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003123 present value, placed in escrow at interest, to be used by the basin of origin to compensate unprotected parties and for whatever other pur- poses its citizenry prefers. Compensation should definitely not be aimed at keeping water prices or costs of water development to in-basin users from rising as water becomes scarcer. Water prices should reflect the real scarcity value of water. As water is transferred outside a basin because of its greater value there, water does become scarcer in the basin than it otherwise would have been. The cost of water to users should reflect the fact of this scarcity and not the scarcity of some bygone era. Pro- visions like those in the Colorado Water Conservancy District Act dis- cussed earlier,60 which require that "present. . . and. . . prospective appropriations of water. . . not be impaired nor increased in cost" distort the real scarcity signals to in-basin water users and induce them to apply water to uses and in quantities that are not justifiable in light of curren t scarcities. It is not clear that compensatory storage will always be the most useful form of compensation to the area of origin. Perhaps schools, highways, or hospitals would be of greater benefit, given the hydro- logic situation and other needs. Even when storage is the most useful form of compensation, there is the issue of timing of construction of that storage. Clearly, it should be sized and timed in accordance with the water needs of the area of origin. One official, mistaking ineffi- ciency for foresight, recently stated, "We built Green Mountain Reser- voir 45 years ago, and now we need it." These observations also have implications for the institutions that negotiate for and manage the resources gained through compensation. If negotiations over losses are to represent all of the unprotected losing parties identified above and if the uses of these compensatory resources are to be determined in the interest of all losing parties and not just water users, then a governmental unit of general jurisdiction should control negotiations and manage the use of the compensatory resources. F. General Economic Guidelines for Compensation By way of summary, the following general guidelines concerning compensation are offered: I. Compensation paid should equal the present value of net in- comes and public amenities lost in the area of origin that are not pro- tected under conventional appropriation doctrine. The relevant 60. See supra note 46.