The Economic Impacts of Agriculture-to-Urban Water Transfers on the Area of Origin: A Case Study of the Arkansas River Valley in Colorado

The development of new water supplies has grown increasingly costly, both in financial and environmental terms. Public values related to instream flows, preservation of natural areas, and wildlife have increased sharply relative to the values of traditional water uses. In such a setting, reallocation of existing supplies becomes increasingly attractive, and water transfers have been hailed as the solution to western U.S. water shortages (e.g., Anderson, Saliba and Bush, Howe et al). A major U.S. Geological Survey-funded study (MacDonnell et al) has found frequent water transfers in several western states (Colorado, New Mexico, and Utah) but infrequent transfers in other states (e.g., California and Wyoming), the frequency being strongly affected by the institutional structure for effecting transfers and the pressure on water supplies. A glance at water use data (U.S. Geological Survey) shows that 80% of all water diversions and nearly 90% of all water consumption in the western United States occur in irrigated agriculture, strongly suggesting that small percentage reallocations from agricultural to nonagricultural uses could satisfy growing nonagricultural water demands for decades.