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  <TITLE>Water Use Conflicts in the West:  Implications of Reforming the Bureau of Reclamation's Water Supply Policies</TITLE>
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<CENTER><B><FONT SIZE="+3">WATER USE CONFLICTS IN THE WEST: IMPLICATIONS
OF REFORMING THE BUREAU OF RECLAMATION'S WATER SUPPLY POLICIES</FONT></B></CENTER>
 
<BR> 

<CENTER><B><FONT SIZE="+1">August 1997</FONT></B></CENTER>
 
<BR> 

<HR ALIGN=CENTER SIZE=2 WIDTH="53%">
<CENTER><B><FONT SIZE="+3">Preface</FONT></B></CENTER>

<P><FONT SIZE="+3">C</FONT>onflict among water users is part of the history
of the American West. The conflicts have changed over the years but have
not gone away. Environmentalists, who want water to be left in the rivers
to preserve threatened species, are now competing with urban and agricultural
users for the West's limited water resources. Native American water rights,
long ignored, are also receiving more attention.

<P>The federal government is a key player in western water. Through its
Bureau of Reclamation, the government developed water supplies that literally
made the desert bloom. Developing new sources of water--deciding where
the next big water project should be built--has long been the focus of
the Bureau of Reclamation. But good options for the large-scale projects
are extremely limited, and the federal government now focuses more on the
fair and efficient allocation and use of existing supplies. Policy changes
that could lead to better use of water are being put in place in parts
of California served by the Central Valley Project, the largest water supply
project in the United States. Policy changes introduced in California could
serve as models for changes throughout the West.

<P>In response to a request from the Ranking Minority Member of the House
Committee on Resources, this study analyzes the policy tools slated for
use in California, estimates the costs of those reforms to agriculture
in the state, and discusses the implications of using those policy tools
in the rest of the West.

<P>Marca Weinberg, formerly of the Congressional Budget Office's (CBO's)
Natural Resources and Commerce Division, wrote the study under the supervision
of Jan Paul Acton and Roger Hitchner. Gary Brown, Coleman Bazelon, and
Teri Gullo of CBO; Doug Elmendorf and Aaron Zeisler, formerly of CBO; and
Gregory Amacher, Richard Wahl, Daniel Hellerstein, Benjamin Simon, Dennis
Wichelns, Noel Gollehon, and Amy Matthews-Amos provided valuable comments
and assistance. Michael R. Moore helped develop the agricultural model
and also provided general comments.

<P>Sherry Snyder edited the manuscript, and Chris Spoor proofread it. Angela
McCollough typed the many drafts. Kathryn Quattrone and Jill Sands prepared
the study for publication.
<BR> 

<P>June E. O'Neill
<BR>Director
<BR>August 1997
<BR> 
<BR> 

<HR ALIGN=CENTER SIZE=2 WIDTH="53%">
<A NAME="anchor"></A><CENTER><B><FONT SIZE="+3">Contents</FONT></B></CENTER>
 

<P><A HREF="showdoc.cfm?index=46&sequence=1">SUMMARY</A>

<P><A HREF="showdoc.cfm?index=46&sequence=2">ONE - INTRODUCTION</A>

<UL>
<LI>Background</LI>
<LI>The Changing Federal Role</LI>
<LI>Assessing Reform Efforts with a Case Study</LI>
</UL>

<P><A HREF="showdoc.cfm?index=46&sequence=3">TWO - WATER USE IN THE WESTERN
UNITED STATES</A>

<UL>
<LI>Types of Water Use</LI>
<LI>Conflicts Over Water Use in the West</LI>
<LI>The Role of the Bureau of Reclamation in Developing Water Supplies</LI>
</UL>

<P><A HREF="showdoc.cfm?index=46&sequence=4">THREE - ISSUES IN REFORMING FEDERAL
WATER POLICY</A>

<UL>
<LI>Tools for Reforming Federal Water Policy</LI>
<LI>Implications of Policy Combinations: Interactions and Redundancies</LI>
<LI>Matching Reform Objectives with Policy Tools</LI>
</UL>

<P><A HREF="showdoc.cfm?index=46&sequence=5">FOUR - WATER DEVELOPMENT, USE,
CONFLICTS, AND REFORM IN CALIFORNIA'S CENTRAL VALLEY</A>

<UL>
<LI>The Central Valley Project and Its Stakeholders</LI>
<LI>The Central Valley Project Improvement Act</LI>
<LI>The Regulatory Environment for Implementing the CVPIA</LI>
</UL>

