What are Water Rights ?

Water rights are rights to use surface and / or subsurface water from real property.  Water rights are often not an issue in states where abundant water exists for development.  In a desert state like Nevada, however, water can make a tremendous difference in value.  The development of desert property depends on the quality and quantity of water available.  Thus, rural properties that have no access to a municipal water system or a private water company and lack rights to subsurface water can end up being not useful for development.  

Beyond recreation, what can you do with an 80 Acre vacant land parcel that lacks water rights?  Even if a parcel is zoned for a commercial purpose and it adjoining a major highway, without water rights there can be no development.  So the answer is that you can do nothing.  You either need established water rights or you need to have a water service connection.

In Nevada some water rights are transferable, and some water rights can be purchased and moved from one property to another.  Thus, a market for water rights has developed in many outlying areas, and it is important that the appraiser discover the value of the water rights associated with a parcel of land.

When real property is newly connected to a water system the water rights holdings of the owner often must be conveyed to the company providing the water service connection.  The water rights owned will be directly related to the level of service that will be provided to the newly connected property.  

An Acre-foot of water is the amount of water necessary to fill an acre of land one foot deep, which is about 326,000 gallons, or about enough water for a family of five for one year (some areas require 2 or more Acre feet as the nominal amount to support a residence).

Having appraised several properties with water rights, we have discovered that some parcels with significant water rights may have more value for their water rights than is associated with the value of the land itself.  Some properties with no water rights cannot be developmed.  Water rights have thus become an important factor in land value.  Title insurance is now being issued to guarantee that water rights purchased are indeed owned by the party conveying them.

Contact us with your questions about water rights or other appraisal issues at 1-702-568-6699 or send us an e-mail at grigdon@cox.net.     

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.