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As Texas faces an increasingly fraught environmental future from climate change, a new approach to conservation is growing.

Drought conditions have created a two-pronged problem for Texas aquifers, natural bodies of water that move through porous rock underneath the Earth’s surface, and reservoirs. Without rainfall, farmers and ranchers are relying more on those well-established water supplies in the state. And without that same rainfall, the aquifer and reservoir levels can’t be replenished as quickly as they are being depleted.

As the state is losing water, some conservation organizations, mostly nonprofits, and agencies are stepping up to help conserve water by using a new strategy — paying farmers to leave the water in the ground and consume more sustainably.

Known as water trades, the transactions help keep water in nature and prop up the state’s agricultural economy. Experts believe this could become a major conservation strategy for the drought-prone state, given the state’s preference for solutions that boost markets, over regulation.

“The tool the Legislature has been pointing toward for several decades now has been basically allowing water trades,” said Sharlene Leurig, CEO of Texas Water Trade. “That’s water to be purchased or leased in a way that makes that water available for the environment.”

Texas is in the early stages of establishing these water transactions between organizations and farmers. The programs are voluntary. Some encourage more efficient irrigation on farms while others pay farmers to not use water for irrigation during times of drought.

Getting reimbursed for using less, or in some cases no water, could be beneficial to farmers with failed crops. The current drought is costing Texas agriculture billions of dollars in losses.

“In Texas, drought and extreme heat affects crops and crop productivity,” said Sarah Kapnick, chief scientist for the National Oceanic and Atmospheric Administration. “You potentially have less access to water, but there also isn’t time to recover from big heat waves.”

According to Kapnick, 64% of the country was in drought conditions this summer, and much of that was concentrated in Texas. At the peak of the summer, 95% of the state was experiencing drought, compared with 59% of the state now. Without nature chipping in with consistent rainfall, farmers have to turn to irrigating their crops, which can strain natural resources such as the Edwards-Trinity Aquifer and the Ogallala Aquifer. Combined, the two aquifers stretch under most of West and Central Texas and the Panhandle.

As the largest consumer of water in Texas, the agriculture sector is also the source for the majority of the agreements. But the benefits of these programs extend beyond the ranchers and farmers in Texas. The water saved through the various conservation efforts flows through streams, maintaining ecosystems pressured by drought. The groundwater that stays in aquifers remains on hand as a resource during future droughts.

These voluntary agreements are not new to the United States, but over the last decade their prevalence in Texas has grown. The total amount of surface water exchanged in 2016 was 57,866 acre-feet, or about 19 billion gallons; a recent report from West Water Research showed that volume for 2022 increased to 173,852 acre-feet, more than 560 billion gallons of water.

While other drought-prone areas of the country have used similar incentives to conserve water, Texas farmers and ranchers are just starting to adopt water transactions.

The Ogallala is heavily relied upon in the High Plains region, which produces 30% of the nation’s crops and livestock, in times of drought. However, the region has also had more decline in the aquifer’s water levels than anywhere else in its span through seven other states, according to a 2019 report from NOAA.

Some areas have had anywhere from 50 to 150 feet of decline. The report also states that water from the Ogallala used for irrigation exceeds the rate the aquifer can replenish its supply.

“It is a critical first step toward what we have to do as a state,” Leurig said. “We can’t continue managing water the way we’ve been managing our water.”

Texas Water Trade, a nonprofit that advocates for water conservation, established the Aquifer Resilience Fund. It allows landowners to conserve groundwater and invest in water efficiency measures. The fund uses $1.275 million from the Natural Resources Conservation Service, Texas Water Development Board and National Fish and Wildlife Foundation with the goal of bringing more finance conservation agreements to the Edwards-Trinity Aquifer in West Texas.

Leurig said that with population growth and climate change driving the demand for available water, more market deals will likely happen.

“I think we’re going to start seeing those sorts of scarce conditions support the market,” Leurig said.

The first recipient of the fund was Belding Farms in Fort Stockton, about 85 miles southwest of Odessa. The farm received $100,000 to install a pilot high-efficiency irrigation system on a part of the pecan orchard.

“Belding Farms has a long history of investing in water-efficiency improvements, and this is another step,” said Ernie Cockrell, chair of Cockrell Investment Partners, owner of Belding Farms. “We believe in saving water because it’s a sound business practice, good stewardship and a way of sustaining the aquifer for future use.”

The Texas chapter of The Nature Conservancy, a national environmental organization, is also working on a similar program. One water transaction it offers is a dry-year lease option. This arrangement outlines a base payment made to the farmer every year, with the understanding that they will not take water from the stream when the source of surface water falls below a certain level.

In return, the producer receives an additional payment to further supplement their operation. This could help balance the income for producers whose crops failed during the growing season. Kyle Garmany, the water and agriculture program director for The Nature Conservancy, said these agreements also help agricultural operations build resilience to drought.

Garmany knows that asking farmers not to use water they have a right to will have an economic impact on the operation, but that’s why these agreements are unique. They are structured to give farmers what they otherwise lost by considering factors such as the cost to pump water and labor costs.

“We try to provide enough incentive there so that we can really focus on providing water during the most critical times of the year, of the season or drought period when the river needs it most,” Garmany said.

The Edwards Aquifer Authority also tries to prepare for those critical times. The water management agency hosts various programs that enable water permit-holders to forbear pumping from the aquifer during periods when the groundwater is at historic lows.

The two major programs have different triggers for when the conservation efforts would be set in motion. Marc Friberg, the aquifer authority’s executive director of external and regulatory affairs, said there’s “a good chance” that the Voluntary Irrigation Suspension Program Option, established in 2013, will be triggered in October given the current level of the aquifer. When that happens, the people who opted into the program will forgo taking water from the aquifer.

The Edwards Aquifer on Wednesday was at a level of 635.5 feet above mean sea level at the San Antonio pool. If that level is below 635 feet on Oct. 1, the VISPO program will be triggered. The historical monthly average for September is 660.6 feet.

“They’re all designed to take water off the table when we hit those really bad years,” Friberg said. “When that water isn’t being pumped, there’s more water potentially for other growers, but most importantly there’s springflow, and so we can help maintain springflow for the benefit of endangered species.”

Leurig, of the Texas Water Trade, said the aquifer authority’s programs not only provide investments in water conservation, but also assure that there will be water available in the system when there’s less to go around in the future. She hopes to see water transaction programs more broadly used across the state.

“If we were doing that in every basin, and if you have groundwater districts and you had surface water entities like river authorities, irrigation districts that were participants in that sort of cooperative investment … that, to me, would be the holy grail,” Leurig said. “And it needs to at some point be at that scale, it can’t just be nonprofits.”

Disclosure: The Edwards Aquifer Authority and The Nature Conservancy have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2022/09/26/water-trades-texas-climate-change-drought/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.