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01/24/95 10:12 '6'801 538 7279 liT ST WATER RES ~002 006'(' at least delay) figuring out how to attach financial or administrative strings to water passing lee Ferry. Although the large quantities of unused water in the Upper Basin are what first catches the eye of water marketing advocates, it should be remembered that significant amounts of lower Basin water are being used to grow relatively low-valued forage crops. In a totally free market, it is not difficult to imagine large municipal water purveyors finding many Lower Basin farmers willing to free up part of their supply through more efficient operations or other measures in order to strike a mutually., advantageous deal. I personally believe constraints on marketing water in the lower Basin could be relaxed significantly without causing undue harm to the 'public interest'. Surely we're clever enough to develop appropriate legal ground rules to provide the.desired degree of protection for whatever values we cherish. The foregoing should not imply that Utah is will not consider Upper Basin to Lower Basin water marketing, Utah is presently using less than 900,000 acre-feet of our total allocation of about 1,400,000, Unless something totally unforeseen happens (such as a need to develop a one million barrel/year 0;1 shale industry), we have difficulty envisioning increasing our consumptive use of Colorado River water by more than 200,000 acre-feet in the next fifty years. The economics of the type of agriculture that predominates in Utah (livestock-related) just won't support much expansion. People don't consume much water in their homes, and neither do the non-agricultural economic activities likely to occur here. So that leaves us with at least 300,000 acre-feet which would be nice to get some kind of economic return on, There's a magic number of $200/acre-foot floating around, which is said to be a very conservative estimate of what Lower Basin buyers would be willing to pay for our water. I don't know where this number originated, but it sounds reasonable -- developing new water supplies anywhere in the Colorado River Basin (which, incidentally, the Colorado River Compact defines as including all territory in which Colorado River water is used) certainly costs more than that. So S200/acre-foot times 300,000 acre-feet/year comes out to the tidy sum of $60 million/year -- this is a potential revenue source no politically astute governor could afford to ignore. If Upper Basin to Lower Basin water marketing is not be be rejected out of hand, the first thing to determine is whether a market really exists in the Lower Basin. If it does, the next items of business should be to define what kind of arrangements would acceptable to the parties (what gyiQ for what SY2), and then evaluate what obstacles would have to be overcome on the road to bringing the agreements to fruition. Determining with any degree of surety that a Lower Basin market for water really does exist will probably be a difficult and frustrating task. (Ford Motor Company's multi-million dollar effort to define what kind of automobile would be most marketable -- and profitable -- resulted in the Edsel.) The phys.ical reality is clear: water not used in the Upper Basin flows inexorably to the Lower Basin to be used there; the only thing really marketable is an Upper Basin (or Upper Basin state) promise to relinquish rights to a certain quantity of water for a specified length of time. The economic value of that promise depends first on when the prospective buyer really needs the wet water, and perhaps more importantly, how enforceable that promise is. We in Utah have initiated an attempt to find the answer to the first question, and have tentatively concluded that the Lower Basin will not need wet water beyond Compact entitlements for another 10-15 years. )-