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<br />001341 <br /> <br />be realized, by one person to the ~xclusion of all others <br />(i.e.. instream uses yield "public benefits" or "public <br />values"). Thus. until 1973. instream uses of water. and the <br />values associated with such uses. were not accounted for by our <br />water rights system. <br /> <br />A corollary problem exists when the impacts, or costs, <br />which water diversion and impoundment imposes on some are not <br />compensated for. For example. since private property rights <br />are generally not attached to fish and wildlife resources. <br />those who enjoy such resources are not paid by those engaged in <br />water development for the right to "use" the affected fish and <br />wildlife resources (as. for example. with the irrever.sible <br />commitment of fish and wildlife habitat to a reservoir). <br />Similarly. not all impacts on the basin-of-origin resulting <br />from transbasin diversions are necessar.ily accounted for by the <br />marketplace. ther.e being equity considerations which are not <br />reflected in the cost of developing such diversions. <br /> <br />In short. these are instances in which the marketplace is <br />unable to fully account for all of the values associated with <br />different uses of Colorado's water resources. In the words of <br />economists. "externalities" cause "failures" in the marketplace. <br /> <br />Colorado has adopted three main pOlicies in response to <br />these circumstances. First. the legislature passed an instream <br />flow law in 1973 (section 37-92-102(3). C.R.S.) which vests <br />with the Colorado Water Conservation Board the exclusive <br />authority to appropriate or purChase water rights for "such <br />minimum flows...as are required to preserve the natural <br />environment to a reasonable decree...." Appropriations by the <br />Board take their place in the priority system, rather than <br />being absolute requirements for minimum flows or bypasses of <br />flows at others' points of diversion. While there is much <br />debate about whether this statute provides enough recognition <br />of the values associated with instream uses of water. it <br />undeniably articulates Colorado's policy in this regard. <br /> <br />Second. in 1987 the General Assembly passed legiSlation <br />(section 37-60-122.2, C.R.S.) which specifies how state <br />gover.nment will decide the extent to which the impacts of water <br />resources projects on fish and wildlife should be mitigated and <br />the extent to which state financial resources will be devoted <br />to such mitigation. This law also pr.ovides state funding for <br />the enhancement of fish and wildlife resources. Again. much <br />debate attended the passage of this legiSlation. but it can no <br />longer be said that Colorado does not have an explicit policy <br />for the mitigation of fish and wildlife impacts. <br /> <br />The third policy pertains to compensation to basins-of- <br />origin. The state's policy in this regar.d (section 37-45-118 <br />(l)(b)(IV). C.R.S.) is selective in that it applies only to <br />water conservancy districts' exportation projects and has <br /> <br />-3- <br />