Water Rights & Irrigation Systems Flashcards

When water rights are severed and sold separately from the land (water right severance), what typically happens to the remaining property value?

Answer: Property value typically decreases substantially, sometimes rendering the land unirrigable

Severing water rights from land can render irrigated farmland unable to support crops, dramatically reducing productivity and market value; appraisers must identify any past severances.

What is an irrigation district, and how does it affect rural property appraisal?

Answer: A government-formed quasi-municipal entity that acquires and delivers water to member landowners, with assessments that may affect operating costs

Irrigation districts are quasi-governmental entities that hold and deliver water rights for their member landowners; appraisers must analyze the district's reliability, assessments, and water delivery history as they affect value.

Which appraisal approach is most commonly applied when valuing water rights separately from land in a rural appraisal assignment?

Answer: Sales comparison approach using documented transfers of comparable water rights

The sales comparison approach, analyzing documented arm's-length transfers of water rights with similar priority dates, sources, and volumes, is the most market-supported method for water right valuation.

What is 'conjunctive use' of water resources, and why is it important in rural appraisal?

Answer: The coordinated, planned use of both surface water and groundwater to optimize supply reliability

Conjunctive use coordinates surface water and groundwater so that each supplements the other seasonally or during drought, improving supply reliability and reducing risk—factors that positively affect property value.

In a drought year within a prior appropriation state, which water right holders face the greatest risk of having their supply curtailed?

Answer: Junior rights holders with the most recent (latest) priority dates

Under prior appropriation, junior (newer) rights are curtailed first during shortage; senior rights holders are served until their full allocation is met before any water reaches junior holders.

What is a 'water share' or 'stock share' in a mutual water company or irrigation cooperative, and how should an appraiser treat it?

Answer: An ownership interest in a mutual water company entitling the holder to proportional water delivery, typically valued as part of the real property

Water shares are ownership interests in a mutual water company; because they are typically appurtenant to the land and essential to its productivity, appraisers generally include their value as part of the real property.

How should a rural appraiser handle water rights that are legally inseparable from the real property in a fee simple appraisal?

Answer: Include the water rights as an integral component of the real property value within the fee simple appraisal

When water rights are appurtenant and legally inseparable from the real property, they are part of the bundle of rights being appraised and must be reflected in the overall fee simple value conclusion.