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<br />w <br />CD <br />to <br />00 <br /> <br />. <br /> <br /> <br />The extent of these damages is relatedto two factors: (1) Irrigation <br /> <br />water consumptively used upstream cannot be available to downstream <br /> <br />. <br /> <br />users and the concentrating effects on the river downstream will be <br /> <br />directly related to upstream consumptive use, and (2) the saline return <br /> <br />flows increase the salt loading which imposes additional higher production <br /> <br />. <br /> <br />costs on downstream users. Normally, for both reasons, the greater <br /> <br />the upstream diversions the greater the. damages imposed downstream. <br /> <br />. <br /> <br />MED also may not be linear as presented, but a necessary condition to <br /> <br />the argument is that it have positive slope. <br /> <br />MED does not enter the decision framework of the upstream irrigator. <br /> <br />. <br /> <br />If we assume he attempts to maximize his own ,net benefits, he will extend <br /> <br />his water use per acre to OA' where MNB is zero. His total per acre net <br /> <br />. <br /> <br />benefits is the area under the MNB curve and this is a maximum at OA' <br /> <br />units of water utilized. This may be referred to as his private water <br /> <br />"rent". The marginal external damages at that level of use are A'B. <br /> <br />. <br /> <br />Clearly, this level of water use is not optimal when considered from the <br /> <br />vantage point of the whole river system. At the margin of use, marginal <br /> <br />net private benefits are zero wherea s the marginal external damages are <br /> <br />. <br /> <br />not. By restricting water use to one unit below OA', the foregone private <br /> <br />benefit will be zero at the margin whereas the reduction of external damages <br /> <br />. <br /> <br />will be A 'B at the margin. <br /> <br />The socially-optimum position is OA where MED=MNB. At rates <br />e <br /> <br />of use below OA , the marginal net benefits accruing to the irrigator exceed . <br />, e <br /> <br />6 <br /> <br />. <br />