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<br />892 <br /> <br />NATURAL RESOURCES JOURNAL <br /> <br />[Vol 37 <br /> <br />RONALD KAISER, SOME POTENTIAL ROLES FOR THE TEXAS WATER BANK, REPO <br />PREPARED FOR THE TEXAS WATER DEVELOPMENT BOARD (1994). <br /> <br />JA Y R. LUND ET AL., UNIVERSITY OF CALIFORNIA, RECENT CALIFORNIA W A T R <br />TRANSFERS EMERGING OPTIONS IN W A TERMANAGEMENT (1992)(Department ofC vii <br />and Environmental Engineering Report No. 92-1). <br /> <br /> <br />LAWRENCE MACDONNELL ET AL., UNIVERSITY OF COLORADO SCHOOL OF LAI ' <br />WATER BANKS N THE WEST (1994) (Natural Resources Law Center Research Report No. 12). <br /> <br />Lawrence MacDonnell, Water Banks: Untangling the Gordian Knot of Western Water, 41 ROCJy <br />MTN. MN. L. INST. 22(1995). <br /> <br />L. MINK, WATER BANKING IN IDAHO (1993) (paper presented at Riparian Management: <br />Common Threads and Shared Interests and USDA Forest Service Tech. Rpt. RM-226) <br /> <br />Kevin B. Pratt, Water Banking: A New Tool for Water Management, 23 CoLo. LAW. 5 5 <br />(MarchI994). <br /> <br />RichardRigby, Water Banking in Idaho, in PLANNING FOR WATER SHORTAGES: WAT <br />REALLOCATION, TRANSFERS AND DROUGHT MANAGEMENT 113 (I.Schaack et al. ed ., <br />1989). <br /> <br />III. ECONOMIC CONSIDERATIONS IN TRANSFERS <br /> <br />Economic value has been the principal means for establishing resource utility in our socie <br />Values established by market price are used to allocate scarce resources. Western water policy is <br />often criticized for allocating water through nonmarket means without regard to its economic valul <br />As such, water is not used efficiently for its highest economic value. The problem of economih <br />misallocation is further complicated by the federal subsidies for water development projects. I <br />Economic theorists have advocated that water be reallocated by market mechanisms t <br />remedy these inefficiencies. They posit that market mechanisms provide allocation flexibility b <br />allowing those who place a higher economic value on the water to purchase it at its market price. <br />this way, markets generally generate economically efficient outcomes because they facilitat <br />voluntary trading among users thereby delivering water to those users who put the highest economi <br />value on it. <br />The literature focuses on (1) the technical and legal predicates for market reallocations, (2 <br />efficiency and equity in allocations, (3) investment and risk assessment, (4) benefit/cost valuatio <br />and transactional barriers and costs. It includes theoretical and practical articles as well as those tha <br />are positive and pessimistic. Positivists suggest that market mechanisms can reallocate water in an <br />economically efficient manner among irrigation, municipal, industrial, environmental and <br />recreational purposes by letting voluntary transfers determine the highest economic use of water. <br />Pessimists point to market failures, third party impacts and water valuation problems. <br /> <br />Raymond Anderson, WindjQll Gains from Transfer of Water Allotments Within the Colorado-Big <br />Thompson Project, 43 LAND ECON. 265 (1967). <br /> <br />H. Stuart Burness & James Quirk, Water Law, Water Transfers and Economic Efficiency: The <br />Colorado River, 23 J.L. & ECON. 111 (1980). <br />