Abstract
Purchasing irrigation water rights is a common method for western municipalities and industries to obtain a dependable water supply. The 1982 Sporhase decision removes legal barriers to development of an interstate market in water right sales. Such sales are likely to result in windfall profits for sellers, but may also result in higher transaction costs for non-selling local irrigators. Importing states will benefit from increased water availability, but exporting states will gradually lose irrigated acreage and associated economic activity. Exporting states have limited opportunities to realize any offsetting economic benefit in the water right sale process. Where water is appropriated for export, exporting states lose the opportunity to use the exported water, but may realize indirect economic benefits. Legislation may be required to protect existing water users from the physical effects of export appropriations. Additional research is needed to determine more precisely the economic effects of the Sporhase decision.
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