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

bank, or a rafter floats down a river. More common, users pay nothing for
the resource but only for the cost of conveying the water from one place to
another, as when irrigators pay levies to cover the cost of building and
maintaining ditches, landowners pay taxes to cover the costs of flood
protection, or city dwellers pay rates that cover the costs of wells and pipes.

In most instances, the pricing of conveyance costs distorts things even
further. Although most ofthe water used for irrigation by farmers in New
Mexico and Texas is available to them only because of the upstream federal
dams, they pay far less than full market value for those portions of the dams'
costs that are allocated to irrigation, and nothing for those portions allocated
to non-irrigation purposes, such as flood-control. Farmers in Colorado and
New Mexico use large amounts of water that would not be available to them
if the federal government did not help each state meet its Compact
obligations, and yet the farmers pay a fraction of the federal government's
costs. The disparity between the price a farmer pays for water and the cost
of delivering the water is especially important because irrigation accounts for
about 80 percent of the major water uses (typically associated with
withdrawals and diversions) in the Basin (Ellis et al. 1993). The size of the
disparity has not been estimated for the Basin, but some estimates derived
from data for all Bureau of Reclamation (BuRec) projects provide a frame of
reference. A recent summary of studies reported that a 1975 study found the
disparity was 82 cents of every dollar of BuRec costs, and a 1982 study found
that the disparity was about $50 per acre foot (in 1996 dollars) delivered
from a BuRec project (Secretary of the Interior 1994).

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Farmers are not the only ones paying less than the full costs of water-
management facilities. Urban water consumers who derive benefits from
projects, such as the one that diverts water from San Juan Basin into the
Upper Rio Grande, pay far less than the projects' actual costs. Recreationists
using the Basin's reservoirs pay little or nothing to cover the cost of
establishing and maintaining them. Landowners in the flood zone pay little,
if anything, for the costs of the flood-control structures and maintenance
activities. Advocates of resource conservation similarly are not confronted
with the full costs of satisfying their desires.

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In the absence of prices -or some appropriate substitute for prices-that
reflect the true degree of scarcity for the Basin's water and related resources,
these resources are not used efficiently. Instead, those who have access to
the resource have a strong incentive to use more of it than they would under
competitive-market conditions and some potential users who place a higher

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