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<br />OO'! Dl)tl <br />..t. Ud <br /> <br />on institutional, legal, and policy questions concerning state and federal government. Especially <br /> <br />for proponents of water marketing, we have examined state and federal law and policy for <br /> <br />potential impediments and obstacles to voluntary water transactions. In California, for example, <br /> <br />the legislature has even been accommodating in passing the necessary legislation to remove <br /> <br />identified obstacles. Yet water trading in the west is still dominated by the same transactions .. <br /> <br />the monthly sale of units in the Colorado-Big Thompson project, shares in ditch and mutual <br /> <br /> <br />companies.2 It is time for us to examine why "water has not flowed" over lowered legal <br /> <br />barriers. <br /> <br />Below, I argue that the outcome of "little new trading" can be explained by a simple fact: <br /> <br />irrigation organizations that lack traditions of trading have yet to develop mechanisms for <br /> <br />trading. Unless these organizations adapt, they will inevitably face. politically/legally mandated <br /> <br />reallocation. In the end, they must either change their practices on their own, or they will have <br /> <br />their practices changed for them. <br /> <br />The core issue is the institutional capacity for irrigation organizations to change. Below, I <br /> <br />concentrate on five areas which shape the ability of irrigation organizations to change: (1) <br /> <br />institutional capacity of organization leadership; (2) the trustee relationship between district <br /> <br />boards and water users; (3) district governance and local concerns; (4) the role of potential <br /> <br />2 Water banks have emerged in Idaho and Kern County, CA, but they commonly involve <br />one-year, irrigator-to-irrigator transactions at administratively-set prices. Over the past three <br />years, one-year agreements for large blocks of water have been negotiated among northern and <br />central California water agencies and the California Department of Water Resources, but these <br />transactions are for drought management and not long-term transfers. For discussion of the <br />historic agreement between the Imperial Irrigation District and Metropolitan Water District of <br />Southern California, see section on "Institutional Capacity of Irrigation Organizations," infra. <br /> <br />3 <br />