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Water Rights


JGBRK
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I do not know if anyone can help on this topic.  But here it goes.  I have a piece of land that sits above an aquifer. The previous owner gave a 100 x 100 piece to a village to provide them water about 40 years ago.  They now need another parcel the same size to drill 2 more wells.  the village has about 600 people but they have been approached by another village to provide them water too as their well is drying up.  The second village has about 500 people.  I'm leaning toward leasing the land.  Any thoughts on calculating a price?  Thanks in advance.

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Depending on where the land is there has been some transactions in water rights especially in the Western states.  There are a number of publications which publish transactions.  I can look these up if you can tell me which state it is in.  A few years ago we valued one of these types of assets.  There are four publicly traded water rights cos: PICO (also an insurance co.), Pure Cycle, Cadiz and Two Rivers along with water rights being buried in some operating water utilities.

 

Packer

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A few things occur to me:

 

  • From your explanation they have the rights to the water already but they need to get access to it.
  • If the above is true, they may actually be able to put a pump on your land regardless of what you want them to do. Depending on the state even private parties have this right
  • Even if the above is not true, they may be able to use eminent domain to get to the water
  • Check to see exactly what are their water rights
  • In essence you are leasing the land and not the water rights, but that does not mean you can not charge accordingly.
  • From all of the issues above, you may want to talk to a lawyer who specializes in this area.

 

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