San Luis Valley Model for Agricultural Water, Energy, and Workforce Resilience
In the San Luis Valley, agriculture remains a foundational employer and economic engine, yet producers face increasing water constraints, rising energy costs, and aging irrigation systems. Qualified modernization projects stall for lack of affordable financing and skilled local labor. Closing that gap does not require a new state grant program or a broad new appropriation, because Colorado already has the building blocks in place: San Luis Valley Rural Electric Cooperative, Tri-State, and the Colorado Clean Energy Fund launched the Electrify and Save On-Bill Repayment Program in 2024, and rebates already cover eligible measures. What is missing is state recognition, credit support, and trained local capacity to move qualified projects forward at scale. The Colorado State Legislature should advance enabling legislation for a focused three-year San Luis Valley pilot that builds on existing on-bill repayment and rebates with three additions: a state-qualified credit support program, a workforce pathway through Adams State University, and a regional performance dashboard. Done well, the pilot would help producers lower energy use, cut operating costs, and manage water better, while giving other rural agricultural regions a model they can adapt.
Challenge and Opportunity
The San Luis Valley illustrates a broader challenge confronting rural agricultural regions across Colorado: the systems that produce crops, move water, deliver electricity, and train the workforce needed to maintain those systems are tightly linked, but policy responses are often fragmented.
This is not a new problem. Producers have long managed groundwater limits, high pumping demands, and large capital costs, but the urgency has grown as drought conditions, aquifer decline, equipment age, and farm operating margins have converged. Producers need irrigation reliability, efficient pumping systems, affordable capital, and a local workforce capable of installing and maintaining modern equipment at the same time. Cooperatives and local utilities need stable load, cost recovery, and healthier distribution systems. The state needs to sustain rural economies, protect Interstate Compact compliance, support water management goals, and ensure that rural communities outside the urban Front Range can participate in modernization efforts rather than fall behind them.
The Colorado Department of Agriculture emphasizes that the state is facing a significantly dry year in 2026, with the Governor activating Phase 2 of the Drought Response Plan in March 2026. The Upper Rio Grande is expected to see poor spring runoff (roughly 25% of average) alongside declining aquifers, adding continued stress on producers who already operate under strict groundwater management requirements.
At the same time, San Luis Valley agriculture remains too important to ignore. Colorado’s potato economy is heavily concentrated in the Valley, and regional economic analysis has shown that agribusiness is a major share of local employment. The scale of irrigation infrastructure is substantial: the Valley operates up to 3,000 center pivots and more than 14,000 wells, and replacing or reconstructing a single center pivot can be costly. In 2019, estimates found that building a well-irrigated, single center pivot could cost approximately $170,000. Even incremental modernization represents a major capital demand for individual producers. The workforce challenge is just as central as the financing challenge. Even when a project is technically sound and financially attractive, it can stall if the Valley lacks enough trained engineers who understand irrigation systems, pumps, controls, motors, rural electric infrastructure, and local water conditions. If producers cannot access both affordable modernization pathways and the local talent needed to deliver them, the likely results are a continued squeeze on farm margins, reduced competitiveness, delayed capital upgrades, and added pressure on the local electric system and workforce base.
Colorado Leadership Opportunities
This challenge also creates a concrete opportunity for state leadership. Colorado does not need to build a policy response from scratch or commit to a large new spending program. The Electrify and Save On-Bill Repayment Program and existing rebates already provide a practical deployment platform for rural consumers and small businesses, with repayment tied to the utility bill rather than conventional credit underwriting. The remaining barrier is that some qualified agricultural projects still need additional credit support, implementation capacity, or capital flexibility to pencil out.
A targeted state-qualified credit support program would strengthen the existing system by backing the financing gap that remains above on-bill repayment. It would also enable qualified projects to secure additional capital at lower rates without replacing local program delivery. The more flexible financing options available will increase accessibility and help reduce barriers and motivate improvements.
Meanwhile, the Adams State University and Colorado State University mechanical engineering partnership has now produced its first graduating class in Alamosa, proving that the Valley can grow technical talent locally rather than relying entirely on outside labor. The workforce component is not secondary; it is what makes the financing strategy deployable. Together, these developments create the foundation for a place-based initiative that links financing support, local technical talent, deployment, and measurement in one coordinated effort.
If Colorado acts now, it can accelerate qualified irrigation and farm energy projects that are already close to viable but remain constrained by financing gaps and limited implementation capacity. Benefits include lower energy use, lower water waste, stronger farm balance sheets, more resilient rural electric infrastructure, and a stronger local workforce trained to install, maintain, and improve these systems. The state would also gain a replicable framework for other agricultural basins by demonstrating how limited public credit support and existing programs can unlock more private and cooperative financing. If Colorado does not act, many producers will continue to navigate a fragmented capital stack in which even well-designed projects stall despite existing rebates and on-bill repayment options. That delay raises the odds of slower adoption, missed savings, and weaker long-term outcomes for both communities and the state.
