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<br />003156 Page 55 <br /> <br />about one-fourth that magnitude (140 thousand acre-feet), on the average. A <br /> <br />substantial reduction in outflows to Mexico also occurs, although Mexico still <br /> <br />receives about 20 percent more than her treaty entitlement (in the form of <br /> <br />infrequent spring flood flows). Evaporation losses are reduced to a modest <br /> <br />level and reservoir conservation storage declines to zero at the end of the <br /> <br />period. <br /> <br />While the increase in Upper Basin shortages is an obvious and necessary <br /> <br />consequence of unfilled demand and higher water values in the Lower Basin, the <br /> <br />finding that those shortages are so much smaller than the resulting increases in <br /> <br />higher-valued Lower Basin uses is surprising. It indicates that the economic <br /> <br />opportunity costs of existing water allocation institutions may be even higher <br /> <br />i <br /> <br />~ <br /> <br />than has generally been supposed, and that the potential gains which could be <br /> <br />produced by institutional innovation, should they be appropriately distributed, <br /> <br />may be great enough to create the incentives to accomplish such changes. <br /> <br />This <br /> <br />is an interesting hypothesis for further research, and may be the most <br /> <br />~ <br /> <br />significant finding of this study. <br /> <br />Table V-4. Projected Average Annual Changes in Colorado River Water Use <br />Produced by Abandoning Existing Interstate Water Allocation <br />Institutions (Thousands of Acre-Feet) <br /> <br />Demand Condition <br />Current Full Development <br /> <br />Upper Basin Shortages 0 140 <br />Lower Basin Shortages -209 -535 <br />Evaporation and Channel Losses +79 -116 <br />Reservoir Storage +43 -76 <br />Outflow to Mexico -331 -202 <br />