WSP09351

• File Number: 8220.111.J
• Description: Central Utah Participating Project
• State: UT
• Basin: Colorado Mainstem
• Date: 1/1/1993
• Title: The CUP Holds the Solution: Utah's Hybrid Alternative to Water Markets
• Water Supply Pro - Doc Type: Report/Study

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1993]

CENTRAL UTAH PROJECT COMPLETION ACT

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II. BARRIERS TO WATER MARKETs

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Many economists propound the notion of water markets as the
solution to the water wars." They argue that if the West had a
system of freely transferable water rights, market forces would create
more efficient allocations of water." Under such a system, thirsty
cities could purchase water from surrounding farms, or environmental
groups could purchase water to improve stream flows, Water markets
would also provide fanners with a monetary incentive to retire water-
intensive crops such as rice and cotton and to implement water-
conserving technology." By improving efficiency and thus increasing
the amount of available water, water markets appear to provide a win-
win solution for everyone.
While some states have experimented with limited water markets,
the Western States have failed to adopt a comprehensive system of
transferable water rights.'. Ironically, the West remains locked in a
doctrine of water laws that formerly promoted the development of the

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11 Since 1973, when the National Water Commission recommended solutions to overcome
water transfer barrienJ, water markets have been a major topic. See U.S. NAn WATER COMM'N.
WATER PoLICIES FOR TIlE F'vTtJRE 260-70 (1973~ He ge,umdly, Symposium, F,..e MarMt
Erwironrrumtal..m, 15 HARV. J.L. & Pull. POL'y 297 (1992) (compiling several article. concerning
variOWl approaches and critiques DC Cree market environmentalism).
Water marketing refers to the voluntary buying and selling of water rights in a free
market system such u an auction market for common stock. See Wahl, .upro note 4, at 129.
TheN voluntary transfers can involve permanent sales of water rights, leases, or temporary
l8Ies atwater, and a variety of other permutations. See id. at 131. While Borne articles broaden
the definition of water markets to the use offinancial incentives in water resource management,
this Comment draws a clear distinction between voluntary water markets and financial
incentive. to reallocate water rights. For example, the CUP water management improvement
program does not create water marketing. Se. infra note. 197-211 and accompanying text. It
force. a minimum. level of conservation, and then offers financial incentives for further
conservation and water reallocation to instream flows.
I. See geMrally WAHL, .upro note 4 (advocating water markets for increased efficiency).
11 If the four biggest water..consuming crops in California-pasture, alfalfa, cotton, and
rice-were retired and the land were simply allowed to grow wild, enough water for
approzimately 70 million new Californians would be freed up while only shrinking the state'.
oc:onolDJ" by about 0.25%. REIsNER & BATES, supra note 10, at 33.
I' lei. at 98-110. However, even states that have already implemented some form of water
marketing have maintained smaller barriers against transferability. In Colorado, a water user
may only transfer the amount of water consumptively used in the past, which does not include
return flow water. Another major impediment is the Northern Colorado Water Conservation
District's policy prohibiting transfers of water outside the District boundaries. Id. at 99. In
California, temporary transfers of water between farmen within districts are fairly common,
but there have been few outright purch.... of permanent water rights. /d. st 104.

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