New podcast episode: Water licencing and drought In Alberta with Lorraine Nicol

EPISODE 8- Water Licencing and Drought In Alberta with Lorraine Nicol

As Alberta faces drought, how do we work with water licence holders to ensure Albertans have access to water? Find out more from our latest podcast episode with Lorraine Nicol.


Thank you, Lorraine Nicol, for making this episode possible.



Host: You’re listening to the Land Use Podcast brought to you by the Alberta Land Institute. 

Lorraine: The water licence system is a foundational element to water management in this province and it has been in place for absolutely decades. Seventy-five per cent of water licences have been provided for irrigation activity. Irrigation production in Alberta accounts for 5.4 billion of provincial GDP. I think that this may be what we call a critical juncture. It might be a crisis, but don't let a good crisis go to waste. 

Host: Hi there and welcome back to the Land Use Podcast. My name is Aysha Wu with the Alberta Land Institute and today we'll be learning about water licencing. 

To start off, I want to acknowledge that as part of the University of Alberta, the Alberta Land Institute is located on Treaty 6 territory and respects the histories, languages and cultures of  First Nations, Metis, Inuit and all First Peoples of Canada whose presence continues to enrich our vibrant community. 

After a warm and dry winter, Alberta is facing drought conditions for 2024. The Alberta government is working to find water management strategies that will ensure Albertans have the access to water that they need. 

Water use in the province is managed through water licences that grant individuals, municipalities and businesses access to water. The water licence system works well when water is widely available, but could cause problems when the province is faced with water scarcity, particularly since all of Alberta’s water has been allocated. We’ll be discussing the complexities of the water licencing system today with Lorraine Nicol, who is part of a group of researchers, lead by Sven Anders, who won funding from the Alberta Land Institute (ALI) to study water licencing in Alberta.

Hi Lorraine. Can you introduce yourself and tell us about what you do?

Lorraine: Sure. So my name is Doctor Lorraine Nicol. I'm a senior research associate in the Department of Economics at the University of Lethbridge. I have worked in the area of water management since I moved to the city with my family in 2001. So, coincidentally, that was the year of a very major drought, the biggest yearly drought in history at that time. And here we are, back again about 23 or 24 years later, in the midst of a drought situation probably as extreme as that. 

So I took an interest in studying water because I was a sessional lecturer at the University of Lethbridge and I was interested in doing something beyond sessional lecturing in economics. And so I decided to go back to school and I did a second masters degree in agricultural studies in the economics department. I finished that in 2005 and my study looked at the buying and trading of water within irrigation districts during the 2001 drought. And I also looked at the permanent sale of water licences as well, so temporary sale of water as well as the permanent sale of water licences. And it was the first study at that time that looked at these particular activities. 

And so that was very interesting, and I worked an additional few more years in water research and then an opportunity came along to do a PhD in biosystems and biodiversity and I did that. I started in 2009 and I finished in 2013. So U of L provides for four years to do a PhD and I did that then, and again, it was relating to water. 

And what I did was I studied the Calgary Regional Partnership, which was a voluntary partnership amongst 18 municipalities at that time that attempted to come together to develop a land management framework as well as a water management framework. And the framework was a situation where, at that time, the City of Calgary had three times the licenced water capacity relative to their population at that time. So their population – three times their population – that was the amount of water licences that they held so, significant. Whereas the region – there were many water stressed communities that were really willing to come to the table in order to work out this water sharing arrangement. So it was a very, very big plan. It was land management, It was where future growth was going to occur, where water was going to go. Calgary being a water utility to service all of these other places. 

So, anyway, it – long story short I studied that framework as a regional framework which, unfortunately, started to come apart quite soon after it came together and it – I think that it was by 2011, all of the rural municipalities had left. There were four, and they had all left the partnership. And a couple additional municipalities had abandoned it so that, in the end, there was only, out of 18, there was only 11 left. And then the whole partnership came apart subsequent years down the line. So I studied the period of time, 2005 to 2009, when that partnership started breaking apart and the four rural municipalities left, and the reasons why. 

So then, ever since then, that was 2013 when I finished my PhD I have gone back to study– I really am interested in irrigation, water management and I have a good working relationship with the irrigation districts. I really enjoy working with farmers. I come from a farm family in Saskatchewan, so I have a farm background and so I like working with those people and, you know, trying to figure out how water can be managed better in this province. And so that's really the crux of the issue with the proposal itself. So I'm really kind of continuing, I guess, the research that I've always done with this particular ALI proposal that we're working on. 

