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<br />Administrative, Institutional, and Structural Characteristics or an Active Water Market
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<br />in a poke" as may be the case with other less well
<br />defined water rights. A review of historical deliveries
<br />shows that the supply of C-BT water has been
<br />reliable. The infrastructure and distribution systems
<br />in the region are already well developed and provide
<br />the means to physically move water within the dis-
<br />trict service area. Because of this, water that is pur-
<br />chased for use at another location can usually be
<br />transferred with little or no additional cost in con-
<br />veyance systems.
<br />The administrative process for transferring C,BT
<br />water is simple and straight-forward. The typical
<br />amount of time to process and approve a transfer
<br />application is four to six weeks, In contrast, the trans-
<br />fer process takes an average of 20 months for other
<br />Colorado water rights, The shorter time and lower
<br />cost to process C-BT water right transfers can largely
<br />be attributed to the administrative versus adjudica-
<br />tion process, and to institutional conditions that sig-
<br />nificantly simplify the requirements compared to
<br />most other water right transfers. Because C-BT water
<br />is "new" water imported from another basin, the full
<br />quantity of the allotment is transferred, This obviates
<br />the need to determine the historical amount of con-
<br />sumptive use - the portion of other traditional water
<br />rights that can be transferred, This means that a
<br />transfer does not involve an evaluation of the impact
<br />to others from changes in consumptive use or return
<br />Ilows, This is a major departure from transfers of
<br />other water rights where the protection of water
<br />rights that are dependent on return flows is provided
<br />by most prior appropriation laws and institutions and
<br />is often a central issue and transaction cost of a trans-
<br />fer,
<br />Between 1970 and 1993, there were 2,698 transac-
<br />lions resulting in the transfer of over one third of the
<br />lotal project's water right allotments to new owners
<br />for another use and/or for use at a different location,
<br />The market is composed of a large number of individ-
<br />ual sellers and buyers and is not dominated by any
<br />one individual or organization,Agricultural users
<br />have been the source of most of the allotments trans-
<br />ferred, which is consistent with economic theory on
<br />lhe incentive for water transfers, The value of water
<br />in agriculture is typically lower than municipal or
<br />Jndustrial water use values, and therefore, we would
<br />expect water to move from the lower to higher valued
<br />uses. Purchasers of C-BT allotments include munici-
<br />palities, industries, other land owners (e,g, develop-
<br />ers) and, somewhat surprisingly, agricultural users,
<br />Although discouraged by the NCWCD, agricultural
<br />purchasers may be participating in the market as
<br />~peculative investors with the water continuing to be
<br />used in agriculture until the water and/or land is
<br />nceded for urban development. Some C-BT water has
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<br />been purchased by utilities and industry to meet pro-
<br />jected demand but, until that demand develops the
<br />water is rented back for agricultural use, Because of
<br />these interim uses, the final or new use of transfers
<br />are not immediately or fully rellected in the deliveries
<br />ofC-BT water.
<br />In conclusion, successful development of the C-BT
<br />market can be attributed in large part to the estab-
<br />lishment of clearly defined water rights, the high reli-
<br />ability of supply, its use as a supplemental "new"
<br />supply for the region, a well developed distribution
<br />system, the large number and diversity of market
<br />participants, and especially to institutional rules and
<br />administrative procedures that minimize transfer
<br />restrictions and transaction costs, Although some
<br />have suggested that the C-BT market be used as an
<br />example in developing other markets, as shown in
<br />this paper, the conditions are unique and are unlikely
<br />to be duplicated in other situations without signifi-
<br />cant modifications in prior appropriation water insti-
<br />tutions and administration, Owners and buyers of
<br />other water rights ofien face institutional restrictions
<br />that can significantly increase transaction costs or
<br />discourage participation in water right transfers, Dif-
<br />ferences include the limitation with most other rights
<br />that only the consumptively used portion of the water
<br />right can be transferred to protect downstream water
<br />users from injury, purchaser uncertainty about the
<br />quantity of water that will actually be transferred
<br />and delivered, and beneficial/expanded use require-
<br />ments that discourage marketJuse efficiency by pro-
<br />hibiting transfers of surplus or conserved water to
<br />other uses,
<br />
<br />ACKNOWLEDGMENTS
<br />
<br />The aut.hor gratefully acknowledges Patrick Person, graduate
<br />student. University of Wyoming, for his invaluable research assis-
<br />tance; Marilyn Conley and Brian Werner, Northern Colorado Water
<br />Conservancy District for willingly and patiently answcring ques.
<br />tions; and Jim Booker, Alfred University, and Robert Young, Col-
<br />orado State University, for their helpful comments and suggestions.
<br />This rcscarth was supported in part through a grant from the U.S.
<br />Geological Survey, through the Wyoming Wrl,ter Resources Center.
<br />
<br />LITERATURE CITED
<br />
<br />Anderson, T. L., 1986. Water Marketing: An Idea Whose Time Has
<br />Come. Water Values and Markets: Emerging Management
<br />Tools. Special Report, Freshwater Foundation, Navarnc, Min-
<br />nesota.
<br />Anderson, Terry L. and James A. Turncr, 1993. Marketing the
<br />West's Life Blood. Water Resourt'cs Updatc 92: 22-26.
<br />Chccchio, Elizabeth, 198B. Wat.cr Farming: The Promise and Prob-
<br />lems of Water Transfers in Arizona. Water ResouT('cs Research
<br />Center, University of Ari7.0nn, Tucson, Arizona.
<br />
<br />981
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<br />WATER RESOURCES BULLETIN
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