do with it, including groundwater, which is a resource that farmers think about. So, I mean, but let’s start with some simple definitions. What is groundwater and what does that have to do with climate change?
Richael Young: That’s a great question. So groundwater, and this wasn’t something that I realized until college, which tells you the state of knowledge of our science education. So groundwater is water that is stored underground. You can think of it as these underground reservoirs. Water can get stored between these voids that could be air and are filled up instead with water between gravel and rocks and other soil that, yeah, is just sitting beneath our feet. And how this relates to climate change is that a lot of farmers use groundwater to irrigate their crops.
And groundwater is a really great tool for hedging against climate uncertainty. And so when we have really hot, really dry summers, you can pull from this underground resource to irrigate crops. The problem is that in general, we are using more groundwater than is being replenished annually. So groundwater is recharged. Largely by rainfall. It sinks into the ground, so the ground is like a sponge and it soaks it up. Aquifers that are typically built over centuries are being drained in a generation, and so we’re losing permanent storage. One of the problems is that if you pump groundwater too rapidly, you create a bunch of these massive air voids that used to be filled by water.
And the ground will literally start collapsing in on itself. And so at a surface level where we’re walking around, the ground is sinking. You can see pictures of land subsidence in places like California. And so it’s a huge issue in that it’s costing us billions and billions of dollars because it’s destroying surface level infrastructure like our roads, like water canals, like our telecoms infrastructure. And so it actually becomes a really costly problem beyond just looking at Our water use. And as we’re losing this precious resource, we’re also losing our ability to hedge against climate change and uncertainty that we have related to drought.
Christophe Jospe: I think you laid it out in a really nice way. And when you just put it in the context that like you’re depleting a resource that’s been building up over millennia in a decade, humans have ways of trying to use markets and markets are a Sure.
Richael Young: Well, markets emerged out of the need to Reallocate water in times of scarcity. So when you don’t have enough water to satisfy all of the human needs for water, then there becomes a need to, as a society, move water between its different uses. You might move it across space, you might move it across time, but the point of a market is really to create flexibility in communities. You know, the water market in Oman has been going on for over a thousand years and we have...
Alexsandra Guerra: So for those who are not familiar with Oman, what is this water market?
Richael Young: Yeah, so there’s surface water trading that is happening in Oman and it’s been happening for over a thousand years. And we have surface water and groundwater trading in the United States that’s been happening for decades as well. It’s just that they’re largely informal, decentralized, and... And so one of the You really can’t have a good functioning water market without good governance. And in fact, if you don’t have good governance, you can actually see a water scarcity issue be exacerbated.
Christophe Jospe: So you’re kind of doing this thing that we like guests to do, which is like seeding your own questions that you want us to ask you. So let’s talk about governance. Where has governance failed or succeeded in the establishment of water markets?
Richael Young: There are so many examples. There are examples in the United States, in Nebraska, for example, where I work, where groundwater markets have done really well and also that we’ve learned from failure and have seen some kind of horror stories around how water markets make the problem of water scarcity worse. So for example, if you have an allocation or a limit on groundwater pumping that exceeds the average amount that And if you don’t allow trading and people just have a limit on how much they can use, but their average amount is less than that, then, okay, you won’t make the problem worse.
If instead, though, you then allow people to trade, that difference between the average and your upper limit, your allocation, can then be traded in a market. Those are called slack permits. And if you trade those slack permits, you can actually get into a situation where you increase consumptive use in a water market. So those kinds of situations happen a lot in water markets. I see a look on your face.
Alexsandra Guerra: Yeah, I just saw a connection directly to what we see with emissions allowances and just cap and trades of saying this is how much you’re allowed to emit. And that’s just what went through my mind. And that’s why I was smirking when you were explaining this.
Christophe Jospe: Yeah. And so just to read back, what I think you’re saying is that when you have governance that might allow for certain tradings with an over allocation of permits that actually isn’t addressing the scarcity issue, you’re going to get more use of that resource than if there wasn’t any water market in the first place, we would have been fine. But somehow it’s like, these are mine. I own this. This is my property. Now I’m going to trade it.