Host: It sounds like you have such a specific background in water research that's really relevant to current events. Over 20 years. That’s a ton! 

Lorraine: Yes.

Host: What do you think the average person needs to know about water licencing and the drought situation that's happening right now? 

Lorraine: Yeah, well, maybe it's best for me to actually go back to the research proposal because it will dovetail into what the ALI is asking for in terms of their research questions that they want answered in this study. 

So, quite rightly, you know, that the topic at hand is water licencing. It’s one of the strategic areas of study under the ALI. And the introduction to the study questions that they describe is, quite rightly, that in Alberta we have a water licencing system by which all water is allocated. So if you are a municipality, a commercial operation, an industry or a[n] irrigation district, a feed lot you, you will have a water licence that you will require in order to service your industry, or your people, or your animals. And so this is a system that works quite well if water licences are available. So if you have a municipality that has rapid population growth, you could, at a time, go to Alberta Environment and ask them for a water licence and they would give that to you under certain conditions, they would – you know, approvals and all of that – but they would give that to you. 

In 2006, Alberta Environment determined that three sub basins of the South Saskatchewan River Basin were over allocated or they were reaching their limit of allocated water. So they closed those basins to new licences. So that includes the Bow River Basin, the Old Man and the South Saskatchewan Sub Basin. So if you're a municipality in the Bow River Basin, like Okotoks is a classic example, where you have rapid growth, you will then eventually come up against your licence capacity in terms of providing water – and they have. And so to provide flexibility to the system, Alberta Environment said well water licences can be traded. So they can be bought and sold. So that municipality would have to go to the market and literally look for a seller of a licence and they would buy that water licence if they could. And it's not easy because there's, I won't go into detail, but there's a lot of different steps that have to go through in order for a licence transfer to occur. I'll call them licence transfers because that's what they're called. 

And so this is – what we have is – we've got this situation where, as the study question indicated, municipalities are up against their water licence capacity. What happens to them? Do they find other water licences? Does it stunt that growth? Do they indicate, you know, is it such a case that they can grow no further? Is population growth going to then occur in other areas? And then you’ve got all of those industries in there. Some of those industries have their own water licences, but there's many industries, for example in Lethbridge, that are provided their water from the city water licence. So we've got all of this going on. 

So then the ALI posed the question is the water licencing framework the best way to go? Are there other ways in which we can add flexibility to the system? Are there other opportunities that we’re not even considering? There hasn't been any changes to the policy and regulatory environment as far as these types of systems go for a very, very long time. So that is one of the first questions. 

The second question is how does the regulation of water affect growth in the future when we've got drought, floods and other abnormal water activities becoming more commonplace? So this situation, in all likelihood, will be getting worse or more challenging. 

And then the third question is can water be used as a regional growth management tool and if so, how? And so then my study with the Calgary Regional partnership – I know full well how regional partnerships work and how they don't work. That’s an easy way to go on the surface, but it's not so easy to do when you get down to the practicalities of it. And then as far as, you know, how can growth possibly be affected by this water management area and, you know, the foundation of which we are working within Alberta? I've looked at problems with housing development when it comes to water availability and I have looked at municipal development and constraints on that as relates to water availability. So I have done studies myself that indicated there are problems out there. So to the average individual, I hope that this is understandable. This is what we're really looking at.

Host: Yeah, for sure. And I think we're all going to start seeing the effects of that because it does, you know, it affects everything from food production to lots of different industries. Is there anything the average person can do to be involved or is it kind of just on a government level? 

Lorraine: I would say at this high level of discussion and conceptualisation the average person would not be involved in it. The average person certainly can be involved in conserving water, but we're talking about higher level changes to policy and regulation and management, you know, which would involve the players at the industry, irrigation district, city, government level for those discussions. 

And I would really, really like to emphasize that although we are talking about water licencing as being, you know, the foundation of this topic, the water licence system is a very, very foundational element to water management in this province and it has been in place for absolutely decades, in fact more than a century – so when water licences were first issued way back at the turn of the 1900s. And so we've got whole economic systems that are built around water licencing. So irrigation districts are the fundamental matter here that we should make people understand is that 75 per cent of water licences have been provided for irrigation activity, and that is irrigation districts, and there are 11 of them, as well as private irrigators. 

