WSP05845

• File Number: 8507
• Description: Rio Grande Project
• State: CO
• Basin: Rio Grande
• Date: 7/1/1997
• Title: Water Management Study: Upper Rio Grande Basin part 2
• Water Supply Pro - Doc Type: Report/Study

Water Management Study: Upper Rio Grande Basin

opportunities and the benefits of ecosystem integrity. With such a web of
unintended consequences, federal policies and actions have pervasive and, in
many cases, unavoidable impacts on prices.

The most apparent and immediate market distortions affect diversionary
uses of water and related resources. In the absence offederal expenditures
for water-development and flood control, local water users and property
owners, not federal taxpayers, would bear the full financial burden and,
hence, pay a higher price whenever they divert water from the river, or
develop in the floodplain.

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Economic theory, as well as empirical evidence, strongly suggest that, if
water users had to pay the full costs ofthe federal facilities and programs,
they would curtail their water use in response to the higher prices. Most of
the curtailment would occur in irrigation, which accounts for more than 80
percent of water use in the Basin. The estimates discussed above indicate
that farm businesses pay a small portion, perhaps less than 20 percent, of
the cost of water derived from BuRec projects and they consequently use the
water on lands with relatively low productivity and crops with relatively low
value. If these farm businesses had to pay the full cost, much ofthis land
would be withdrawn from production and the land remaining in production
would be dedicated to higher-value crops.

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Similar reasoning applies to urban residents and businesses: ifthey had to
pay fully for the benefits they derive from federal facilities and programs,
they too would ration their water use more tightly. Because of federal
expenditures, municipal and industrial water users do not see the full cost of
the water they use for drinking, watering lawns, industrial processes, or
countless other uses. For users who rely on groundwater and bear the
associated drilling and pumping costs, the impacts offederal expenditures on
water consumption probably are less pronounced than for users who rely
more heavily on surface water. Federal expenditures on flood protection
encourage urban development in the floodplain that probably would not
occur if the local communities had to bear these costs fully.

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Farmers and urban water consumers are not the only ones affected by the
market distortions offederal policy. Anglers and other recreationists have
incentives to seek a greater supply of recreational opportunities and to avail
themselves of these opportunities more frequently when they do not have to
pay the full cost of producing them. Residents and visitors who prize the
scenery and other amenities of a river/riparian ecosystem or of irrigated

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