Alexsandra Guerra: Well, would we have been fine? Or is it like somewhere in the middle? Like, is it better with the water market we’re consuming more? Without it, would we just have a free, what would that look like? It’d be a free-for-all, no?
Richael Young: No, there would still be a limit on water use, but if most people are still under that limit, it’s better than having unregulated water use altogether because you’re still constraining the highest water users. But, you know, this is why it’s really important to be mindful about it is that In some situations, a water market is not a good solution. And so you really have to look at the water data that you have, what the water use is currently, what you need to get to in order to hit the proper balance of what is available every year versus what you can use, and think about the hydrologic system.
I mean, groundwater trading can be really, really complicated because groundwater pumping has Effects on streamflow. So a lot of people think that groundwater is separate from surface water, but in a lot of cases, they’re actually hydrologically connected. So if you’re pumping groundwater, you can actually be depleting adjacent surface water sources. And the problem with that is that if you have ecosystems that depend on rivers or wetlands, or if you have You know, other surface water users that use that water for drinking water or for their own irrigation practices or for commercial or industrial uses, your groundwater pumping could actually be negatively affecting all of those uses.
And so groundwater trading has to consider those hydrologic impacts on surface water. And so there, in addition to thinking about allocations, you have to think about the spatial effects of pumping and how to implement what are called trading ratios. Yeah.
Alexsandra Guerra: So what does this look like for farmers when they’re interacting with water markets?
Richael Young: It’s really hard. So the first challenge is just finding an interested party with which to trade.
Alexsandra Guerra: And what exactly are you trading? The rights to water?
Richael Young: It’s usually the right to pump water in the case of groundwater. So in general, you’re not physically trading the water or groundwater itself. It’s not like, okay, you sell groundwater to me and now you have to deliver that pumped groundwater to me. It’s instead that we’re trading a piece of paper that transfers your right to pump that groundwater to me. But, you know, because farmers are spread across millions of acres of farmland and It can be really difficult to identify who’s interested in trading. So I don’t know that you’re interested in selling groundwater.
And so I’ll have to ask around, call friends and neighbors. Some people use Craigslist to self-identify that they want to trade. That’s the first challenge. The second is negotiating price. These are typically small rural communities, people that you grew up with. Revealing the value of your water and negotiating price can be financially sensitive. And then the third is that the complications of all of these rules and regulations that govern groundwater transfers can be incredibly complicated. Groundwater, you know, we’ll strike up a deal. We’ll head to our regulatory authority and, you know, ask for, apply for approval.
They’ll look through our application and tell us, hey, according to rule 33, you do not match in our rules and regulations or you’re not eligible to trade. And so a lot of these rules require technical expertise. And so if you then try to hire someone to do that, it can get really costly. And so these are what in markets we call transaction costs. And so because there are really high transaction costs associated with water markets, it can make it where it just outprices water rights for a lot of people. And so they just choose not to participate.
Alexsandra Guerra: And they won’t sell them.
Richael Young: Right. And so, you know, there’s money left on the table. And at the end of the day, that means that our ability to cost effectively deal with water risk and scarcity is in jeopardy.
Alexsandra Guerra: Yeah, it seems very similar. Those transaction costs that you were mentioning seems very similar to what we’re dealing with at Nori with high verification costs where farmers want to participate, get additional revenue. But if the cost of doing that and participating in the Nori carbon removal marketplace or other markets is too high, it just isn’t penciled out for them.
Richael Young: Right. And so that gets specifically at monitoring and enforcement. And so verification of water rights is also very important. If you sell a groundwater right to me, We have to be able to verify that you have actually reduced your water use by the amount that you’ve sold to me. And so the importance of actually monitoring, measuring water use is really important, but often overlooked in water markets.