Plan of Action
Here are the recommendations to construct a pilot program that will help producers lower energy use, reduce operating costs, and support better water management.
Recommendation 1. Create a state-qualified credit support program for agricultural water and energy projects.
The Colorado State Legislature should direct the Colorado Energy Office, in partnership with the Colorado Clean Energy Fund and participating utilities, to establish a state-qualified credit support program for irrigation and farm energy projects in the San Luis Valley. This should be structured as an enabling credit support tool, not as a request for a new state grant program for individual projects. The state should reinforce the existing Electrify and Save On-Bill Repayment Program and available rebates by backing the financing gap that remains above on-bill repayment, so eligible projects can secure additional capital at lower rates to proceed. Eligible measures could include irrigation pump upgrades, variable frequency drives, control systems, motor replacements, and related efficiency investments. The purpose is to expand financing options for producers whose projects are operationally sound and policy-aligned but still need added assurance or structured capital support.
The Colorado Energy Office should serve as the lead state coordinating entity, with the Colorado Clean Energy Fund administering or supporting financing mechanics in partnership with San Luis Valley Rural Electric Cooperative, Tri-State Generation and Transmission Association, and other participating distribution cooperatives. Participating utilities would identify eligible customers, support on-bill repayment coordination, and help verify utility-related project performance. The Colorado Department of Agriculture and Colorado Water Conservation Board should advise on project qualification criteria so the program aligns with agricultural resilience, groundwater management, and state water goals. Local water entities, irrigation districts, and producer organizations should provide field-level input on whether proposed measures are practical under Valley conditions.
Because this request centers on agricultural water resilience, rural energy financing, and state credit support, it would likely be best supported through the Colorado General Assembly’s Agriculture, Water and Natural Resources committees. The Energy and Environment and Appropriations committees could coordinate as needed. Framing the request as an agricultural water and energy resilience pilot gives it the strongest policy fit while recognizing that the financing structure and any reserve funding would also require energy and fiscal review.
The state could operationalize the program through a reserve, guarantee structure, or other credit support mechanism that is only available for projects meeting defined technical and repayment standards. Because credit support leverages private and cooperative capital rather than spending it, the program can be seeded with $25 million from the state’s Unclaimed Property Trust Fund rather than a new general-fund appropriation, with each dollar of reserve backing several dollars of producer and cooperative financing. The Colorado Unclaimed Property Trust Fund holds abandoned or forgotten property in trust until rightful owners make valid claims, and its funds do not revert to the state general fund at the end of the fiscal year. Because this proposal would use the fund as a credit support reserve rather than as direct grants, it fits the fund’s structure by preserving principal, supporting claims obligations, and recycling public backing to leverage private, cooperative, and producer investment.
To keep the program practical, participating entities should use simple application standards, approved equipment lists, and contractor or vendor pathways that reduce transaction costs for producers. The state should require annual reporting on supported project counts, financing leverage, repayment performance, estimated energy savings, and water-related operational benefits.
Recommendation 2. Build a workforce pathway focused on agricultural energy and water systems.
Colorado should make workforce development a core feature of this policy by supporting Adams State University as the regional training hub for agricultural energy and water systems. Rather than creating an entirely new degree from scratch, the state can build on the existing mechanical engineering and water program partnerships in Alamosa. The university should add coursework, internships, and applied projects focused on water resource, irrigation systems, pumps, controls, motors, rural electrification, and farm equipment optimization. Students who complete the pathway should receive an Adams State University Agricultural Water and Energy Engineering Certification that demonstrates applied engineering competency in agricultural energy and water systems. This approach would help retain local students, support employers in the Valley, and reduce the need to import specialized labor for every installation or retrofit. It also ensures that financing support leads to completed projects, not just approved applications. Because this pathway builds on an existing program rather than a new one, the most direct way for Colorado to support it is to prioritize existing state higher-education funding toward the Adams State University certification program, consistent with this proposal’s broader approach of using existing resources rather than new appropriations.
Adams State University should serve as the regional training hub, in coordination with support from the Colorado Commission on Higher Education and the Colorado Office of Economic Development and International Trade. Local cooperatives, irrigation districts, contractors, equipment vendors, and regional employers should help define applied skills; host paid internships, provide capstone project opportunities, and connect students with real infrastructure needs. The goal is to create a local pipeline of certified engineers who understand Valley conditions and can help farmers adopt modern irrigation and energy technologies more affordably.
Recommendation 3. Launch a regional performance dashboard to measure outcomes and support replication.
