Setting Value on Water Rights

Undoubtedly, the value of water is realtive to many factors including the location of the water, the quality of the water, and the difficulty and expense of producing and transporting it. While it is true that all water has the same molecular structure -- H2O -- not all water is "equal." For this reason, there is no consensus on the best method for placing a price or value on water rights, generally. In fact, the price paid for water rarely is a reflection of its full value -- bottled water is more expensive that unleaded fuel, and naturally-flowing streams may provide "free" water.

In order to fully evaluate the potential return on your water rights -- related either to groundwater produced from an aquifer, or surface water produced pursuant to a State-issued certificate of Adjudication -- you should gather as much information as possible concerning factors discussed above.

For example, it would be important to evaluate the following:

1. What sort of treatment will be required of the water which can be produced pursuant to my water rights? Taste, color and odor are obvious indicators, but quality testing would be necessary before any entity buys your water.

2. Is the quantity of the water I can produce regulated by permit requirements (from a Groundwater Conservation District or otherwise)?

3. How close is the nearest DEMAND for the water? Will it be consumed nearby, or a significant distance from my source? Is there planned development in an area near the place your water rights can be exercised?

4. Are there water delivery facilities close-by? Has the local water purveyor installed transmission mains near your property, or is the closest pipeline miles and miles away?

5. Is it politically viable for me to sell my water rights? Many times, this question is overlooked, and the consquences can be dire. Ask yourself: Will my neighbors be upset over my efforts to sell my water?

If you have available water rights that you are interested in marketing, selling or leasing, you should do so with the help of a lawyer experienced in water rights and real estate transactions. You can bet that the purchasers of water rights know their legal rights and the factors dictating the value of water in your area. You should have the very same advantage.

San Antonio Attorney Trey Wilson is experienced in negotiating and drafting water rights purchase and sale agreements, water supply contracts, water leases, water permit transfer documents and deeds and other instruments necessary to convey water rights in Texas. He may be contacted at www.texaswaterlaw.com or 210-223-4100.