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<br />Water markets can mean an end to water shortages <br /> <br />Page 12 of27 <br /> <br />Federal water projects provide as much as one-third <br />of all irrigation water in the West. But rights to <br />water from federal projects are not easily tradable. <br />Most reclamation laws fail to address water <br />transfers, and, until recently, Bureau of Reclamation <br />policy varied from region to region and project to <br />project. Major inconsistencies raised questions, <br />such as whether project water could be sold or <br />leased at a profit, whether it could be transferred <br />away from the lands to which it was originally <br />assigned, and whether it could be used for <br />nonirrigation purposes. In 1988, the bureau declared <br />itself a "water market facilitator" and outlined <br />procedures to govern transfers of federally supplied <br />water. However, market activity in federal water <br />has not increased significantly, primarily because <br />the federal reclamation laws remain unclear (Wahl <br />1989). <br /> <br />Prices Are Going Up <br /> <br />"Despite all the limits on water transfers, there are <br />growing pressures for change. As current fiscal and <br />environmental constraints make it more difficult for <br />governments to find new sources of supply, <br />government agencies are being forced to consider <br />raising water prices to encourage conservation. The <br />evidence is strong that both urban and agricultural <br />water users change their behavior in response to <br />changing prices. For example: <br /> <br />. In the mid- to late 1970s, Tucson, Arizona, <br />reduced its average peak daily demand by 20 <br />percent, using price increases and voluntary <br />conservation (Tucson Water Department <br />1996). <br />. Economists Bruce Beattie and H. R. Foster <br />(1980,444-45) studied six regions ofthe u.s. <br />and found that a 10 percent increase in the <br />price of urban residential water reduced <br />consumption between 3.75 percent and 12.63 <br />. Recent studies have found that a 10 percent <br />increase in water prices will cause agriculture <br />to reduce its water consumption by four to <br />seven percent (Bay Area Economic Forum <br />1991, 14). <br />. In 1989, the California State Water Resources <br />Control Board found that Central Valley <br />cotton growers who purchased federal water <br /> <br />http://www . perc.org/pub1ications/policyseries/priming_ full. php ?s=2 <br /> <br />9/1212006 <br />