WSP00913

• File Number: 8272.600.60
• Description: Colorado River Basin Salinity Control Program - Basin Member State Info - Utah
• Basin: Colorado Mainstem
• Water Division: 5
• Date: 3/7/1975
• Title: Colorado Regional Assessment Study - Phase One Report for the National Commission on Water Quality - Part 2 of 2 -- Chapter VI - end
• Water Supply Pro - Doc Type: Report/Study

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crop varieties).

The "external effects" problem arises because the irrigator upstream

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does not bear the increased costs imposed on downstream users. In fact,

he has a right firmly rooted in the law to put his water to a "beneficial"

use such as irrigation without regard to external effects. Although it is

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not his intention to injure anyone downstream, the irrigator upstr~am

utilizes the hydrologic system as a free resource for disposing of some

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of the dis solved sa lts jointly produced with his valua ble crops. The full

social cost of producing these crops is the irrigator's private production

costs plus the costs of higher salt concentrations resulting from the

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irrigation imposed on downstream users. No market mechanism exists

that would require the crop's market price to cover the full social cost.

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Thus, the upstream irrigator may be able to profitably produce crops

that would be impossible if the full social costs had to be paid.

It is in

this sense that "market failure" has occurred.

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The "external effects" issue can be described diagrammatically.

(Figure VI-l.) Let MNB represent the marginal net private benefits of

using various quantities of irrigation water to produce crops on a repre-

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sentative acre of land. Assume an optimal level of irrigation technology

and optimal cropping patterns and technical production conditions as seen

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from the viewpoint of the irrigator. (It will be apparent that what is

optimal for the irrigator may not be for society if external effects exist. )

Variable production costs are subtracted from crop revenues yielding

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