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CBT Water Market Indicator: Will Prices Continue to Increase?

Because the Northern Colorado Water Conservancy District (“Northern Water”) established simple mechanisms to allow trading of Colorado-Big Thompson (“CBT”) Project water, CBT units have been trading widely for about 60 years. The CBT Project is a federal water diversion project that brings water from the Colorado River headwaters on the West Slope to the Big–Thompson River, a tributary to the South Platte River, to provide a supplemental source of water to Colorado’s Front Range—supplying 960,000 people and 640,000 acres of irrigated agricultural lands in Northern Colorado.

The project facilities and water rights are owned by the U.S. Bureau of Reclamation, but Northern Water, a quasi-municipal entity and political subdivision of the State of Colorado, manages the project.

Prices ran up in the fourth quarter of 2018. The previous year ended average prices that ranged from $27,000/unit to $29,011/unit in the fourth quarter of 2017. In 2018, average prices ranged from $27,274/unit to $27,694/unit in the first quarter and $28,543/unit to $29,603/unit in the second quarter. There were no paid transfers in the third quarter of 2018. The average price for CBT units in the fourth quarter of 2018 ranged from $30,000/unit to $36,056/unit. Prices for individual transactions ranged from $30,000/unit to $35,000/unit, not including the auction that was held in December for 63 units that violated Northern Water’s Storage and Parking Agreement Rule. North Water reported the average price of successful bid for those units at $36,111.97/unit, which pushed up the average price for December.

During the fourth quarter of 2018, a total of 324 units changed hands. Monthly volumes ranged from 26 units to 178 units. The third quarter saw a total of 156 units change hands. Monthly volumes ranged from 26 units to 93 units, a total of 519 units transferred in the second quarter, and a total of 594 units in the first quarter. In the fourth quarter of 2017, a total of 347 units changed hands, with monthly volumes ranging from 17 units to 266 units.  (See chart)



The Northern Water Board of Directors approves transfers of CBT units and sets quotas to determine the yield of each unit. The project has 310,000 units. The board sets an initial quota each November and revisits it the following April. The April quota allows all CBT Project water users to plan for their water supply needs. The board began setting an initial quota in November 2001 to allow municipal and domestic water users access to CBT water in the winter months without incurring a negative balance when the quota is set in April. The board considers both the availability of water and the water needs in the region when it determines the quota. If conditions warrant, the board will announce a supplemental quota. The annual quota has a historic average of 74% (0.74 AF/unit). At its April 2019 meeting, the Northern Water Board of Directors declared an initial quota of 70%, which the most common annual allocation since 1957.

CBT activity has decreased significantly since the late 1990s and early 2000s, with total annual volumes now coming in at one-third to one-half the annual volumes traded in those earlier years. According to local water brokers, development and a shift in the demographics of who owns CBT units have caused this change in market activity. 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 only 30% 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.

While there are occasional spikes in volume driven by unusually larger transactions, the overall trend continues to show volume dropping and prices rising. But a question lingers of how high prices will go.

(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