Christophe Jospe: Yeah, it’s so interesting. And Alexsandra, I love that you started drawing parallels to Nori because we like to learn from other market forces. And we both have a digital asset or some asset that represents something else, which the physical activity occurred. So in our case, it’s carbon getting taken out of the atmosphere. And so we’re essentially commoditizing it, right? But in this case... Is water a commodity? Like what’s the asset? Is it an acre foot? Like what is actually getting traded here? And yeah, how do people think about some of the varieties?
Richael Young: Yeah. So it’s the right to pump or to use that water. And so oftentimes it’s not water that’s traded, but the right to use it. Yeah.
Alexsandra Guerra: And so you mentioned earlier that these transaction costs are really high and there are all these sticking points for farmers to participate. What’s Mammoth Water doing to help?
Richael Young: Great question. So that’s how we got started in this space is that we were as a research group. So back in the day when I was a graduate student at the University of Illinois, I was studying with my research advisor, Nick Brozovich. Groundwater markets could work to meet both economic and environmental objectives. And we found that there was a really nice commercial opportunity for The work we were doing to build what we call smart markets. And smart markets basically are a centralized hub for trading. So it brings together many buyers and sellers who are interested in trading water.
It uses a price discovery mechanism that is fair and equitable. So you don’t have to haggle over price. We handle that for you. And then third, it uses a customized clearing algorithm that looks at all of the particular rules and regulations of groundwater trading and puts them into this code so that instead of spending hours and hours manually figuring out whether One buyer and one seller are eligible to trade. You can, with a click of a button, see who matches with whom by price point and by regulatory constraint. And that you can do this not just on a one-to-one basis, but that you can match many buyers with many sellers.
Alexsandra Guerra: Expert here at markets we should be talking to.
Christophe Jospe: And markets, to go back to that. Abstract expression that humans use to basically discover price preferences. And so in this case, you’ve got hydrological characteristics, which somehow set that price discovery. So how to, not to give away all your secret sauce here on the podcast, but what is the underlying algorithm that ultimately discovers those hydrological characteristics on the buying and selling side?
Richael Young: Well, the value of water has nothing to do with the hydrologic characteristics. So in terms of what my value or price of water is going to be, it doesn’t matter what the aquifer looks like beneath me. It’s really that what purpose am I using this water for? What crop am I growing? What soil type do I have? So when you think about the more Agronomic and physical properties or the use properties of that water, that’s usually what drives the value of it. And so as an example, when corn was $8 a bushel, the price of water rights was very high in Nebraska.
And that was in 2012. When it tanked a few years after in 14-15, the value of water rights really fell as a result. And so it’s really tied to The hydrologic properties, however, can distort the effectual price between you and whoever you’re trading with because you have these trading ratios. So because you have different impacts on the river as a result of your pumping, that means that it changes then the How much water you can buy or sell. And so it sort of distorts the price that you can pay.
Alexsandra Guerra: Because it’s not an always one-to-one, right?
Richael Young: It’s not always a one-to-one transfer.
Alexsandra Guerra: That’s right. So the same volume of water you could get paid for less if you were having a higher impact on that source of water.
Richael Young: So if you, for example, were, you know, as the seller, were farther away from the river, you had much less impact than I do. Let’s say that my impact on the river is double. Then if you were selling 100 units of water, 100 acre feet of water, but my impact is double, then we would proportionately reduce it down to 50 acre feet of water. Mm-hmm. So that makes the price much higher to me. So if I could only afford or if I only wanted to bid $100 per acre foot, it might bump up the price for me or make it so that I couldn’t afford to purchase that water from you.
Christophe Jospe: This is way more than we could have bargained for about water rights and everything.
Richael Young: Apologize for getting into the weeds on that one.
Christophe Jospe: Oh, no.
Alexsandra Guerra: Our listeners appreciate that.
