10.2190/X9WE-03K8-NJE9-Y0J9 X9WE03K8NJE9Y0J9 5 Water Allocation: The Roles of Value and Prices 71 76 20020509 20020509 20020509 20020509 X9WE03K8NJE9Y0J9.pdf http://baywood.metapress.com/link.asp?target=contribution&id=X9WE03K8NJE9Y0J9 1 Curt L. Anderson Jerrold M. Peterson University of Minnesota, Duluth Fresh water may no longer be considered as a free resource by society. The demands for water with reasonable quality characteristics have surpassed available supplies in many regions of the United States. This will likely lead to major changes in state and national water policy as the need to more effectively allocate the available water supplies becomes necessary. This article discusses some of the basic economic principles which may serve as guidelines for this allocation. In particular, the distinction between the value of water and the appropriate price of water are discussed as well as their roles in efficient water allocation. C. V. Moore and T. R. Hedges, Economics of On-Farm Irrigation Water Availability and Costs, Gianni Foundation Research Report No. 263, University of California, Berkeley, 1963. J. A. Callaway, A. K. Schwartz, Jr., and R. G. Thompson, Industrial Economic Model of Water Use and Waste Treatment for Ammonia, <i>Water Resources Research, 10</i>:4, August 1974. F. P. Linaweaver, Jr., J. C. Geyer, and J. B. Wolff, Summary Report on the Residential Water Use Research Project, <i>Journal of the American Water Works Association, 59</i>:3, March 1967. S. H. Hanke, Demand for Water Under Dynamic Conditions, <i>Water Resources Research, 6</i>:5, October 1970. A. M. Freeman III, <i>The Benefits of Environmental Improvement</i>, John Hopkins University Press, Baltimore, 1979.