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In Part I the institutional factors affecting water distribution in the Upper Colorado River Basin in general and specifically the Uintah Basin are presented. The historical development of the appropriation doctrine of water allocation is outlined and Utah water policy is examined. These institutional factors are analyzed in light of the prototype oil shale development in the Uintah Basin and potential impact on the area's agricultural sector. Oil shale water estimates are compared with Uintah Basin water availability and examined with regard to population projections and municipal water use. Lastly, Utah water policy and the appropriation doctrine are viewed as restraints to efficient water transfers.

In Part II irrigation water is treated as a random variable. Its actual quantity is not known ahead of time. If transfers of water to oil shale production affect the variability of water used in agriculture then there will be impacts in agriculture even if the farmers receive the same average quantity of water as originally. These impacts are analyzed in the context of the expected utility maximization hypothesis, i.e., the farmers are hypothesized to maximize expected utility. The measure of an increase in variability is the "mean preserving spread." The analyses seek to determine the impact upon expected (average) real income (utility), expected profits (net farm income), purchased inputs, the price of water, and the price of land. The analyses are conducted for both the case where the farmers are risk neutral and the case where they are risk averse.


This work made publicly available electronically on May 21, 2012.