The Texas Water Development Board (TWDB) has approved $69.5 million in state grants for 17 canal modernization projects in the Rio Grande Valley, part of a $163.6 million package intended to reduce water losses in irrigation networks serving Hidalgo and Cameron counties.
Sen. Juan “Chuy” Hinojosa announced the awards in a Sept. 10 newsletter. The projects will be carried out by 12 irrigation districts and range in total cost from $370,000 to $22 million.
The work includes lining earthen canals with concrete and synthetic materials and replacing open canals with enclosed pipelines. Several projects also include pump stations, automated gates, variable-frequency drives, supervisory control and data acquisition systems, valves, electrical equipment and other water-control technology.
The North American Development Bank (NADBank) is contributing approximately $75.4 million. The TWDB grants provide another $69.5 million, while approximately $18.8 million will come from other funding already secured by the irrigation districts. Together, the three sources bring the package to $163.6 million.
NADBank received 21 applications from 13 irrigation districts before recommending 17 projects from 12 districts. Applications were evaluated based on projected water savings, benefits to communities, environmental benefits, cost-effectiveness and readiness to proceed.
Combined, the projects are expected to conserve approximately 44,188 acre-feet of water annually once completed. One acre-foot equals about 325,851 gallons, putting the projected savings at approximately 14.4 billion gallons a year.
The canals primarily carry water for agricultural irrigation, although some also supply untreated water to municipalities, water utilities and industrial customers. Improving the canals can preserve supplies for farms while also strengthening the networks used to move water to Rio Grande Valley communities.
Canal lining and related irrigation improvements are not new areas of state or federal spending. The TWDB says its Agricultural Water Conservation Grant Program has funded hundreds of projects since the program was established in 1985. Eligible work under that program includes improvements to irrigation delivery systems, demonstrations of conservation technology and financial assistance for agricultural water-efficiency equipment.
Those grants, however, are generally much smaller than the new Rio Grande Valley package. For example, the TWDB awarded the United Irrigation District approximately $105,000 in 2025 for a telemetry and supervisory control system. Some Valley districts have also completed canal lining and pipeline projects with assistance from the U.S. Bureau of Reclamation’s WaterSMART program.
Lawmakers appropriated $1.038 billion to the TWDB in the 2025 supplemental budget to provide grants for water-supply and infrastructure projects across Texas. From that appropriation, the agency set aside up to $100 million for canal lining and conversion projects matched through NADBank’s Water Resiliency Program. State grants are allowed to cover up to 50 percent of each eligible project’s cost.
The districts must close on the grants by May 1. Construction contracts must end by Jan. 31, 2031, and districts must submit closeout documents and complete final site visits by Feb. 28, 2031. All grant funding must be spent by Aug. 31, 2031.
Before funding is released, recipients must meet requirements covering engineering contracts, environmental reviews and control of necessary land, easements and rights of way. Projects are also subject to state and federal requirements governing the use of iron and steel products.
The $1.038 billion appropriation was included in House Bill 500, the supplemental appropriations bill approved during the 2025 legislative session. Unlike the state’s revolving loan programs, the money was appropriated from general revenue for direct grants to eligible political subdivisions.
Under the TWDB’s implementation plan, $875 million of the appropriation is being distributed through the Water Supply Infrastructure Grant program. The agency divided that amount among five population categories, with project caps ranging from $6 million for communities with populations below 1,000 to $55 million for jurisdictions serving more than 1 million people.
Eligible projects include drinking-water infrastructure, reduction of real and apparent water losses, replacement or rehabilitation of deteriorating systems, correction of regulatory violations and certain water-reuse improvements. Wastewater, drainage and flood-control projects are not eligible under this appropriation.
In addition to the $875 million general grant pool, the TWDB reserved up to $100 million for the NADBank canal initiative, left $50 million unallocated and designated approximately $13 million for administering the program.
Photo by Charl Durand from Pexels
This story is part of the weekly Texas Government Insider digital news publication. See more of the latest Texas government news here. For more national government news, check out Government Market News daily for new stories, insights and profiles from public sector professionals.