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003120 State of Colorado, and some much further downstream, possibly in Arizona and California. This is a question of the "accounting stance" that is to be used to quantify the benefits and costs mentioned in (I) and (2) above. From a national point of view, any losses caused by the transfer should be counted as costs of the project. In practice, however, ac- counting stances are likely to be determined by the geographic bound- aries of public administrative units, from conservancy districts to states, regions, and the nation. Differences in the consequent costs and benefits frequently lead to conflicts among jurisdictions over the desir- ability of various actions or projects, including the need for compensa- tion. This indicates the need for an institutional framework within which all benefits and costs are taken into account. D. Nature of the Losses to the Area of Origin Losses to the area of origin are likely to take four main forms: (I) current and future losses of net income directly associated with diver- sions and consumptive uses that are curtailed because of a water trans- fer; (2) current and future losses of instream values; (3) losses of incomes in activities economically linked to those diversions and in- stream values; and (4) losses which accrue to society at large in the area of origin. Regarding (I), three classes of potentially affected activities stand out: (a) currently operating direct diverters and consumers of water; (b) users of the return flows from the initial diverters; and (c) future water-using activities that currently do not exist. Currently operating activities that are curtailed by a transfer are observable, and their losses of net income can be determined. Return flows from these ex- isting activities can be estimated, and associated income losses can also be estimated. Such losses are currently protected under the appropria- tion doctrine. Future uses of water must be forecasted, using some type of fore- casting procedures or models. Many states have detailed state eco- nomic models, like Colorado's Forecasting and Simulation Model that permits forecasting on a county or planning region basis, relating these forecasts to credible national forecasts (such as the Wharton School Forecasts or those of Data Resources, Inc.). Such models work rea- sonably well in forecasting future levels of existing activities, but they cannot predict activities not already on the scene. Reservation of water for in-basin future uses is somewhat at odds with the prior appropriation doctrine, which emphasizes present bene- ficial use of water. However, several western states now allow state