<P><A HREF="showdoc.cfm?index=46&sequence=6">FIVE - QUANTITATIVE ANALYSIS
OF THE CENTRAL VALLEY PROJECT IMPROVEMENT ACT</A>

<UL>
<LI>Empirical Framework</LI>
<LI>Results of the Empirical Analysis</LI>
<LI>Environmental Benefits and Issues in Estimating Their Values</LI>
</UL>

<P><A HREF="showdoc.cfm?index=46&sequence=7">SIX - LESSONS FOR THE WEST</A>

<UL>
<LI>Regional Differences in Variables That Influence Farmers' Response to Reform</LI>
<LI>The Role of Key Variables as Predictors of Farmers' Response to Water Supply
Policies</LI>
<LI>A Role for Flexibility</LI>
</UL>

<P>APPENDIXES

<P><A HREF="showdoc.cfm?index=46&sequence=8">A - The Central Valley Project
Improvement Act</A>
<BR><A HREF="showdoc.cfm?index=46&sequence=9">B - The Economics of Tools
for Reforming Federal Water Policy</A>
<BR> 

<TABLE ALIGN=LEFT BORDER=0 CELLSPACING=0 CELLPADDING=3>
<TR VALIGN=TOP>
<TD COLSPAN="2">TABLES</TD>
</TR>

<TR VALIGN=TOP>
<TD> </TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>1. </TD>
<TD>Diversion of Surface Water for Various Uses in Western and Eastern
United States, 1990</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>2. </TD>
<TD>Potential Effectiveness of Selected Policy Tools for Alternative Conflicts
and Reform Objectives</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>3. </TD>
<TD>Selected Crops Produced with Water from the Central Valley Project
as a Percentage of Total U.S. Production, 1987</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>4. </TD>
<TD>Effect of the Central Valley Project Improvement Act on Agricultural
Water Use and Revenues</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>5. </TD>
<TD>Effect of the Central Valley Project Improvement Act on Urban Water
Use</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>6. </TD>
<TD>Ranking of Crops in the Bureau of Reclamation's Five Regions, by Acreage
and Revenues, 1990</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>7. </TD>
<TD>Regions' Dependence on Water Deliveries by the Bureau of Reclamation,
1989-1990</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>A-1. </TD>
<TD>Applicable Charges to Finance the Restoration Fund, by Type of Water
Use</TD>
</TR>

<TR VALIGN=TOP>
<TD> </TD>
</TR>

<TR VALIGN=TOP>
<TD COLSPAN="2">FIGURES</TD>
</TR>

<TR VALIGN=TOP>
<TD> </TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>1. </TD>
<TD>Water Projects and Agricultural Regions of California's Central Valley</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>2. </TD>
<TD>Cost of Environmental Water Allocations Under Average Water Supply
Conditions, as Measured by Reductions in Agricultural Revenues</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>3. </TD>
<TD>Total Amount of Water Delivered by the Central Valley Project, 1949-1995</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>4. </TD>
<TD>The Bureau of Reclamation's Five Regions in the Western United States</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>5. </TD>
<TD>Average Gross Revenues from Crops Irrigated with Water from the Bureau
of Reclamation's Projects in 1990, by State</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>6. </TD>
<TD>Agricultural Land Values for Irrigated and Dryland Uses in 1988, by
State</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>7. </TD>
<TD>Average Amount of Water Delivered to Districts in 1989 and 1990, by
Region</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>B-1. </TD>
<TD>The Effects of a Water Market on a Farmer's Decisions About Water Use</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>B-2. </TD>
<TD>The Effects of Tiered Water Prices and a Water Market on a Farmer's
Decisions About Water Use</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>B-3. </TD>
<TD>Water Prices and Quantities with a Water Market and an Allocation for
Fish and Wildlife</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>B-4. </TD>
<TD>Water Prices and Quantities with CVPIA Provisions</TD>
</TR>

<TR VALIGN=TOP>
<TD> </TD>
</TR>

<TR VALIGN=TOP>
<TD COLSPAN="2">BOXES</TD>
</TR>

<TR VALIGN=TOP>
<TD> </TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>1. </TD>
<TD>Water Districts</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>2. </TD>
<TD>Terms Relating to Water Prices</TD>
</TR>

<TR VALIGN=TOP>
<TD NOWRAP>3. </TD>
<TD>Using Changes in Gross Revenues as a Measure of the Impact of Water
Policy Reform on Agriculture</TD>
</TR>
</TABLE>
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