So to understand their significance, irrigation production in Alberta accounts for 5.4 billion of provincial GDP, and this is based on a study that was conducted in 2020. It generates 46,000 jobs and 80 per cent of the GDP accrued to the region and province is provided outside of the irrigation community. And it's only 20 per cent that is provided to irrigation producers themselves. So you've got this very significant structure. 

Then we've got all of the forward linkages and backward linkages to irrigation. The forward linkages are such things as machinery purchase, seed purchase, herbicides and pesticides. And then the backward linkages – or I'm not sure if it's called forward or backwards – but the linkages going forward are all of the industries that rely on the product that irrigation districts provide and that is the livestock industry production and food processing industries. And in this region they are phenomenal. So we have Cavendish Farms, we've got Lantic Sugar, we've got Mccaine, Frito-lay, Old Dutch that are all the processing industries that rely on sugar beets as well as potatoes. 

In terms of the meat processing that is done here in all of the feedlots that provide the cattle to the industry, Cargill in High River, JBS in Brooks, and Harmony Beef in Airdrie together process almost 9000 head of cattle a day.

Host: Woo! Nine Thousand! That's a lot.

Lorraine: Yeah. So this is enormous. And these cattle industries, if you're talking about those specifically, are providing that product all over Canada. I think that 60 per cent of cattle production is in this province. And so these are major, major industries that are foundational within the irrigation complex and they are grounded in the licencing system. So I don't want anyone to get nervous about us looking at the licencing system and suggesting that the licencing system should in any way go, that it should be eliminated or that there should be major changes to it. 

So when we talk about the study itself, one of the first things that I'm specifically going to be doing in the first year of this study is that I'm going out and I'm going to have semi-structural interviews with the Alberta Irrigation District Association. That's the umbrella of the 11 irrigation districts, irrigation district managers, municipalities, industries, all of those entities that are in Southern Alberta and asking for their input into this question. And we're only looking at things that are feasible. We're not thinking about anything that that isn't and that's gonna upset this entire system. So, but are there other mechanisms or we can we build on existing mechanisms that allow for more water sharing within the area so that those municipalities for example that need water that they can more readily access it. 

The second part of this study is that we’ll take whatever those scenarios might be, there maybe  hopefully there's a dozen, I don't know we’ll come up with whatever we can on a practical basis. And then we'll take those, the second part of the study, taking those to the irrigator producers specifically and asking them either through the form of a survey or through a focus group system are these feasible? Are they acceptable? Is there too much risk? What are the tradeoffs? What are the practicalities of it as well? 

I also want to be very clear that it is not in any way ignoring the rights of Indigenous people as well as environmental considerations. So this isn't, according to the ALI proposal, we're really focusing on municipal needs and industry needs, but it's in no way ignoring inflow needs for aquatic environment as well as Indigenous rights to water.

Host: Yeah, that's so important. Thank you for mentioning that. Would you say that there's anything we would have learned from the 2001 drought that we can apply today?

Lorraine: There are learnings. And so in 2001 there is a scenario like there is now. So severe water shortage and so – I love that question because I can go back, again, back to water licences, because every water licence has a priority date on it and the priority of the licence is based on the date that it was issued. The older the licence, the greater the priority. So if you've got a licence that goes back to – some licences go back to probably the 1950s, that is a much older licence than a licence that was issued in 1995. So when it comes to water rationing, those older licences would get water first. But then you have the unfortunate situation – and society would never find this acceptable – that you might have a golf course that has a 1958 water licence, let's just say. I'm just saying throwing that out there. But you might have a feed lot that has a 1995 licence. It’s a first-in-time, first-in-right system. So in that case, the golf course under the priority system would be provided water over that feed lot. So you're giving water – water’s being provided, not giving – water’s being provided to a golf course as opposed to the livestock industry to feed animals and make sure animals don't starve or are thirsty. 

So that isn't sustainable, like that isn't practical. So in 2001 there was about 100 water licence holders that came together voluntarily and they decided that they would allocate 60 per cent of each individual licence totally across the board, so that each of them were sharing the licences and none of them would go without. So this was very monumental at the time and there were awards that were won because of such an innovative solution to come to that situation. 

