WSP08323

• File Number: 8051
• Description: Area of Origin
• Basin: Statewide
• Date: 12/1/1985
• Title: Guidelines for Developing Area-Of-Origin Compensation -- A Research Report Prepared for the Colorado Water Resources Research Institute
• Water Supply Pro - Doc Type: Report/Study

resource owners, and there certainly is no guarantee that the

local price of coal won't rise above what it would have been in

the absence of exports. Why is water viewed differently? Two

reasons stand out: (1) water exports usually come from unapprop-

riated water, acquisition of which does not require payment to

residents of the basin; and (2) water exports generally do not

provide a continuing base for employment and local taxation as do

mineral or forestry activities. No one gets paid because no one

can get title to unappropriated water without putting it to a

beneficial use. Naturally, water remains unappropriated because

there are no currently profitable uses in the basin. Then, once

the infrastructure for water export is built, no significant

employment is provided.

From an administrative and economic point of view, there are

two reasons for paying some form of compensation: (1) equity to

damaged parties and (2) to make sure that those planning out-of-

basin transfers take into account all of the costs caused by the

proposed transfer. Equity is the more obvious motivation, for if

parties are injured by acts intended to benefit others that are

beyond the injured parties' control and in which they had no

voice, it seems reasonable that the injured parties should be

compensated so they will be no worse off than before. Naturally,

it may be difficult to identify all the injured parties and it

may be equally difficult to quantify an equitable level of

compensation. It is important to note that most transfers are

imposed involuntarily on basin-of-origin occupants. Transfers

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