Abstract

Constraints on the expansion of western water supply projects have turned the attention of urban water developers to market purchases of agricultural water supplies as a source of new water. The conventional wisdom of natural resource economics suggests that such shifts should have minimal impact on the agricultural area-of-origin, promote efficiency in water use, and provide an inexpensive and environmentally preferable alternative to building more dams and reservoirs. However the concentration of urban demand combines with water-extensive irrigation practices in western agriculture and a characteristically bipolar economic and social structure in western irrigation communities to create a potential for severe stress on rural economies and communities. The adaptation of supply-oriented western water institutions to market-oriented functions has not provided a decision-making context that accounts for costs imposed on rural communities; moreover, historically water-rich rural communities have not evolved a water policy infrastructure capable of responding to stress. Before the promise of low-cost water supply through the market mechanism can be realized, the structural contradictions inherited from the traditional water-management institutions must be faced and dealt with by both rural source regions and urban water importers