So right now where we have a drought situation again, I think that everybody is aware that Alberta Environment and Alberta Minister has called upon all 25,000 licence holders in Alberta to come together and amongst them there would be key individuals that will be having discussions about water sharing. So those water sharing arrangements are the discussions that are occurring behind closed doors. So I don't know what is being said and what will come out of it, but that water sharing principle is certainly coming to the fore when it comes to this particular situation with our drought at hand. 

And the second thing is that when I studied the sharing of water allocations within the Saint Mary River Irrigation District in 2001 – so these farmers within their district could say, hey, I've got a water allocation within that district that would be used for a low value crop like wheat. I am willing to sell that to my neighbour who is growing potatoes and has a very high value, high input cost crop and they don't want to lose that. I would provide that allocation to that individual. There was money that was exchanged for that, in most cases. In most cases it was just a handshake, but it was a temporary reallocation of water within the irrigation district. So the Saint Mary River irrigation did that in 2001. 

I have the understanding at this time other irrigation districts are allowing that to be done in their districts. So the Bow River Irrigation District is another big one. And when I say big one, I mean that they do have a lot of irrigators that are under this district framework that they can then enter into those water sharing arrangements, which are actually in 2001, very easy to do. In order for buyers and sellers to find each other, we didn't have today's social network that we do through our phones, and so they would put postings on a board in the main office of that SMRID and people would come in and there would be a little, a little card that says I'm willing to sell 100 acre feet and you know, this is what I want for it. And do you want to buy? This is my number. Now, It's much more sophisticated and much easier to get in touch with each other. And it's easy to develop a small market, and it would be a small market for those irrigation districts to provide the flexibility that they need under a drought situation. 

So that we do have those two learnings from 2001 that, at some level I think that a much, much higher level, are engaged in talks about water sharing at the ministerial level because we're talking about a province wide drought. And we're not just talking about southern Alberta, but northern Alberta as well and it's amazing how far, you know, this drought is extending. But the other question that we have to ask ourselves and which relates to the work that we're doing is we want systems that don't have to be created on the fly. You know, we want systems that if we are dealing with climate change and these occurrences where we've got much more common instances of drought as well as flooding then, how can we build some more flexibility into the system so that it works all the time, so that we're not racing after ourselves trying to scramble to put something together.

Host: Right, because the water sharing system might work, you know, in a short term scenario, but we might be looking at multi year drought at this point, hey? 

Lorraine: That's right. Yes, that's correct. 

Host: Okay.

Lorraine: And the other aspect that is coming into the conversation, according to – what I'm understanding is that 50 per cent of the flow of the South Saskatchewan River has to flow to Saskatchewan. That's an inter-provincial arrangement. And most typical years, more than 50 per cent flows to Saskatchewan. So there are conversations about how do we capture more of that water to stay in Alberta? And that mechanism might be producing more reservoirs. 

I think that the day of building dams is probably gone. I think that I read that there were 50 – 41 –  a significant number of dams that already exist in the province. And dams are environmentally contentious, right? Because you're backing up water and you're flooding great swaths of land. So don't want to do that necessarily anymore. There are a significant number already. And so then they're looking at off stream reservoirs. They’re environmentally less invasive and less significant effects to such constructs. And so I think that there are lots of conversations about building more reservoir capacity. And I have done quite a bit of work in the Milk River watershed because I was on the Milk River Watershed Council for a number of years and ever since I had been on that council, which was about 15 years, they had always talked about increasing water capacity in the Milk River area for their farmers. And I think that those conversations are now really, really gaining traction. Yeah. So that's another factor that's been called into play. 

Host: Yeah, definitely. I know it's still very early on, and you haven't started the study yet, but do you want to speculate about any action that the government could take in the meantime that would be effective to help manage the drought situation? 

Lorraine: Well, I think they are – I can speculate that's true, but because irrigators, irrigation district and other private irrigators – there's the districts as well as private irrigators, which hold their own licences– the irrigation districts themselves, by virtue of their high lot water licence capacity, are central to any conversation. And the irrigation districts did sign a declaration indicating that during a drought period water would be first provided for basic human needs as well as livestock needs before any water would be provided for the purposes of crop growth. And so we already have that in place. 

So I can't really speculate what is going to come out of this, but I do think that irrigation districts are going to be pivotal. They’re going to be front and centre and my take on it is that they've always been team players, that they know what they have. It is very, very valuable and they're willing to share it one way or another. And I am sure that they are at the table in good faith in doing this. 

