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have been illustrated by comparing the water market for native water <br /> rights in Division 1 with the market for shares of the Northern Colorado <br /> Water Conservancy District (How e & Goemans, 2003, Jour. AWRA). The <br /> higher transaction costs in Division On e for native rights result in large, <br /> relatively infrequent transfers while the low costs in the NCWCD result in <br /> frequent, small transactions, i.e. essentially a continuous market. The <br /> NCWCD conditions cannot be replicated elsewhere, but they suggest that <br />lowering transaction costs will facilitate transfer transactions, moving in <br /> the direction of the smooth market described in (6) above. <br />8) How can transaction costs for water tr ansfer and lease arrangements be <br /> reduced and worthwhile trades encouraged? <br /> a) through extended rules of thumb for determination of <br /> consumptive use, eliminating the need for extensive engineering <br /> and agronomic studies; <br /> b) through a clearer recognition of consumptively used water as a <br /> private property right that can be transferred with minimal <br /> regulatory supervision (MacDonnell, University of Denver <br /> Water Law Review, V. 10, Issue 1, Fall, 2006) while accepting <br /> profit from water transfers as a legitimate feature of efficient <br /> water use (CWCB vs. Vidler); <br /> c) by allowing water to be "sp eculatively held" for future <br /> beneficial uses and getting away from the bugaboo of <br /> "speculation". Speculation has a role to play. We allow <br /> speculation through cond itional rights. Most agricultural <br /> holdings have a large sp eculative component (High Plains case <br /> 2006). <br />3 <br />