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Comments to SWSI, November 3,2003, by John Wiener 24 The question is whether or not policies and institutions that increase the efficiency of water allocation and the efficiency of irrigation would reduce the motivation of farmers to permanently sell water out of the basin. The Arkansas River Sasin Water Bank Pilot Program was an innovative legislative effort to help agriculture realize the highest value of water without permanent severance from the land (37-80.5-103, C.R.S.) by facilitating temporary transfers. It was attempted at such an unfortunate time, due to the Drought of 2002 and local political controversies, out-of-basin water transfers (see Howe, C.W. and C. Goemans, December 2002 Colorado Water, available on-line through Colorado Water Resources Research Institute, (http: www,cwrrLcolostate.edu>) and "water raids" by speculators who have purchased options on a large portion of the shares of the Fort Lyon Canal, by far the largest in the Arkansas Valley. Among numerous environmental issues, salinity in Western rivers is an increasing problem as the water becomes more heavily utilized. The Arkansas River reaches 4,500 mg/I of total dissolved solids at the Kansas line (for comparison, Colorado River salinity at the border with Mexico is about 1,500 mg/I and has resulted in millions of dollars in salinity reduction efforts). Thousands of acres in the Arkansas Valley are severely impacted by salinization with yield losses from 10 to 25 percent or more causing yield and profit losses of tens of millions annually (Gates et a!. 2002). A water bank can help by facilitating transfers of water off the heavily salt-generating lands. The engineering modeling needed to support these uses of the WBPP for water quality improvement will be available from Colorado State University for our use in this part of the proposed work program (see Gates et al. 2002; more work is scheduled). The Arkansas River WBPP is the first water bank with the potential to incorporate and utilize climate information in design and operation. The current "Three States" project (Howe, P.l.; see Wiener 2000, 2002, 2003) has provided inputs to the Office of the State Engineer that have clarified and broadened the rules for the WBPP so that it will be possible to experiment with a range of designs and transactions with inputs of long-lead seasonal forecasts. Use it or Lose it and all that. . . Legally, however, agricultural water rights have been defined by the amount of water diverted a beneficial use, and by place of use as well as priority for the diversion. If a farmer has a water right to divert 100 units, but had only diverted 75 units, there would have been beneficial use of only 75 units, and the water right would legally be redefined as 75. This is popularly called the "use it lose it" problem. It makes no difference if the reduction in diversion is due to lining the ditch or using a pipe, switching to a more efficient technology, or just not using some land; if the reduction continues long enough, it can be an abandonment of part of the water right. This means that there is not only no incentive to "save" water; there is also a strong incentive to continue using it in ways that could now be superseded by more efficient methods. So, change is not easily rewarded and may be penalized, in terms of the individual. In terms of the river, the inefficiency of the past has been appropriated and is now someone else's water right. If the return flow of water, or water not consumed) is reduced, other water rights are injured. But, if a farmer cannot benefit from a change, and may in fact be injured by making it, the goals of helping agriculture realize more benefit from water rights, and increasing productivity of water, are defeated. How could increased agricultural efficiency be pursued? Colorado now has a "water bank pilot program" in progress on the Arkansas River. Under current rules, this may include small changes which currently cost too much, temporary changes, and interruptible supply or dry-year option contracts. The latter are desirable (Wiener, 2002 and on- going research; Nichols et al. 2001), but have been said to be too experimental for parties to undertake the expense of litigation to achieve formal acceptance.