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003122 possibly as a result of selective migration that leaves a less capable population behind. Direct diverters and users of return flows are afforded protection from damage under the existing appropriation doctrine. Water can be taken from current uses only through purchase or condemnation. In either case, compensation would be paid to the direct water users. Junior appropriators can seek protection against injury during the court or permit proceedings. Thus, only four classes of damaged par- ties potentially warrant compensation beyond that presently assured under the prior appropriation doctrine: (I)future direct uses not cur- rently in place; (2) all unprotected current and future instream uses; (3) parties indirectly suffering employment and income losses from curtailment of direct and instream uses; and (4) the "public at large" in the area of origin who experience lower quality public services. Since many of these values lie in the future, we must equate them to present values for purposes of determining appropriate compensa- tion. The procedure for deriving these present values is known as Hdiscounting. "59 E. Appropriate Forms of Compensation and Its Administration Thus far, it has been argued that the amount of compensation to be paid by the parties transferring water out-of-basin should be the present value of all current and future losses imposed on unprotected parties, i.e. those not automatically compensated by sale of water rights nor protected from injury by the courts. What form should that compensation take? Generally speaking, the most useful form of com- pensation would be an unrestricted monetary grant of the appropriate 59. A dollar now is worth more tha.n a dollar bIer because loday's money can be invested at some illleresl rate. If r is the rate of interest, the future value FV(t) t years hence of N dollars received today would be: (I) FV(t) ~ (I + 'I' In lhis sense, N represents the "present value" (PV) of FV(I) 10 be received I years from now, or dividing by (I + r)C, FV(t) (2) PV ~ - (1 + r)' If there exists a sequence of future values. FV( I), FV(2),. ., FV(t). each to be received in the corre. sponding future years, a present value can be computed for the entire sequence by adding the individual annual present values: FY(I) FV(2) FV(t) (J) PV ~ (I + ,) + (I + ,)' + . . . (1 + ,)' The selectIon of an appropriate interest rate (or a discount rale) r is somewhat controversial, but for public sector purposes (and assuming no inflation) a rate in the the 10 len percent range is generally chosen in practice.