Christophe Jospe: In some cases, there have been situations where water markets have resulted in aquifer depletion and rivers running dry. And it’s interesting because what we’re talking about here is applying market logic to drive conservation. But why have markets in the first place if they’ve failed conservation in some ways? Sort of why, maybe this isn’t fair, Rochelle, but I’m saying like, justify why you’re doing what you’re doing. Because isn’t water just one of those resources that is a human right? And all humans have access to it. So convince me why water markets have a positive role to play in the management of this resource.
Richael Young: Yeah, well, my first point of pushback would be that it’s less water markets that are causing our rivers to run dry and our aquifers to be depleted in that it’s that we as a society have done a really bad job in managing these resources. We have over-appropriated them, meaning that we’ve handed out more permits or rights to use water than there is water available. And so if you look at the Colorado River Basin, It’s highly over allocated. And so we do need to reduce our footprint on water use. And so that will require better governance institutions.
It will require better water management and it will require a reduction in how much water we use. In the American West, you know, our water rights are largely based off of prior appropriation. That means that the first people to claim water rights will be The first ones allowed to use water rights in times of shortage. And so the junior water rights holders, those who sort of came later, are at highest risk as a result. They’re going to be the ones, and they have been the ones that have been turned off first.
You know, I’d really say that it’s been largely a lack of good governance that’s been the problem and not so much markets. And, you know, let’s also reinforce that water markets are only as strong as their governance institutions in the first place. With our work, we’re really picky about where we work. And so our company could have made a lot more money by working in places where we don’t think there’s sufficient governance standards. But the fact of the matter is we’re in this because we care about water scarcity, we care about water risk, and we care about water conservation.
And so we are Really working only in a place that is in places that we think there’s sufficient governance around it. You know, in terms of water being a human right, I agree with that. And we have legal institutions in place in the U. S. , the public trust doctrine. And so that basically charges the state that we live in to make sure that they are operating in the best interest of us as the people of that state. The water is owned by us as the people. So here in Colorado, the water is owned by the people of the state of Colorado, but it’s managed in public trust by the state.
And so it does mean that they have the right then to reduce water use if we’re in situations of shortage or if it’s not meeting public trust standards.
Alexsandra Guerra: Okay. So let’s shift from this higher level thinking of water markets because we’ve discussed it and I think we all have a pretty good understanding now on the impacts of it. But we have a lot of farmers that listen to our podcast. We work with a lot of them.
Richael Young: Come talk to me.
Alexsandra Guerra: Yeah. But why? So maybe tell us a little bit about what you’re doing when you work with farmers and TapH2O.
Richael Young: Sure. So... TapH2O is a new product that we brought online last year. And basically what we’re trying to do is help farmers better track their water use. So what happened a lot as we’ve been working on water markets is that I was getting customers, farmers, who came to us and said, It was always at the end of the year after they got their water use reports from their regulatory authority. And they said, oh my gosh, I had no idea that I went over my allocation. I have this limit on pumping.
I accidentally went over it. I have a fixed amount of time to lease water retroactively from someone else for this overage or I’m going to get penalized. And I remember having the thought of, what do you mean you accidentally went over your allocation? You have water meters that are sitting on your fields. Well, if you actually look at a water meter, it’s not really obvious to calculate your water use. So they look a lot like the odometers on our cars. Tells you the total miles you’ve driven since you drove off the lot, but it doesn’t tell you anything about your use or your miles this year.
And so water rights accounting can be really, really complicated. Sometimes you have just a single year water right, but in many cases, particularly for groundwater, you can have multi-year rights. You can have these things called carryover where you save water in one year and you get to carry it over to the next year. You can have pooling. So, well, the kids won’t understand this on the podcast, but back in the day, you used to be able to have a family plan of your minutes. And if my little sister used way more minutes than I did or vice versa, at least it all evened out.
You can do that with groundwater allocations in many places in the United States as well.
Christophe Jospe: But what that means... And they make the data slow down at the very end of it. It’s so annoying, right? It’s like... Parents are watching Netflix on their camping trip and they’re just like, eat all my minutes.
