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IMPROVING NEW MEXICO’S WATER MANAGEMENT - page 22 / 47

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Long-term water right values in agriculture are the annual value of water capitalized at a

rate of return equivalent to other agricultural assets. Estimate by economists have indicated the

long-term return to agricultural assets is about 2% per year. Note that this is less than the

capitalization factor of 6.5% for cities. Cities must consider their cost of capital when purchasing

assets. Farmers tend to be more tenacious when holding on to their assets.

Table 13 indicates the economic values of water in agricultural production at locations

along the Rio Grande for each timeframe. The value of water generally increases towards the

South because of increased length of growing season and the more flexibility in growing

different crops. Intra-seasonal values of water vary from a low of $154 per aft to a high $450.

Seasonal values range from $34 to $126. Long term value of water ranges from $0 to $54 on an

annual basis. Using the long-term annual value as a basis for capitalized value, water right values

range from $0 (in that specific use) to $1,075. It should be noted that the values reported here are

estimates of the value in use and do not represent actual water prices.

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