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expenditures for the expansion of water supply infrastructure must be carefully reviewed, particularly given the ever increasing competition for capital funds and the growing public concern for environmental conservation and protection. C. The Value of Water A paradox arises in dealing with the value of water. Political and public rhetoric asserts its enormous economic importance. This conventional view, however, contrasts with the reality that the resource exhibits a relatively low economic value. For example, resources devoted to water development, conservation or management for agricultural irrigation can justify a cost of only $25.00 to $75.00 per acre -foot (approximately $.08 to $.24 per 1,000 gallons). Compared with other liquids important in modern economies, the value of water is trivial. Gasoline retails in the U.S. at about $456,000 per acre -foot ($1,400 per 1,000 gallons), implying users are willing to pay 1,700 times more per unit volume than they do for irrigation water. In the municipal sector, although the value of raw water is an order of magnitude greater ($.80 to $2.40 per 1,000 gallons), it seldom compares with the rhetoric surrounding it. What is more, the distribution of water use is exactly the reverse of its value; 80 percent to 90 percent of water diverted from natural systems goes to agriculture, the lower value use. D. The Status of Colorado's Water Economy and Principles for Future Management Colorado's water economy has passed from its "expansionary phase" into what might be called its "mature phase." In the former, new supplies were readily available, few interdependencies existed among users, and -- after subtracting taxpayer subsidies from the federal treasury -- projects were. relatively inexpensive. In maturity, on the other hand, water users are linked by elaborate physical systems and economic interdependencies. Few new supply options exist and costs of new supplies are rapidly escalating. Also, federal subsidies have evaporated. Moreover, free flowing streams are now valuable for their recreational and environmental worth. Given the elaborate physical systems the expansionary phase has spawned, the relative value of water in agricultural and municipal applications, and the increasing recognition of instream values, it's only reasonable to ask how efficient and equitable it is to continue allocating the resource and augmenting supplies in the same way we have in the past. Applying a widely - accepted rule based on the principle that an efficient and fair public policy decision is one that makes no entity worse off for the betterment of another, present day water supply expansion decisions that involve major storage projects or diversions are almost always wasteful, inefficient, and unfair. However, the flaws in the expansionary mode of operation can be remedied by recognizing the characteristics of a mature system. Before considering new storage options, we should invest in: 1) conservation; 2) creating opportunities for cooperation between the two largest user groups — cities and farmers; and 3) taking advantage of system enhancements (e.g. reservoir reclamation or enlargement) and linkages to use existing supplies more efficiently. 2