In the hot, arid southeastern corner of Colorado, the Arkansas River irrigates thousands of acres of crops, including the famous Pueblo green chiles, sweet melons, and onions. This agricultural powerhouse has been disappearing as its water is instead diverted to growing cities and factories, some more than 100 miles away. A strategic approach to managing the limited water resource is hoping to change that.
In 2009 and 2010, Pueblo Water, the City of Pueblo’s municipal water provider, purchased 5,540 shares of water rights from Pueblo County farmers. Pueblo Water leases the water back to the farmers now, but the purchase is poised to dry up approximately one-third (5,000 of 15,000 acres) of the irrigated farmland across three farm communities: St. Charles Mesa, Vineland, and Avondale. In turn, the dry-up will supply the City of Pueblo with municipal and industrial water.
Much of the dry-up will occur on productive, high-value farmland irrigated by the Bessemer Ditch—lands with rich soils, optimal growing conditions, and historically robust yields. Lands on the Ditch comprise only two percent of all the agricultural land in Pueblo County but generate about 40 percent of the county’s total agricultural economic output. Following dry-up, irrigation would continue across a fragmented system of remaining lands owned by approximately 700 ditch shareholders.
Bessemer Ditch farms represent some of the best production lands in the state and are served by some of the most senior water rights in the Arkansas River Basin.
A similar dry-up decades ago in nearby Crowley County left 90% of the once-fertile farmland brown and barren, damaging not only the environment but also the local economy. Many of the businesses that supported agriculture felt the impact.
In light of this looming situation, a team of Colorado-based consultants and researchers from Harvard University worked with The Rocky Mountain Farmers Union and Palmer Land Conservancy to establish an innovative legal framework to support a more strategic approach to drying up farmland.
Pueblo County has some of Colorado’s most stringent requirements for mitigating the agricultural-economic impacts of water supply projects through its 1041 permit regulations. These requirements state that water supply projects must address the loss of agricultural productivity and impact on the local economy. A “substitution of dry-up” provision in Pueblo Water’s decree enables remaining farmers and conservation groups to purchase high-value farmlands that are poised to be dried and restore permanent water to those lands by substituting less productive areas for dry-up. These substituted areas could include farmlands with poor soils, which produce low yields, in places where water pollution can be mitigated, and where wetlands, riverside forests, and native ecosystems can be restored.
“Pueblo County and Pueblo Water have an unprecedented opportunity to demonstrate how cities and agriculture can both thrive in water-constrained contexts,” said Scott Campbell, Colorado Director for The Freshwater Trust.
“This first-of-its-kind project has implications for how we address a future with less water and protect agriculture across the Western United States.”
Decision-support tool for agricultural water use
Optimizing production through the substitution of dry-up provision is one way to help remaining farmers and increase production outputs. Other mitigation strategies include investing in farm businesses through irrigation upgrades; supporting expansion into new markets; and investing in land and water protection efforts to ensure remaining farmland is not subject to further buy-and-dry.
“We have to find solutions to help us balance the demand for limited water,” said Dillon O’Hare, Senior Conservation Manager at Palmer Land Conservancy. “What would it look like to reshuffle the deck to optimize water usage in this basin?”
In partnership with Palmer Land Conservancy, The Freshwater Trust developed a decision-support tool (DST) to guide mitigation efforts. The tool calculates the economic, water quantity, and water quality impacts of different dry-up and optimization scenarios. The DST helps users compare scenarios, identify farmland protection priorities, and consider best management practices (BMPs) such as converting to sprinkler or drip irrigation or restoring native vegetation. Furthermore, the DST estimates the costs of the BMPs and helps determine pathways for mitigating the impacts of dry-up.
The Freshwater Trust's decision-support tool (DST) integrates environmental, economic, and local agricultural data to help users assess alternative water management scenarios. In lieu of alternatives, the Pueblo Water purchase will dry up over 5,000 acres, precipitate a $12 million annual loss to Pueblo County's agricultural economy, and impact hundreds of jobs.
The DST shows that taking no action will result in the loss of $12 million annually to the Pueblo County economy and eliminate hundreds of jobs. The opportunity cost is even greater. The difference between where Pueblo County will be with dry-up and where it could be without—given the growth potential in Pueblo County’s agricultural sector—is $47 million with a corresponding job difference of nearly 700 full-time equivalents (FTE).
However, the DST also shows that retaining just 1,800 acres of prime agricultural lands through the substitution of dry-up provision and optimizing production on half of those lands (900 acres) would maintain current economic outputs and jobs. If coupled with irrigation upgrades across remaining irrigated acreage, it would increase production outputs and jobs by 5-10% and it would reduce contaminants running into the Arkansas River (nitrogen, phosphorus, sediment) up to 90%.
The DST shows where substitutions can have the greatest benefit for remaining farmers and the community and quantifies the costs and benefits of irrigation upgrades down to every field. This data is helping farmers, county commissioners, and other stakeholders make informed decisions about the future.
“It is crucial that stakeholders have access to insights like these, which allows them to evaluate the most efficient options that yield the greatest benefits—balancing the needs of agriculture, ecosystems, and drinking water,” said Campbell.
From analytics to action
In 2025, Palmer Land Conservancy purchased 620 acres of highly productive farmland that had lost its permanent water rights. Palmer will work with the local farming community to transfer permanent water back to these productive farms while exchanging the shares of leased water to other farms owned by local farmers participating in the project.
“We’re excited to demonstrate a proof of concept with this first project,” said O’Hare. “Our partner farmer has two sons who want to be the next generation to farm. We are moving forward with a way to provide security and a future to our farming community.”
This is the first step in piloting the substitution framework. The DST highlighted these farmlands as a priority acquisition, with significant potential to mitigate dry-up impacts. Next steps include multiple water accounting assessments and water court administrative processes to complete the substitution.
The Pueblo farm community has more than a decade until Pueblo Water starts to use the purchased water in earnest. There is still time to strike the right balance. O’Hare sums up the situation:
“Land is valuable, but water is even more valuable. This is about creating models for innovative conservation.”
The Freshwater Trust's decision support tools help users identify strategies to maximize water quality benefits and benefits to farmers, ranchers and the environment, while minimizing costs and adverse impacts to the regional economy.