The Colorado Energy Office should lead the regional performance dashboard and publish annual pilot updates. The dashboard would feature project and program data transmitted by participating utilities, the Colorado Clean Energy Fund, Adams State University, Colorado State University, contractors, and state agency partners. The dashboard should track projects completed, estimated energy savings, water-related operational improvements, repayment performance, financing leverage, workforce participation, internships, capstone projects, and local economic impacts where feasible. This does not need to be a burdensome reporting regime. The purpose is to give policymakers and implementing partners an evidence base that shows how well the model works, how well the local workforce pipeline is growing, and which elements should be expanded to other rural communities. California offers a useful precedent: the California State Treasurer’s Office publishes periodic public reports on its credit enhancement financing programs, covering participation, capital leveraged, and portfolio performance in a format Colorado could adapt for the Valley pilot.
The pilot should run for three years, followed by a formal evaluation report prepared by the Colorado Energy Office in consultation with the Colorado Department of Agriculture, the Colorado Water Conservation Board, participating utilities, financing partners, and higher-education partners. That report should assess project performance, repayment results, producer participation, workforce outcomes, administrative burden, and regional benefits. Ultimately, these reports would reveal whether Colorado should expand the model, maintain it as a targeted Valley program, modify it, or sunset it based on performance.
The three recommendations should be implemented as one coordinated pilot rather than as separate programs. The Colorado Energy Office should convene the implementing partners, set reporting expectations, and coordinate annual updates. Senator Cleave Simpson and other rural legislators could play a pivotal role by advancing enabling legislation, securing any needed budget direction, and convening cross-agency alignment. A three-year pilot timeline would allow Colorado to move quickly, learn from implementation, and determine whether a broader statewide model is warranted.
The foundation for this effort is already in place. The Valley has producers who understand the challenges of managing water and operating costs, water leaders focused on long-term sustainability, colleges and universities training future engineers, and energy and financing partners with programs that are already delivering results. Rural economic development organizations and other local stakeholders bring additional experience and support. Rather than creating a new system from scratch, this proposal builds on existing relationships, programs, and local expertise. That makes it a practical candidate for state support and positions the Valley to move quickly from policy to implementation.
Conclusion
Colorado should act now to create a state-qualified credit support program for San Luis Valley agricultural water and energy projects while making workforce development a central part of implementation.
This is not a request for a broad new state spending program. It is a practical pathway that uses existing programs, available rebates, targeted credit support, and regional higher-education capacity to help qualified projects move forward. Doing so would respond directly to drought pressure, rising operating costs, and the need to preserve the Valley’s agricultural base while modernizing critical infrastructure. If implemented well, the San Luis Valley can become a state-tested model for using limited public credit support and locally trained talent to unlock more rural investment, conserve resources, and build long-term community resilience.
Not in the form of a new general-fund grant program. The proposal does request a one-time $25 million credit support reserve drawn from the state’s Unclaimed Property Trust Fund rather than the general fund. Because that reserve backs financing rather than being spent as grants, it is recyclable and is designed to leverage several dollars of private, cooperative, and producer investment for each dollar committed. It does not replace existing financing tools. It asks the state to recognize qualified projects, provide enabling credit support where appropriate, coordinate existing programs, and help align workforce training with local implementation needs. The goal is to make current tools work better and attract more private, cooperative, and producer investment.
Some qualified projects still do not move forward even with on-bill repayment and rebates in place. A state-qualified credit support program would not replace the existing program. This proposal would support additional financing options for projects that meet technical and repayment standards but still need added credit support or capital flexibility to proceed. That approach helps Colorado get more value from systems and incentives that are already working.
Similar efforts can stall when programs are too complicated, when local contractors are not prepared to deliver projects, or when agencies work in silos. This proposal addresses those pitfalls by emphasizing simple rules, a defined pilot geography, local higher-education and workforce alignment, and clear annual reporting. A small but well-supported pilot is more likely to succeed than a statewide rollout that lacks implementation capacity.
Federal resources may still play an important role, but state action can move faster, be tailored to Colorado’s water and agricultural realities, and position the Valley to absorb future federal funds more effectively. Acting now allows Colorado to shape the model, generate evidence, and demonstrate bipartisan value through rural cost savings, resource efficiency, and workforce development.
Colorado already has the building blocks in place to modernize its agricultural industry – they just have to put it to use. With state recognition, a San Luis Valley pilot could improve local capacity in just three years.
About 86% of Colorado’s water is used for agriculture, but only about 30-60% of that water actually reaches crops. Conveyance efficiency through canal modernization is a powerful drought resilience and water saving strategy with proven technical feasibility.
In an ideal world, we would not have state or federal climate intervention research bans. We would have researchers and institutions that would not shy away from revealing the good, the bad, and the ugly of these technologies and doing so responsibly.
Ask people what worries them most right now, and they’ll say the cost of living and their livelihoods, not climate change. But those concerns are not separate.