WATER TRANSFERS AND THEIR IMPACTS: LESSONS FROM THREE COLORADO WATER MARKETS

• Published in: Journal of the American Water Resources Association 2003-10, Vol.39 (5), p.1055-1065
• Main Authors: Howe, Charles W., Goemans, Christopher
• Format: Article
• Language: English
• Subjects: compensation; Earth sciences; Earth, ocean, space; economic efficiency; economic impacts; Exact sciences and technology; Hydrology. Hydrogeology; transaction costs; USA, Colorado; water markets; Water resources
• ISSN: 1093-474X; 1752-1688
• DOI: 10.1111/j.1752-1688.2003.tb03692.x

Three water markets in Colorado were examined to explore how different institutional arrangements for water markets, regional economic conditions, and property-rights definitions in water affect market functions in terms of the types, size, and frequency of transfers. Transfers of state water rights passing through the Colorado water court system were compared with transfers of shares in the Northern Colorado Water Conservancy District that were able to bypass review by the courts. Transfers of state water rights in the South Platte River were then compared with such transfers in the Arkansas River to estimate the direct and indirect economic effects of agricultural to urban water rights transfers. The homogeneous nature of the Northern Colorado Water Conservancy District shares was found to make them easier to trade than state water rights passing through the courts, as the avoidance of water court review contributed to a continuous market in small transactions. Out-of-basin transfers involved much larger transaction costs, resulting in the distribution of transfer sites dominated by a few large transfers. For a less prosperous river basin, the losses of income, tax receipts, and employment per acre foot were significantly higher than those for a prosperous basin.