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894 NATURAL RESOURCES JOURNAL [Vol 37 Tom Kuhnle, The Federal Income Tax Implications of Water Transfers. 47 STAN. L.REv. 53 (1995). Jay Lund, Transaction Risk Versus Transaction Cost in Water Transfers, 29 WATER RESOURCES RES. 3103 (1993). Kathleen Miller, Right to Use Versus the Right to Sell: Spillover Effects and Constraints on thf1 Water Rights of Irrigation Organization Members, 23 WATER RESOURCES RES. 2166(1981). K. Olson, Economics of Transferring Water to the High Plains, 22 Q.J. BUS. & ECON. 63 (1983). Bonnie Saliba, Market Transactions and the Pricing of Water Rights in the West, in WATER MARKETING: OPPORTUNITIES AND CHALLENGES OF A NEW ERA (S. Shupe ed., 198 ) (University of Denver College of Law and Watershed West). RODNEY SMITH, TRADING WATER: AN ECONOMIC AND LEGAL FRAMEWORK FO WATER MARKETING (1988) (The Council of State Policy and Planning Agencies, Washington, D.C.). Wynn Walker & Gaylord Skogerboe, An Implicit Approach to Pricing Agricultural Water Transfers to Urban Uses, 11 WATER RESOURCES BULL. 751(1975). Frank Ward, Economics of Water Allocation to Inst ream Uses in a Fully Appropriated River Basi : Evidence from a New Mexico Wild River, 23 WATER RESOURCES RES. 381 (1987). NORMAN K. WHITTLESEY ET AL., ECONOMIC STUDY FOR THE POTENTIAL FO WATER MARKETS IN IDAHO (1986) (Idaho Water Resources Research Institute Report USG G 1259~2). IV. ENVIRONMENTAL WATER NEEDS A remarkable new demand for water is for instream and estuary flows that suppo nonconsumptive environmental and recreational uses. This demand is driven by recreation an tourism which has become a major part of the economy of many western states, rivaling 0 surpassing agriculture in gross state revenues. Water-based recreational and tourism activities requi that a certain amount of water remain in streams and these activities are harmed by consumptiv diversions. Marketing and transfer advocates argue that recreational and environmental needs c be satisfied through transfers. 1. Environmental Needs and Marketing Generally, the prior appropriation doctrine did not consider environmental and recreationa uses when much of the water in western stream was allocated. During times of drought this oversigh is most apparent as fish and wildlife suffer. Bonnie Colby et aI., Mitigating Environmental Externalities Through Voluntary and Involuntary Water Reallocation: Nevada's Truckee-Carson River Basin, 31 NA T. RESOURCES J. 757 (1991).