Richael Young: Yeah. So they don’t do any of that. There’s no like slowing down your water use as you get close to your allocation. And so that’s actually a problem is you have no. There are no alerts or warnings to give you indication that you’re getting close to the end of your data or the end of your water allocations. And so what we do with TAPH2O is instead of farmers having to spend lots and lots of time figuring out Their water use relative to their allocations, we do it for them. So all they have to do is snap a photo of their meters and we automate the rest.
We generate reports that show them how much water they’ve used to date, how much of their allocation is remaining. And then the really cool thing that they love is we do benchmarking for them too. So we show them how their water use performs to that of their peers. And so they can get these, you know, it’s so funny because you get these farmers who come on To tap H2O and, you know, they brag about how water efficient they are and that, you know, you’ll see they’re the leaders of the pack.
They’ve installed soil moisture probes and drop nozzles and all this great irrigation technology. And they’re going to be the ones who are the lowest water users in their area. And we’ve had several of these situations where, you know, farmers start seeing that, geez, they’re not as efficient as they thought they were. And that So farmers are super competitive. They want to be the best in the industry. They want to be the best at their jobs. And so by giving them real insights into their water use, we can help them be better, to help them be more efficient, and to help them be more profitable.
Alexsandra Guerra: That’s really interesting. So you have these really... I don’t know. This is a mean word, but archaic meters that are hard to read. People have to do advanced math. And what you’re doing with top H2O is allowing them to just snap a picture and do the calculations for them. But to me, that’s a little nuts. I used to work at the utility and it’s why aren’t we using smart meters for water?
Richael Young: Yeah, that’s a great question. Well, first of all, they’re really expensive. And so just to buy the new hardware for smart meters, you can be out $5,000 a pop. And some farmers might only have one meter or one field. You know, some have over 50, some have over 100. And so that gets to be a really costly change. Now that’s just the one time Then you have ongoing data charges and cell links, satellite links are really expensive because in much of rural America, there isn’t cell reception. You would have to go to a satellite link, which is more expensive.
And so it’s just really costly. That’s especially the case if you’re working in the high plains of the United States, where You’re working on razor-thin margins. It’s just not something that you’re going to spend money on. And so what’s been really important to us and what we’ve heard from farmers is to make it as low cost as possible to use existing hardware and make it so that all they have to do is pull out the device that is already in their own pockets, use the hardware that is already sitting on their fields, and be able to generate these reports.
So we like to say that We turn their dumb meters into smart meters.
Alexsandra Guerra: I love that you took that approach of working with them to do a solution that makes most sense for them, that’s low cost and easy to do. And why not? A lot of people have smartphones in their pockets, so why have to replace a whole new meter and So you mentioned too that after a farmer snaps a photo in TAP H2O, they get an analysis of their water and benchmarking. Like you consumed 23% more than your neighbors in this area, etc. What do they typically and what can they do with that information?
Do you provide any recommendations?
Richael Young: That’s the future. So we’re not there yet. What we’d like to be doing with TAP H2O is collecting A host of data, not just around crop type and soil type, which we’re doing now, but also looking at the different irrigation and field practices, behavioral practices that they’ve adopted on their fields so that we can start tailoring recommendations to say we’ve crunched the numbers. Folks who move to no-till practices reduce their water by 10%. And so you can start then providing insights to farmers that go along with the numbers of how their water use compares to their peers.
Christophe Jospe: You’re laying it out so nicely, I just can’t resist. I mean, we think a lot about stacking benefits for farmers because carbon markets are not a silver bullet. They’re not going to help save the family farm, but they are a new piece of revenue and they certainly align with conservation practices which reduce water use. Not to put words in your mouth.
Alexsandra Guerra: Actually, I think I know where you’re going.
Christophe Jospe: Go ahead, Alexsandra.
