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<br />Comments to SWSlt November 3, 2003, by John Wjener <br /> <br />23 <br /> <br />The Jarger context: <br /> <br />In the semj...arid West, the abiljty to shift exist;ng water suppfies from one use to another is cruc;af, <br />given the high economic and environmental costs of new suppHes. World-wide, there is <br />increasing concern with water management and the attraction of reallocation as a demand..side <br />options in response to scarcity, rather than increased supply. because Iltheyare regarded as <br />being more environmentally sustainable, cost-effectiv9t and flexible.. .1' (rpCC 2001; 219; citations <br />omitted.) Adaptation to cJimate varjability, presentJy and in the future, is affected by the legal <br />framework of water managementJ the comprexity of management arrangements. and the ability to <br />lIassess current resources and project future resources I This requires continuing collection of <br />data and the abirity to use scenarios with hydroJogical models to estimate possible future <br />conditions..' (rpee 2001: 223). The assessment of management technjques is more of a <br />challenge than the assessment of supply-side technical options (IPCC 2001 : 219); littfe is known <br />about how water transfer mechanisms which may be superimposed on existing regimes. Every <br />study of potentiar impacts of climate variability and change has recommended serious inquiry into <br />the management institutions and laws governing water allocation and re-allocation, as far as I <br />know (e.g. USGCRP regional and sector studies, avaiJabre on-line from US Global Change <br />Research Program website). <br /> <br />In the western U.S., there is a rang tradition of recommending remedies for the high costs of <br />transactions in water (WWPRAC 1998, NRG 1992), beHeved to constrain transferst but few .'real- <br />Ufell experiments. While water banks are theoreticaUy desjrabl9t there ;s Uttle experience with <br />truly market-driven efforts. The famous California drought water bank, a 'eading example of a <br />transfer mechanism superimposed on a complex historical system of administration, was very <br />effective as a quick response to a crisis situation but experienced large inefficiencies due to a <br />rigid price structure (Archibald and Renwick 1998, Howitt 1998, Jercich 1997)~ The long standing <br />Idaho water banks have had some beneficial effects but of a very restricted value due to <br />inappropriate pricing struct~re and priority rules. AdditionaJ experience is found in the Arizona <br />ground-water exchange areas where trading is limited in scope (MacDonnell, Howe and Miller <br />1994. NRC 1992, Saliba and Bush 1987). <br /> <br />It is important that the high transactions costs, in money as weir as time, have almost certainly <br />been a significant drag on agriculture's abiUty to adjust to changing opportunities. Because the <br />high cost of changes would have to be financed (by serf with opportunity costt or with credit and <br />obvious costs), the changes would have to IIpay off-I quickly~ Long-term benefits from perhaps a <br />huge number of small adjustments are probably being lost because they would take too long to <br />payoff, or because they are too small to provide benefits big enough to cover the costs of <br />change. Smarr changes are, apparentry, limited to those uunder the radarll within a lateraJ. for <br />example; this inefficiency could be eased~ <br /> <br />There has been public concern in Colorado over large water sales out of the Arkansas Valley to <br />growing Front Range cities (e.g. Governor's Commission, 2000)~ These transfers have resufted in <br />substantial negative focal impacts because of the Valley's high dependence on irrigated <br />agriculture and the absence of alternative jnvestments (Howat Lazo and Weber 1990; Howe <br />1997; Howe 2000; Howe and Goemanst forthcoming, and see Colorado Water December 2002 <br />issue). The strong cultural and symboUc importance attached to Uour waterll in the West has <br />inhibited public acceptance and water market development (Ingram 1990, Thompson 1997). <br />Further, there is very serjous concern that municipar buyers can pay so much more than <br />agriculture that any reduction of the frictions wilJ only increase the speed with which irrigation <br />water is drained away (see news item appendix 1 for a statement January 15t 2003). At the <br />South PJatte Forum in October 2003, Peter Binney, utirities manager for Aurora; Colorado, noted <br />that his water customers were paying more than $3000 per acre-foot under drought emergency <br />prjcing in 2002, (at the highest tier ratest one presumes)t and other sources commonly mention <br />figures in the high hundreds of dollars per acre-foot.. not to mention tap fees for hooking up new <br />homes~ <br />