Irrigated agriculture in the semi-arid western U.S. depends heavily on priority-based water rights, which in drought years face state-mandated curtailments of water supplies to lands with rights with lower (junior) priority claims. We present evidence of two forms of unobserved temporary water transfers used by agricultural producers to transfer irrigation water during periods of curtailment. The first is transfers between lands with water rights owned by a single owner as part of a mixed portfolio of senior and junior rights. The second is transfers between lands with different landowners, who negotiate arrangements through which owners of senior rights transfer a portion of their water to landowners with relatively more junior rights facing curtailments. Because no State approvals or permits are needed for these temporary transfers, they are not recorded and thus not observed directly. We identify these transfers using a 10-year set of panel data from Nevada’s Carson River Valley, where surface irrigation is the major source for agricultural production, and during which drought results in curtailments. The data describe 477 land parcels with surface water rights. As surface irrigation is both a necessary input and main constraint for agricultural production, we identify temporary transfers through observed satellite changes in irrigated cropland acreage in years when water use is curtailed. Controlling for additional factors that influence irrigation decisions, our model shows that, annually, these temporary transfers redistribute 3.1% to 3.5% of total surface irrigation water to lands with junior rights, and representative of more productive croplands, thus suggesting improved water use efficiency during drought years. Our findings suggest that prior empirical estimates may under-represent the capacity of unreported, and thus unobserved, temporary water transfers to mitigate potential agricultural water use inefficiencies resulting from water curtailment under prior appropriation.