Alexsandra Guerra: And I just want to be very clear. What you’re about to say is what Rochelle said to me the first time we hung out, which is like, we should stack the benefits. And I’m trying to get her to say it herself.
Christophe Jospe: I want to be like, what are you going to do about it?
Richael Young: I should have known that was coming. So I completely agree. I think that what is exciting to me as a raging capitalist who cares about the environment is that we need to be thinking about really awesome ways to monetize conservation, to create new revenue streams to farmers that they never had before. So that when we think about things like water savings, that we think about things like Carbon removal practices that this isn’t something they’re doing for the sake of it just being the right thing to do or being, you know, a philanthropic practice, but that they are actually increasing their revenue and increasing profits by doing so.
So, yeah, I mean, I totally can envision a future where we’ve got an integrated marketplace for carbon removal and for water trading.
Alexsandra Guerra: Right. Because through Nori’s platform, by adopting new regenerative farming practices, one co-benefit that we don’t happen to be monetizing in Nori is increased water retention. So if your soil is holding more water, then you don’t have to pump as much. Exactly. So a total tied system or stacking of benefits is one would say. Let’s do it. And you heard it now. Right.
Christophe Jospe: I mean, I kind of, to go back to your point that these things are hyper regionalized, and they need to work in the place where they’ll actually make a substantive impact. And then to look at like, there’s a crisis in certain aquifers that are depleting really quickly. And so the Ogallala is one such aquifer, actually the largest aquifer in the United States, I believe. And that covers the region that you work in. So maybe this is a good strategic spot to start thinking about where to stack benefits. Why does the Ogallala matter?
And why might an approach like this improve how the Ogallala ultimately is storing water?
Richael Young: Yeah, the Ogallala is a very important source of water for us. I think the stat is something like 30% of... Our water use as a country comes from the Ogallala Aquifer. It’s really stunning. And so, yeah, it’s this important resource. The Ogallala Aquifer is generally misunderstood. So it’s sort of split into three portions, the north, middle, south. And the middle and southern portions of the aquifer are in pretty bad shape. And so these are portions of the aquifer that take millennia, And so it’s really hard then to manage in a situation when you’re basically mining a fossil aquifer.
Like it doesn’t recharge at the rate that functions for, or, you know, is really useful for human use. And so... The Northern High Plains Aquifer, which is under Nebraska, and two-thirds of the Oglala Aquifer sits underneath Nebraska, so they’re super lucky that they’ve got that amount of water sitting under their state. It recharges at a lot faster of a scale, and so they’re not in the kinds of bad shape that states like Kansas, Oklahoma, Texas are in. So unfortunately, there are places where It’s just really hard to be able to reduce water use to the point that you can actually match it with the recharge rates.
And so you have places like in the Texas Panhandle where they’re doing what’s called manager aquifer decline. The goal is not to actually match it to how much is being recharged annually. The goal is to extend the life of that resource for as long as it’s possible.
Alexsandra Guerra: Which I imagine is really hard to do in this case. So what is the solution for us? Like if you could wave your magic wand and be queen of all water markets in the US, let’s start there. What would that look like? I’m sure you fantasized about it before.
Richael Young: I think the first thing that I would do is adjudicate all water rights. So that means that we need to quantify water rights. And so there are a lot of claims of water rights. You know, people have water rights that are in paper, but they haven’t been Verified in how much they actually use every year. And so one of the big inhibitors to water management broadly, but specifically water markets, is that it depends on having a quantified water right. And in most of the United States, We actually don’t have quantified or adjudicated water rights.
And so the first step that I would do as a water queen is making it so that we go through that process systematically in a way that’s fair and in a way that, yeah, is consistent, but gives us certainty around our water rights. Consistency and certainty. Right.
Christophe Jospe: Where does equity fit in on that?
Alexsandra Guerra: Well, if you’re consistent... Chris, stop killing me with the...
Christophe Jospe: I’m just coming with the gotchas.
Alexsandra Guerra: But if you’re consistent, isn’t that a fair and equitable system?
