Selling Reclamation Water Rights: A Case Study in Federal Subsidy Policy

THE federal reclamation program was designed to provide working farmers with irrigation water at prices they could afford. The farmers got their water at low prices, but in the process they got something else even more important-the right to continue to receive that share of water year after year.2 In the arid reclamation states, assurance of a continuing, dependable supply of irrigation water is an extremely valuable asset. A piece of dry land may be almost worthless, but that same tract with a reliable water supply will generally be worth a substantial amount of money. Since the worth of the water right is thus typically reflected in land values, one who sells a farm in a reclamation project may also receive payment for this valuable right.3 Moreover, since the asset which is being thus marketed was created by the investment of public funds in the construction of the project,4 the effect is that the seller converts the