Utah Water Banking Act and Pilot Projects

A Utah solution for water banking

In 2017 a diverse stakeholder group of over 70 people including representatives from agriculture, public water suppliers, conservation groups and other interests began to meet to develop a Utah water banking concept. The stakeholder group spent thousands of hours discussing marketing concepts, studying existing activities in the various basins in Utah, reviewing water banking programs in other western states and receiving public feedback.

To support these efforts, in 2019, SJR 1 was passed endorsing the continued study of water banking and drafting of a water banking bill, authorizing a one-time $400,000 appropriation, and supporting seeking $400,000 in funding from the Bureau of Reclamation WaterSMART Water Marketing Grant program. The money funded a project team to oversee a multi-year effort to pilot the Water Banking Act and develop statewide water marketing strategies.

Utah Water Banking Act: temporary, voluntary and local

In 2020, with near unanimous support, the Utah Legislature passed the Utah Water Banking Act (SB 26) – now Utah Code 73-31. The Water Banking Act focused on three key principles: temporary, voluntary and local transfers of water. It works by empowering local water users to design a water transaction suited to local needs.

The act recognizes two forms of leasing arrangements that can qualify to be approved as a Utah Water Bank.

  1. Contract Water Bank: Utah Code 73-31-301 et seq.
    Water leasing contracts are voluntary arrangements that outline the terms and conditions for the use of water between a discrete set of parties. Many water users in Utah already use contracts to lease water. Water leasing contracts that meet the criteria of the act are eligible to apply to be a contract water bank. To prevent private speculation of water, the applicant for a contract water bank must be a non-federal public entity.
  2. Statutory Water Bank: Utah Code 73-31-201 et seq.
    A statutory water bank is a legal entity organized for the purpose of administering and facilitating water leasing between multiple parties in a defined area. Statutory water banks are modeled after private irrigation companies and run on private governance documents such as articles, bylaws or other organizational documents. The applicant for a statutory water bank must be the owner of a perfected water right.

Once an application is approved by the Board of Water Resources, water banks are extended certain benefits and protections. In particular, water rights deposited into a water bank are exempt from forfeiture; water rights can be leased for environmental purposes; and water banks are subject to a streamlined change application proceeding that provides participants greater flexibility.

Pilot Summaries


To identify water marketing principles and develop Statewide Water Marketing Strategies, Utah conducted four Pilot Projects to test the Water Banking Act and identify water marketing alternatives. The pilot areas were selected based on local interest and each reflected the unique conditions of the area.

Overall, each of the Pilot Project efforts was extremely successful with two water banks being formed and approved, the establishment of a late season lease pool, and the identification and installation of critical infrastructure to facilitate future leasing. From the lessons learned during the process, Utah was able to derive the Statewide Water Marketing Strategies and materials found here.

Cache County:

Two-Party Late Season Lease Pool Contract

Price River:
Carbon Canal Co. Contract Water Bank

Snyderville / East Canyon Creek:
Installation of Instrumentation to Guide Future Leasing

Uintah Basin:

First Water Bank of Utah (Statutory Water Bank)

Background. The Cache Water District identified water marketing strategies as a potential tool to address local issues such as inadequate late-season irrigation water, growth within ditch systems, and scattered water owners. The district was interested in coordinating meetings to explore water banking and water marketing alternatives.

Multi-party discussions developed into a successful two-party lease contract.

More Info→

Background. Two environmental NGOs have been actively developing water leasing projects in the Price River Basin to benefit instream flows. The NGOs had previously partnered with the Carbon Canal Co. and its shareholders on several projects. They wanted to test the water banking structure as a new means of securing instream flows.

Discussions resulted in the first ever approved contract water bank in the state of Utah.

More Info→

Background. Various stakeholders, including environmental NGOs, a municipal sewer district, and local municipalities wanted to use water banking to improve instream flows in East Canyon Creek during critical low flows in late summer.

Discussions led to the installation of 6 telemetry stations to monitor instream flows needed to to inform leasing activity. Discussions inform lessons for developing a statutory water bank.

More Info→

Background. Various stakeholders in the Uintah Basin wanted increased ability to conserve and improve delivery of water. The desert climate and basin’s unique topography required a comprehensive water management strategy. 

Discussions resulted in the first ever approved statutory water bank in the state of Utah. Implementation included creating a digital marketplace with water right records.

More Info→


  • Shop for Best Fit: Consider multiple water marketing methods when addressing a local water need; identify which methods best address the needs of the local participants.
  • Be Clear on Purpose: Defining the needs of water users should come first. Local conditions will dictate the form of and participation in water banks.
  • Someone Needs to Lead: Having an engaged and local champion is invaluable in setting up water markets.
  • People Want to Know: Outreach and education are critical and might require significant resources. Stakeholder engagement should be early and often.
  • Welcome Support: Resources from state agencies are available and grant funding may be available to support setting up a water bank.
  • Is it Worth the Effort? The effectiveness and return on investment of a Utah Water Bank should be monitored and compared to other transaction mechanisms.
  • Pick the Easy Route: Establishing a lease program or local market is significantly streamlined if the source water rights have flexibility in use and formal change applications do not have to be filed with state agencies.
  • Large Group Consensus is Challenging: The success and speed of negotiations can be improved by empowering a limited number of representatives to negotiate on behalf of contracting parties.
  • Don’t Study it to Death: Technical studies are important to understand water bank operations and useful when seeking regulatory approval. However “analysis-paralysis” should be avoided.
  • Have Fun: Water is complicated and can be contentious. Try to foster an environment of creativity and community in your discussions. Approach the task as a group effort looking to address common challenges.

