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WATER RIGHTS TRANSFERS FOR INSTREAM FLOWS Transferring water from an existing use to anew use can extend the utility of water. Since nearly 80% of existing water withdrawals in the West are for agricul- ture, most of the transfers are likely to be from agriculture to other uses. While municipal users are potential recipients of water transfers in many areas, instream uses -fisheries, recreation and aesthetic uses -are requesting, and in some cases receiving, an increasing share of western water. Statutory Authority and Administrative Hurdles ^ For a successful water right transfer for instream flows, the applicable state law must allow transfers of the type pro- posed. In nearly all of the western states, transfers are allowed, in theory at least, to any new beneficial use. But most of the western states treat instream flows differently from other kinds of water uses, and several either do not recognize water rights for instream purposes at all, or put severe restric- tions on the transfer of water from offstream use to instream use. ^ The particular transfer must also meet all applicable administrative require- ments. No state leaves transfers entirely to the market. Instead, the state agency responsible for water rights administra- tion must approve any change of place or type of use. Though private parties are free to make a deal to effect a transfer, the transfer will be contingent upon receiving administrative approval for the desired change. Since most western states use a "no injury" test to protect other water rights holders from a water rights transfer, the transfer will not be approved unless the agency is satisfied that no other rights, even those junior to the right seeking to be trans- ferred, will be hurt by the transfer. The Value of Water For market transfers to occur, the value of water for the new use must exceed the value of water in its existing use and also cover the often substantial costs associated with transferring the right. In other words, the new user must be able and willing to pay an amount for the transfer that will convince the existing user to give up the water. Thus, water transfers are not always possible or appropriate -they are dependent on variations in state law, an ability to avoid injury to other users and the relative value of water for different uses. Where these factors can be recon- ciled, transfers can, on a case-by-case basis, provide effective and voluntary water reallocation. The following Oregon, Washington and Colorado stories illustrate the use of voluntary water transfers to effect mutually beneficial reallocation of relatively small amounts of water from consumptive uses to instream uses, thereby augmenting existing water flows. The Lahontan Valley Wetlands, Nevada, story chronicles the acquisition of large amounts of agricultural water from the first large federal irrigation project for restoration of wetlands. Most transfers are likely to be from agriculture to other uses. 7