What Is the Value of My Water Right?

Clients frequently ask us what their water rights are worth. Numerous factors go into making this determination. This article will only provide a very brief overview of some of the typical considerations that one must consider in answering this question.

First, the priority date of the water right is significant. Certainly, Kansas has a modified version of the “first in time, first in right” appropriation concept. Thus, if you live in Western Kansas or in an area facing water shortages, a low number on the water right is quite significant. In other areas, such as the Equus Beds where recharge occurs much faster, this may be less of a factor.

Second, a practitioner should consider the “guts” of the water right. At a very basic level, we consider the authorized quantity and the authorized rate of diversion. If not enough water can be pumped in a given amount of time, the water right may be worthless for the desired purpose. One must also consider the saturated thickness of the aquifer or the availability of the source water. If water is not readily available for pumping, the water right may be of little value.

Third, we consider the authorized place of use. Sometimes we have encountered situations where plenty of water is available but the water right was only authorized to be used on a small portion of land.

Fourth, we look at the nature of the designated use. A water right designated for industrial or municipal use may have inherently more value than another use in a given situation. It merits noting, however, that the attributes of the water right can be changed—as we discuss in another article. Also, in this vein, one must consider the “market” for the water right. Sometimes a valuable industry may make a water right tremendously valuable. Or, conversely, a water right near poor farming land, for instance, may have little value.

The above points constitute some of the many factors a practitioner must consider in assessing the value of a water right. We generally hire an experienced appraiser to help in analyzing the value and the appraiser will also look into comparable values of surrounding land. Keep in mind, however, that very few appraisers are properly trained in appraising water rights. At any rate, someone experienced in water rights can help with determining value.