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below the full cost of production and distribution. Therefore, local benefits can be greater than national benefits because of this subsidy. Before the water can be used, it must be taken out of the river. In arid climates, water must be stored in reservoirs if a year-round supply is to be available. The amount of water that can be stored and distributed with existing dams and aqueducts is limited. If demand for water exceeds the capacity of the storage and distribution system, additional facilities will be required. WOSA water benefits will have one value if only the currently built water resource projects on the river will be used in conjunction with WOSA. The value will be quite different if those projects that have been authorized by the Colorado River Basin Project Act (P.L. 90-537) are built, so that more water can be distributed and used. At present, not all the water that flows down the River is used. If WOSA is undertaken on a large scale, the added water will flow down the River w'ithout being dra\vn out in either the Upper or Lower Basins. The added water will have three possible benefits: a slight improvement in water quality, an improvement in the reliability of river flow, and increased hydropower generation. The Mexican Treaty obligation will go on being met with leftover water, for which there is no com- petitive use. The improvement in water quality would allow a yearly saving of $2.5 million in water quality management pro- grams that have been proposed. The hydropower generated by the WOSA water in the generating stations on the river would save a yearly $5.3 million in fuel that would otherwise be burned in older, less efficient steam electric stations. We have not been able to put a value on the improved river flow relia- bility, but it would probably be small. The Colorado River Basin Project Act of 1968 (P.L. 90-537) declared the Mexican Treaty to be a national obliga- tion that shall be met by any water augmentation project planned under the Act and authorized by Congress. In addi- tion, the Act authorized the Central Arizona Project and five ECONOMIC EFFECTS 53 SNOWPACK, CLOUD-SEEDING, AND THE COLORADO RIVER anteeing a minimum allocation to California. Shortages in the water allocation were to be borne first by the Central Arizona Project. Congress also declared in the legislation that it recog- nized a future need to augment the water supply of the river. It stated that when the river is augmented, the obligation of a treaty to supply Colorado River water to Mexico that was agreed upon in 1944 would take the first priority. It also stated that the costs of satisfying the Mexican obligation would be borne by the federal government. There is reason to believe that an operational WOSA pro- gram in the Upper Colorado River Basin would not satisfy the conditions that Congress may have had in mind when it estab- lished this augmentation policy for the river. Some sort of spe- cific Congressional action, or legal litigation, would be re- quired to allocate WOSA water to the Mexican Treaty. If the water should be allocated to Mexico, it would foreclose any opportunity for forming an innovative public policy to deal with the problems created by a WOSA program. Water Benefits The benefit of water is simply its value to a user. To a man dying of thirst, a gallon of water may be priceless, but a million gallons would not be a million times more valuable. A mati who uses water to grow crops is not going to buy that water at a price so high he loses money on his product. In the arid west, so much water is used in irrigated agri- culture that all other water uses could easily be met by transfers from agriculture. Theoretically, if water could be freely ex- changed, the farmer would be willing to sell his as soon as he could make more money selling his water than he could by farming. This means that the benefit to the nation cannot be greater than the price the farmer would be willing to pay for water. However, in much of the west, water supplies are not rationed by the price of water in a free market, but by adminis- trative means. Water is made available to irrigators at prices 52 '. 1\..'... 'i Jl, ~ '.