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in federal reclamation projects, which is a different subject. In general, intrastate water marketing is not a concern to other states. But the mechanics involved in that, of course, are very useful to implement procedures for the transfer of place on purpose of use in a state in which water ministers have to approve water transfers. One should not take those remarks to construe that all intrastate water market proposals are coated with honey and sugar and everyone is happy. In this state, for instance, a recent proposal for inter-basin, intrastate water marketing created much concern in the exporting area and a large opposition is in place. Water marketing interstate is of concern to the states, at least to the states involved. It could work well between some states but any proposal should be very sensitive to the specific circumstances and facts of the site and proposal. As Rita mentioned, in the Lower Division, the opportunity to market water exists by banking water in groundwater storage. Most of the states directly involved in resource administration feel that inter- state water marketing must be accomplished on a state-to-state basis, that is, the state would control marketing as a broker. The state could contract the water from a willing seller and the contract could convey the water to another state for resale to the user. There's much concern that private interests in different states become engaged in water marketing. The opportunity for speculation and an uncontrolled water market would be presented which would create many difficult problems. As Mike indicated, some have proposed water marketing from the Upper Basin to the Lower Basin of the Colorado River. Several of these schemes have surfaced but none have been accomplished. The state water administrators in the Upper Colorado River Basin have generally been opposed to most of these proposals, however, there may now be some slight crack in that opposition. There is a debate as to whether inter-basin water marketing would be in compliance with provisions of the Colorado River Compact, which, of course, apportions beneficial use to the Upper Basin and to the Lower Basin and specifically defines those basins. There is some concern that an uncontrolled water market could develop [and that] consequently the Upper Basin interests would be outbid and lose their water for future use. This would be directly contrary to the philosophy of the Upper Basin in the negotia- tion of the Colorado River Compact 77 years ago. New Mexico has not embraced either inter-basin or interstate water marketing for several reasons. An unregulated market could result in very adverse social, environmental and economic impacts, negatively impacting existing economies and prevent- ing further economic development. It is likely that new interstate compacts would be required to implement state controlled or state regulated water banks. As I indicated, water would be placed in economic competition which, in the case of the Colorado River Compact, was removed from that competition between the Upper and the Lower Basins and preserved in perpetuity for use within those basins. New Mexico's apportionment of Colorado River water can be fully developed without fully developing the natural resources in that portion of the Upper Basin in New Mexico. New Mexico also must remain alert for its statewide needs for water, some of which might be met by exporting water from the San Juan River Basin. The Upper Basin Compact provides that an Upper Basin state may exceed its apportionment so long as that excess use does not deprive another signatory state of its appor- tionment. New Mexico likely will be the first of the Upper Division states to use all of its apportionment. Indian water rights, particularly unquantified rights such as those of the Navajo Nation, could be a large unknown factor in interstate water marketing. Obviously, the precedent would be set to encour- age interstate water marketing in other basins, including marketing interstate water from groundwa- ter basins. New Mexico has several groundwater basins abutting another state and some of these basins, and most of them, receive recharge only from local precipitation which offers little opportunity for sustaining these basins against large withdrawals. The greatest economic value of the water resource is dependent upon the product produced through the use of the water and not the value of the water itself. The state's economy would receive a greater benefit through the export of the product not the raw water resource. From the above discussion, I would indicate that New Mexico must approach water marketing very cautiously and inter-basin water marketing between the Upper and Lower Basins even more cautiously. There is little question that new sources of water will be needed before very long for use in southern California and southern Nevada. To some, it is logical, probably, to suggest that the states in the WATER MARKETING ON THE COLORADO RIVER New Mexico likely will be the first of the Upper Division states to use all of its apportionment. - Philip Mutz SYMPOSIUM PROCEEDINGS SEPTEMBER 1999 o