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<br />Financial compensation to redress potential damages in the area of origin is an <br />approach common to many legislative mitigation proposals. Financial losses associated <br />with water transfers may include reduced property tax bases from land taken out of <br /> <br />. <br />production and increased costs for water and sewer facilities necessary to deal with reduced <br />stream flows. Financial compensation could be placed in a trust fund to mitigate damages <br />incurred over time. It would be financed by assessments on a dollar per volume of water <br />transferred (where land is purchased and retired to obtain the appurtenant water rights, an <br />additional one-time charge based on land acreage also may be assessed). University of <br />Colorado law professor Larry MacDonnell notes that <br />one attraction of this approach is that it avoids the need for speculative <br />assessments of the possible adverse social and economic effects of a transfer. <br />At the same time it provides a source of funds for needed mitigation. The <br />availability of such a fund may also be important since the effects of transfers <br />are likely to be more significant cumulatively than individually.86. <br /> <br />Compensation proposals have been most thoroughly developed in Arizona and have <br />been a prominent part of water transfer legislation. Three forms of compensation have <br />been considered: <br /> <br />a one-time "dedication fee" to be paid to the county of origin when <br />groundwater is dedicated for use in another county; a per acre "in ground <br />fee" to be paid at the time water farm acreage is retired from agriculture; and <br />a per acre-foot "transportation fee" to be paid when groundwater is actually <br />removed from the county. The transportation fee would be deposited in a <br />"county economic development fund" to be used to enhance planning, <br />business recruitment and retention, and other related activities.87 <br /> <br />43 <br />