ARA Water Rights & Irrigation Systems 3

Question 1

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

Accepted Answer

Property value typically decreases substantially, sometimes rendering the land unirrigable

Answer

Property value increases because the seller received additional cash

Answer

Property value remains essentially unchanged

Answer

Property value is unaffected if surface water remains physically available nearby

Question 2

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

Accepted Answer

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

Answer

A federal regulatory agency that issues water pollution permits to farms

Answer

A private company that purchases water rights and resells delivery contracts to farmers

Answer

A county zoning classification designating land eligible for agricultural water subsidies

Question 3

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

Accepted Answer

Sales comparison approach using documented transfers of comparable water rights

Answer

Cost approach using the replacement cost of water delivery infrastructure

Answer

Income approach capitalizing net water lease income only

Answer

Gross acre-foot multiplier derived from agricultural census data

Question 4

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

Accepted Answer

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

Answer

The use of only surface water during wet years to preserve groundwater aquifers

Answer

The exclusive reliance on groundwater when surface deliveries are curtailed

Answer

The sharing of a single water right between two adjacent property owners

Question 5

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

Accepted Answer

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

Answer

Senior rights holders with the earliest priority dates

Answer

Holders of municipal and domestic use rights regardless of priority

Answer

Holders of in-stream flow rights held by environmental agencies

Question 6

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

Accepted Answer

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

Answer

A percentage of the annual rainfall officially credited to a parcel by the county

Answer

A formal legal agreement authorizing two neighbors to share a private irrigation well equally

Answer

A federal farm bill subsidy payment tied to irrigated acreage in the county

Question 7

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

Accepted Answer

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

Answer

Value the water rights separately using a standalone water right appraisal and add the result to land value

Answer

Exclude water rights from the appraisal scope and note their absence in the limiting conditions

Answer

Report water rights only in a supplemental addendum with no influence on the concluded value