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<br />suppiies. Absent incentives to conserve water and transfer it to other users, farmers are <br />faced with an all-or-nothing proposition-keep using the water as before or give up farming <br />altogether by selling the water rights. Zack Willey, an economist with the Environmental <br />Defense Fund, has found interest among farmers for negotiated conservation/transfer <br />agreements. He cites four reasons: <br />First, trading water for financing of irrigation system improvements would <br />increase the value of agricultural lands as well as irrigators' ability to control. <br />the application of water to crops, which could enhance yields. Second, <br />regulatory uncertainties concerning the status and amount of water rights <br />which irrigators will hold in the future can be alleviated by improving <br />irrigation systems with the financial assistance of water purchasers. Third, <br />irrigation system improvements can reduce irrigators' liabilities stemming <br />from pollution drainage and runoff. Finally, some interest in water sales was <br />expressed for reasons unrelated to water policy, including enhanced income <br />and ability to retire debt from the proceeds of water sales.90 <br /> <br />California and Oregon have enacted legislation authorizing the transfer of <br />conserved water. California's 1982 legislation (CaI. Water Code, 1010-1011) authorizes <br />conserved water to be "sold, leased, exchanged, or otherwise transferred pursuant to any <br />provision of law relating to the transfer of water or water rights, including but not limited <br />to, provisions of law governing any change in point of diversion, place of use, and purpose <br />of use due to the transfer." The statute ensures protection of exiting water rights by <br />requiring compliance with provisions of law regulating changes in water uses generally. <br /> <br />Despite the legislature's action, there has been virtually no water transfer activity <br />attributable to the law. The reasons include (1) the need for water district approval of <br />transfers outside a district's boundaries (most of California's water rights are held by <br /> <br />46 <br />