In stark contrast to my post of yesterday about the federal government paying irrigators for their water, here’s a pay-for-water scheme that I wholeheartedly endorse: Montana’s innovative water-rights leasing program, covered last week by the Missoulian.

What’s the difference?

In the California case, the federal government signed a compensation agreement implying that it had no right to restrict water to water-rights holders. In Montana, the state government has simply made it legal for water-rights holders to lease their rights to certain other entities, such as the state or fishing groups.

The Montana program—which needs renewal from the state legislature in 2005—does not convert the water right itself into anything more proprietary than before, it simply makes the right (as limited a right as before) tradeable. It’s a subtle difference, but it makes all the difference.

We wrote briefly about the promise of tradeable water rights here.