Conserving Agricultural Water Rights: The Role of Conservation Easements
In the western United States, water rights are often a defining feature of agricultural land value and long-term viability. Where irrigation is necessary to produce reliable yields, the ability to divert or pump water under a recognized right can matter as much as soils, location, or infrastructure. For that reason, water rights are increasingly treated not only as an input to farming and ranching, but also as a transferable asset. Conservation easement projects are one framework that can work to conserve working lands and, in some cases, limit the permanent separation of associated water rights from the conserved property.
Why water rights matter on working lands in the West
Most western states operate under prior appropriation principles (“first in time, first in right”), alongside state-specific rules on beneficial use, priority administration, and transfer procedures. Regardless of the details, the practical outcome is that a water right can determine whether a farm can irrigate during dry periods, whether a ranch can maintain pasture or hay production, and whether cropping decisions can be made with confidence. In many basins, the market value of land correlates strongly with the type, reliability, and priority of its water right.
Because water rights can have independent value, they are often evaluated separately from the land. Landowners may receive offers to purchase, lease, or transfer water for municipal supply, industrial operations, energy development, or other non-agricultural uses. These transactions can be structured in different ways—temporary leases, multi-year leases, rotational fallowing agreements, permanent transfers, or changes in point of diversion and place of use, depending on state law and local constraints.
Drivers behind transfers out of agriculture
Water transfers from agricultural use to other uses are usually driven by a combination of economics and risk management:
Relative returns. In some circumstances, a one-time payment for a permanent transfer can exceed several years of net operating income from farming, especially during periods of high commodity volatility or elevated input costs.
Urban growth and reliability needs. Municipal providers often seek firm, dependable supplies as populations grow and as surface water deliveries become more variable.
Drought and supply uncertainty. Multi-year drought conditions and tighter administration can increase the value of more reliable rights and increase interest in moving water to uses considered “higher priority” from a financial standpoint.
Capital needs and succession planning. Some landowners consider water-right transactions as part of debt reduction, estate planning, or business restructuring.
These factors do not automatically lead to permanent transfers, but they do create persistent pressures to evaluate water rights as an asset that can be monetized apart from the land.
Potential impacts when water rights are permanently removed from irrigated lands
When a water right that has historically been used to irrigate a property is permanently transferred away, the land may shift to dryland production, grazing, non-agricultural use, or—in some cases—become idle. The scale of impact depends on the right’s size and reliability, the availability of alternative supplies (such as groundwater), and local agronomic conditions.
Commonly discussed outcomes include:
Changes in land use and productivity. Irrigated acreage may decline, which can reduce yields and limit crop options.
Local economic effects. Reduced irrigated production can affect businesses and services tied to agriculture, though the magnitude depends on how widespread the transfers are and whether the land transitions to other productive uses.
Operational flexibility. Without irrigation water, a producer may have fewer options to respond to market signals (for example, switching crops) or to manage drought conditions.
How conservation easements can address water-right risks
A conservation easement is a voluntary legal agreement that restricts certain uses of a property to achieve conservation purposes, typically recorded on the deed and binding on future owners. On agricultural properties, easements often focus on limiting subdivision, restricting residential or commercial development, and ensuring the land is available for farming or ranching.
In some cases, easements also include provisions related to water rights. Depending on state law, funding requirements, and the conservation organization’s policies, an easement may:
Require that appurtenant water rights remain with the property (or limit permanent severance), supporting continued irrigated agriculture.
Define how water may be used to remain consistent with the easement’s agricultural purpose (while still allowing ordinary agricultural operations).
Establish notice or approval processes before certain water-right changes occur, to ensure consistency with easement objectives.
This does not mean every conservation easement automatically “ties water to land.” Water-right provisions are negotiated and can range from minimal to comprehensive. They also need to be drafted carefully to align with state water law and to avoid unintended restrictions that could reduce the landowner’s ability to operate a working farm or ranch.
Incorporating flexibility: short-term leasing and risk management
Landowners often want tools to manage variability in water supply and farm economics. For that reason, many easement projects—when they address water rights at all—distinguish between permanent transfers and temporary leasing.
Temporary leasing can be structured to provide income or operational flexibility while preserving the long-term capacity of the land to remain irrigated. Examples include:
One-year or multi-year leases where the underlying right remains with the landowner and returns to agricultural use afterward.
Split-season arrangements that allow early-season irrigation followed by late-season leasing, where legally feasible.
Rotational fallowing agreements that reduce irrigation on a portion of acres in exchange for compensation, potentially maintaining soil and infrastructure for future production.
If an easement includes water-right provisions, it may explicitly allow certain temporary transactions subject to defined conditions (time limits, compliance with state approval processes, no permanent change in ownership of the right, and consistency with the easement’s agricultural purpose). The objective is typically to preserve the property’s long-term agricultural utility while recognizing that producers may need short-term options.
Practical considerations for easement projects involving water rights
For landowners considering an easement where water rights are part of the discussion, the key practical issues usually include:
Clear definitions. Which water rights are covered (surface, groundwater, shares in a ditch company, storage contracts), and what “transfer” means under the easement.
State and local legal constraints. What kinds of leases or changes are permitted, and what approvals are required.
Monitoring and administration. How compliance is tracked without creating unnecessary burdens.
Future adaptability. Whether the easement provides room for evolving water-management strategies (efficiency upgrades, changes in irrigation technology, or basin-wide conservation programs).
Conclusion
In the West, the long-term productivity of agricultural lands is often closely tied to the water rights historically used to irrigate them. As water becomes more valuable and as transfer opportunities increase, some landowners face decisions about whether to lease, sell, or permanently transfer water for non-agricultural uses. Conservation easements—depending on their terms—can be used to reduce the likelihood that water rights will be permanently separated from conserved working lands, while still allowing carefully defined flexibility such as short-term leasing. For landowners and conservation partners, the most effective approach generally involves tailoring easement language to local water law and to the operational realities of agriculture.