Christophe Jospe: But let me just say where I’m coming from, which is maybe 20 years ago, you were allocated certain water rights based on certain assumptions. But in today’s day and age, those assumptions don’t hold water. You know what I mean?
Richael Young: I’m loving the puns. Can you give me an example of the type of thing you’re thinking about?
Christophe Jospe: I don’t know. I’m just thinking that there are all these different dynamics that need to go into decision-making processes that have to do with assigning property rights or allocations for a certain region. And there is a notion, at least And since we’ve made you queen of water markets and given you a magic wand, I’m just wondering if there are some more systemic or sociological things that have not necessarily have favored the few and powerful at the expense of public writ large. If there’s a way to equitably design water rights.
Richael Young: So I think the really important thing here is that we do need to stay consistent with water rights doctrine. And so, you know, we can’t just throw out the law in favor of what we want to do with water reallocation today. And so if you want to move water rights away from people who have it to people who don’t, doing that through a, you Frankly, going to end you in court with a lot of lawsuits. So I think the way to do this is looking at the water rights law that we have, largely prior appropriation.
So that means we’ll have to go through quantification, adjudication. And then because we are largely over appropriated, we’ve handed out too many permits, we’ll have to start cutting junior water rights appropriators off. And You know, we need to make sure, of course, that we have enough water for our drinking water and for environmental needs after we have that amount fixed, which the state can purchase water rights. And so the state itself can participate in water markets. And then beyond that amount for environmental and I’m satisfied with that answer.
Christophe Jospe: How about you, Alexsandra?
Alexsandra Guerra: I mean, I’m thinking through it. I trust Rochelle’s expertise in this. And right now I’m just like, well, how do you determine in this system whose needs are greater in a scenario where the supply is less than the demand for water? So say it was a really dry season and the farmers need more water to irrigate their land, but you also have the demand from domestic use. I don’t know. My mind’s a little blown. I haven’t thought about this, but just that’s what’s going through my mind as you’re discussing this.
Richael Young: So most of the time, municipal water prices will always outcompete agricultural water prices.
Alexsandra Guerra: Farmers must love that.
Richael Young: Well, I mean, so cities are usually purchasing water from farmers. And so, you know, in order to participate in that, the farmer who is selling it does have to agree to it. You know, you can’t force a person to sell their water, right? Okay. Again, water markets are voluntary transactions. You can’t force people to sell their water rights. And so if they’ve participated in it, that means they got value out of it. That means that the price that they received is better than the value they could have gotten by using it themselves.
There’s one exception that I can think of, which is at the height of the California drought, agriculture was actually out-competing municipalities for water. You have perennial crops, you have tree crops that are a multi-year, sometimes multi-decade investment. And so if you have just planted those trees a few years ago, you’re at the height of the drought, you’ve run out of your water allocation, you will pay Any amount of money to make sure that crop does not die because it represents another 30 years of investment for you. And so that is one example in which agriculture can outcompete municipal water rights demands.
But in general, you know, that’s not happening. Municipalities definitely can afford to pay for additional water rights. The amount that we pay the value of our water rights per acre foot far exceed the value of water rights for farming.
Christophe Jospe: I’ve learned a ton on this podcast. So we’re getting to the top of the hour. If someone wants to learn more about mammoth water or get involved with setting up their own water market, what can they do? Where can they learn more?
Richael Young: Yeah, they should come talk to me. So we would love to talk to any farmers who would like to be tracking their water rights. So any farmers out there that are interested in this, please contact us. Any water regulators or directors of agriculture should come talk to us as well. You can reach us at mammothwater.com or you can contact us at info at mammothwater.com. And yeah, we’d just love to chat with them about what their particular needs are around water management and water markets.
Alexsandra Guerra: Awesome. I’m so glad you’re here. Thank you, Rochelle, for joining us. It’s been a pleasure.
Richael Young: Thank you so much.
Christophe Jospe: Thank you.
