Markets for Federal Water: Subsidies, Property Rights, and the Bureau of Reclamation

By Richard W. Wahl | Go to book overview

10
The Prospects for Leasing Compact Rights on the Colorado River

A 1984 proposal by the Galloway Group Limited, a Colorado corporation, to lease water rights in that state to San Diego County in California poses new questions about how Colorado River Compact rights can be utilized. If compact rights can be leased between states, then market trading could increase flexibility in allocating water along the length of the Colorado River and provide revenues to basin states that are not fully utilizing their compact shares. This chapter reviews state allocations under the Colorado River Compact, the details of the Galloway proposal, the principal legal questions that have been raised, and some of the potential advantages of interstate leasing.


Compact Allocations

There have been battles over allocation of Colorado River water since the early 1900s. The various compacts and pieces of legislation pertaining to the river have established the upper limits on water use for each state in the Colorado River Basin. The Colorado River Compact of 1922 states that 7.5 million acre-feet of water must be delivered each year by the Upper Basin to Lee Ferry, the dividing point between the Upper Basin and the Lower Basin. The Upper Basin itself is allocated 7.5 million acre-feet, but, because annual flows of the Colorado River average only around 14 million acre-feet, the obligation to deliver water to Lee Ferry may in effect reduce Upper Basin entitlements to less than 7.5 million acre-feet. This has not been a problem to date because Upper Basin depletions have not exceeded 4 million

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