Water Bank Application Materials

The Utah Water Banking Act recognizes two forms of leasing arrangements eligible to be approved by the Utah Board of Water Resources as a Utah water bank: a contract water bank and a statutory water bank. The board approves applications that are deemed complete and requires certain annual reporting requirements.

Please follow the guidelines provided for each type of application as you complete it. These materials are intended to be used in conjunction with the general Water Marketing Strategies and resources.


An application to be approved as a contract water bank is relatively straightforward. The applicant, which must be a public entity, must fill out the required contract water bank application form and provide a copy of the leasing contract signed by all of the participating parties. Accordingly, it is critical that interested applicants spend the time and resources to negotiate a water lease prior to applying to become a contract water bank.


An application to be approved as a statutory water bank is more robust than the contract water bank application. Since a statutory water bank is intended to work with a larger group of currently unknown parties, it is imperative that the public know the specifics for how the statutory water bank will operate. It is intended that much of the substance needed to complete a statutory water bank application will be derived from the organization’s governance documents.



The Water Banking Act (Utah Code 73-31) promotes temporary, voluntary and locally directed leasing arrangements for the use of water rights. Leasing arrangements retain local ownership of water rights, create income and provide expanded water access.

The act provides water users ultimate flexibility to design a leasing arrangement that meets local conditions. Local water users can determine the size and scale of a bank’s service area, which water rights participate, lease prices, lease terms, conditions for leasing, distribution of proceeds, etc..

The act is intended to be one additional tool for water users. It is not intended to supersede or supplant existing leases or arrangements local water users are happy with.
Water users may want to create a water bank and conduct water leases under the management of a water bank in order to gain several benefits provided by the act, such as:
  • Streamlined administrative process: Once water rights are approved to be deposited in a water bank, no additional Change Applications or state approvals are needed to move water to a new use within the approved service area. This is intended to facilitate quicker and cheaper movement of water on a temporary basis.
  • Forfeiture: Water rights approved to be deposited in a water bank are exempt from beneficial use requirements and protected from forfeiture.
  • Environmental/Instream-Flows: Banked water can be leased for any purpose authorized by the act, including instream flows.
  • Condemnation Protections:  Banked water is shielded from any condemnation procedures while in the bank and for a period of time afterwards.

Yes, though not termed “water banking.” There are already a few informal efforts around Utah that are similar to water banking. The legislation would not affect those efforts. It would, however, create a 10-year pilot program that would establish a statutory framework. The framework would give water right holders the option of creating and operating their own water banks. The banks would be subject to public notice and comment, oversight from the Board of Water Resources and coordination with the State Engineer.

Water right holders would retain ownership of their water rights. The rights would revert to their prior “heretofore” use when withdrawn from the bank without the need for a change application. Water rights deposited within a bank would also not be subject to abandonment and forfeiture for the period of time the State Engineer authorizes them to be used within a bank.

The decision to create, or participate in, a water bank would be entirely voluntary and would be made at the local level. The banks would be locally managed. Only a record holder of a perfected water right may request approval for a statutory water bank and designate the service area of a water bank. No banks would be managed at the state level.

The act recognizes two forms of leasing arrangements eligible to be approved as a water bank:
  • Contract:
    • Many water users already have leases arranged by contract.
    • A contract water bank would apply in those cases or where a review of local conditions shows the desired water market activity is best managed through a contract.
    • A contract water bank seeks approval to utilize a specific water transfer contract consistent with the terms of a water bank and with the flexibility provided by the act.
    • A contract water bank application asks water users to submit general information about the contract and a copy of the contract.
    • The applicant for a contract water bank must be a non-federal public entity to prevent private water speculation: other parties to the contract do not need to be public entities.
  • Statutory:
    • A statutory bank is a legal entity organized for the purpose of administering leasing activity between parties in a defined area.
    • Statutory water banks are modeled after private irrigation companies and run on private governance documents such as articles, bylaws, and policy documents.
    • A statutory water bank seeks approval to develop new and unspecified water lease agreements under a locally managed water bank.
    • A statutory water bank application requires that the applicant demonstrate they have addressed a number issues needed for prudent management and leasing of water.
    • The applicant of a statutory bank must be the owner of a perfected water right and participation is open to all interested water users.

No. Water right holders seeking to move a water right into a bank would go through the same change application process that applies to all water rights. This means the State Engineer would review all applications that seek to place a water right into a bank to ensure that they do not impair other rights. It also means that the existing limitations on out-of-basin transfers would apply.

After the State Engineer approves a right for use within a bank, the right could be used for a specified period of time within the bank’s service area for other uses without the need for another change application. This, of course, would be subject to any limitations imposed by the State Engineer.

As a pilot program, every bank would submit an annual report to the Board of Water Resources. At the end of the pilot program, the board would report on the effectiveness of the water banking program to the Legislature. The Legislature would then determine whether to continue the program, modify it, or allow it to terminate.

Because this program is intended to be a pilot program, the draft legislation is intended to keep it as simple as possible to limit the potential for unintended consequences and to make it easier to study the effectiveness of the program.

Water Bank Application:
Interested water users can apply to the Utah Board of Water Resources to have qualifying leasing arrangements be approved as a “Water Bank.” The approval process includes a public hearing and applications are approved when deemed complete and in conformance with the act. Contact Emily at @eel@clydesnow.com

More information on Utah water marketing can be found from our Water Marketing main page.

If you have questions or need further information, please email WaterMarketing@utah.gov.