About Us
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We are a team of six graduate students at the Bren School for Environmental Science and Management who worked collectively to help design a groundwater mitigation bank as part of our year-long masters project in 2016. Our project is motivated and supported by various regional agencies and lead by The Nature Conservancy and Trout Unlimited in Bozeman, Montana.
The project developed operational recommendations for a water exchange in the Gallatin River watershed of Western Montana. Ultimately, the exchange will acquire senior surface-water rights from willing sellers, move the water rights through the change-of-use regulatory process to a mitigation purpose, and then sell mitigation credits to new groundwater users. Our project addressed the following objectives: |
Project Objectives
Determine the pricing structure and tradable units for exchange.
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The group performed an economic analysis of the cost of water rights acquisition for the mitigation bank. To determine the price a buyer would pay for mitigation credits, we estimated the administrative initial setup, regulatory, capital and ongoing operational costs of running the exchange. Our team analyzed typical residential water use in Gallatin County to determine a reasonable unit size for mitigation credits. Finally, the team contextualized our results with the approach and pricing structure used by other water banks and exchanges. Our final recommendation is a mitigation credit sales price estimate that accounts for acquisition costs, capital costs, conveyance, operational costs, regulatory compliance, and long term assurance compliance costs.
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Define the institutional structure and operation.
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This group researched and recommended avenues for operationalizing the water exchange, from water rights acquisition or leasing, conveyance contracting, and infrastructure development to sale of mitigation credits. MARS (Montana Aquatics Resources Services), a nonprofit based in Bozeman, MT, will likely administer the bank and its operations. The group provided a process and format to track credit sales, monitor and report on mitigation water recharging the Gallatin River, and ensure the long-term viability of the water exchange. The group also researched tax liabilities and organizational reporting requirements required for operation.
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Assess recharge locations. |
The group identified locations and developed criteria to rank various infiltration sites and researched artificial infiltration gallery methodology to optimize water recharge to the Gallatin Valley’s aquifer. Working with their advisors, the group developed ranking criteria to assess the potential sites, which includes environmental, cost, contracting, soil properties, conveyance, and other considerations. In addition, the group proposed opportunities for the bank to help meet instream flow targets that currently are not being met, and recommended ways for the City of Bozeman to leverage the work of the water exhange to meet the City’s water supply needs in an environmentally-sound manner.
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