There is a water shortage in the arid regions of the southwestern United States. There is a municipal water shortage in Colorado (see CWCB study). The Colorado municipal water shortage has created a price differential, an arbitrage, of 5-10 to 1 increase in the price of municipal water over irrigation water. In the late 1800s, 85% of all water rights in Colorado were granted to and still are primarily held by agriculture. Since then, populations have increased and people have moved to the city.
First generation western water business models attempted to capture the water arbitrage by “buying and drying” the most productive irrigated farmland and moving the water to the cities, which decimated some agricultural communities. The buy and dry model has become politically, economically and legally untenable and is no longer capable of capturing the water arbitrage (see Governor's Executive Order). Two Rivers has built a new business model that reinvigorates, rather than decimates, agricultural communities and captures the water arbitrage in two stages through market forces.