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<br />Water markets can mean an end to water shortages <br /> <br />Page 14 of27 <br /> <br />companies have active internal markets, and trading <br />even occurs in some districts supplied with federal <br />water. Members of the W estlands Water District in <br />California, for example, negotiated roughly 4,500 <br />transfers during 1990-91 alone. In March 1996, <br />Westlands introduced an electronic bulletin board <br />system that enables farmers to buy and sell annual <br />entitlements to federal water using a home <br />computer and modem. Westlands hopes the bulletin <br />board will expedite transfers, reduce paperwork and <br />help farmers respond to volatile weather and market <br />conditions. <br /> <br />Perhaps the best-established market for federal <br />water operates in the Northern Colorado Water <br />Conservancy District near Fort Collins, Colorado. <br />Annual entitlements within the district are freely <br />transferable. Some 30 percent of the water delivered <br />to the district by the Colorado-Big Thompson <br />reclamation project moves through the district's <br />rental market each year, with rental prices ranging <br />from $5 to $7 per acre-foot (Wahl 1989, 135-36; <br />Water Strategist 1996). <br /> <br />Water banks are emerging as an important tool for <br />facilitating water transfers. These banks are <br />generally operated by a government entity and serve <br />as intermediaries between buyers and sellers. Water <br />users with excess water may deposit some or all of <br />it in the bank for rental by other users. The bank <br />often sets the price, timing, eligibility of water <br />rights, and eligibility of recipients (MacDonnell et <br />al. 1994, 1-4). <br /> <br />Water banks offer several benefits. First, they make <br />trades easier by standardizing the transfer process <br />and relaxing regulatory hurdles. Because banks are <br />government-sanctioned and because they set prices, <br />often not allowing profit, they are more politically <br />acceptable than pure markets. Water banks even <br />shun the idea of buying and selling by referring to <br />bank transactions as deposits and withdrawals <br />(Thompson 1996, 10). <br /> <br />Idaho's water bank has been in existence since <br />1979, and several hundred thousand acre-feet of <br />water change hands each year. In 1991, the <br />California Drought Water Bank purchased 800,000 <br />acre-feet of water for $125 per acre-foot and sold <br />half of it for $175 per acre-foot. The remainder <br />went into the state water project. These transactions <br /> <br />http://www . perc.orglpublications/policyseries/priming_ full. php?s=2 <br /> <br />9/1212006 <br />