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After settling at around $25,000/unit earlier this year, the average price for CBT units eased during the third quarter of this year to about $24,000/unit. Most transactions were completed at prices ranging from $24,500/unit to $25,000/unit, but a large transaction approved in September with a price of $22,000/unit drove the average down. The third quarter last year also saw average prices around $24,000/unit. (See chart)
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The volume traded during the third quarter of 2015 also eased. A total of 321 units changed hands during the quarter, with monthly volumes ranging from 66 units to 135 units. During the second quarter 516 units changed hands, and the third quarter last year saw transfers total 653 units. (See chart)
Each unit represents 1/310,000 of the project’s supply—but the quantity of water represented by the unit varies each year according the annual quota set by the Northern Water board of directors. The annual quota has a historic average of 74% (0.74 AF/unit). For 2015, the initial quota, announced on April 10, is 70%.
Local water brokers continue to maintain that development and a shift in the demographics of who owns CBT units have tightened the market. Past drought conditions and uncertainty over water supplies may also be playing a role. When the CBT project began operating in 1957, 85% of the units were owned by agricultural water users. Now agricultural users own less than 1/3 of the units. In addition, there are now fewer and larger agricultural operations—so the supply is limited to stronger hands that generally do not sell, except for estate settlements and retirement.
With the dip in average price driven heavily by one large transaction, the market may still be settled at the $25,000/unit level. (For more extensive background on the history of the CBT Project, see “Trading Federal Project Water: The Colorado–Big Thompson Project,” WS, October 1990).
Written by Marta L. Weismann
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