Mitigating environmental externalities through voluntary and involuntary water reallocation: Nevada's Truckee-Carson River Basin

This article explores the challenges that arise as environmental externalities become a consideration in Western water reallocation. The analysis evaluates voluntary water transfers and exchanges as tools for conflict resolution, for accommodating environmental values, and for expanding the benefits generated by regional water resources. Voluntary transfers are compared to involuntary reallocations prompted by judicial rulings. Both types of reallocations will continue to be important for Western water, but the magnitude and distribution of costs and benefits differs significantly depending on the approach taken to reallocating water. The central issues are illustrated by examining the Truckee-Carson Basin in Nevada. The next section of this article provides an overview of the economic values that motivate water reallocation for environmental purposes. The following section briefly describes water interests in the Truckee-Carson basin, the evolution of water institutions and infrastructure, and the pressures for change in water management and allocation. The final section looks at institutional innovations that may accommodate the changing needs of the area. The emphasis throughout is on incorporating environmental considerations into the Western water allocation framework, and on mitigating externalities by reallocating water from one use to another. -from Authors