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This paper analyzes the allocation of water within the Lower Colorado River Basin and measures the economic impact of water rights. This is accomplished by estimating derived demand for water on two rice irrigation districts that account for most water diversions. The demand for water and the value of water in its assigned use are determined through farm budget analysis and linear programming methods common in agricultural economics. The benefits of agricultural water use are then asessed against the cost of obtaining alternative supplies of water within the river basin. Results show an economic cost associated with the allocation of water.
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