Another mechanism that I should mention besides the trading of water licences is a very useful mechanism. And that was a number of years ago, the irrigation districts the Alberta Irrigation Districts Association started amending irrigation district licences in order for some of their water to be provided for uses other than the growing of crops. So for commercial, municipal feedlots, you name it. And so this was a way where they didn't have to sell a portion of their water licence, which they are very careful about doing and mostly reluctant to do. But this was an amendment to their licence that said we will provide you x acre feet of water. It's an agreement that will provide – and I think the agreement goes on a year by year basis, but in good faith – and will provide it to you over the long term. And this was, again, you know, adding needed flexibility to the system but, unfortunately – well for whatever reason. I really shouldn't say unfortunately – but environmental groups became concerned because there wasn't the same oversight to the amendment of these licences as there is to selling a water licence. So when you sell a water licence, the director at Alberta Environment has to approve it. There has to be a review to make sure that there isn't any third party effects. There has to be a public hearing whereby anybody that's concerned about the sale of that licence, they can say what they want to if they have concerns about it. And also within an irrigation district to sell a part of an irrigation district licence they have to have a plebiscite. And the majority of their water members have to approve that sale.

And then the other factor, which was probably the key factor in this case, is that a director under Alberta Environment could say that we've got x number of acre feet that are going to be transferred under this licence. We want some of that water for a hold back for environmental purposes to stay in the river. And so they were allowed up to 10 per cent of that licence transfer to then, upon their discretion, to be held back and kept for environmental purposes. When we had those licence amendments, there wasn't that oversight. These licence amendments were unto themselves. They they were done very quickly and they were done very easily and there wasn't that kind of oversight. So environmental concerns came to the fore saying we want more protection. This system is, as one law professor indicated, the irrigation districts are a law onto themselves, which is I think a little bit of a stretch. But anyway, that was the way that it was deemed, and so there was a legal case that was levied against this practice. And the legal case didn't go forward, but Alberta Environment, to give some appeasement to the environmental groups, said, okay, we're going to put restrictions on the amount of water – that I won't indicate it's complicated – but the amount of water that can be amended under this licence amendment framework. So then they put restrictions on that.

So one of the things that we're going to look at, well, I think that this is a really good way to go to provide water from irrigation districts to other entities and they're willing to do that. Is there ways in which we can maybe tweak the system and modify the system a little bit so that more water can be allocated in this way? but there would be the safeguards in place that would then be acceptable to environmental groups and other individuals and such. 

So that is an example of some flexibility, but didn't entirely work. It's not extensive. I mean, you know there are constraints on it. 

Host: Absolutely. Thank you so much. Just in the interest of time ,because we are running out of time here, is there anything else you wanted to add before we wrap things up? 

Lorraine: I would like to add that the studies that I have done of the housing industry and the impediments to the housing industry, I was looking at Rocky View County, Foothills and Okotoks and those industries that operate there, almost all of them indicated that the unavailability of water for their industry, the licences that they need to operate were an impediment to their industry. So that is a good example of a study that unearthed this matter. And then as well I had indicated that municipalities themselves that are saying, you know, we've got to be creative that we're out there and we're trying to find water. We're going we’re entering into agreements with other municipalities, with irrigation districts. Let's just say that I think that they are struggling and that there are impediments to industrial growth, for sure, in some municipalities because of these factors. 

And so the drought may be the impetus for us to move forward and say we cannot – the existing drought – We cannot work under the current system on a year to year basis. We have to have some mechanisms in place that are more permanent and I think that this may be what we call a critical juncture. It might be a crisis, but don't let a good crisis go to waste. You know? It is true and we are not going to be do any any of our work until the summer is over, in the growing season is done. We’ll go out and talk to all of those interests that I talked about in the fall when all the dust is settled.  And we'll see how things materialize, but it maybe, you know, an opportunity will take a crisis and will say, okay, we've got to be able to do some things better. 

Host: I love that perspective on it. Alright, well that is all for this episode. So thank you for joining me, Lorraine. If you want to read more about water licencing in Alberta, you can check out some of the resources in the description. If you enjoyed the episode leave a like, a comment and subscribe to stay up to date with all of our latest episodes. You can also follow us on Facebook, Instagram, X and Linkedin and sign up for our newsletter on Thank you for listening to the Land Use Podcast.