56 MULTIPLE PURPOSE RIVER DEVELOPMENT 



be reluctant to commit himself to payment for fear others might 

 fail to contribute, making the cost to him greater. On the other 

 hand, the system of water control structures would not be provided 

 by a profit-maximizing enterprise in the absence of previously 

 concluded contracts for the service. The service accordingly would 

 be nonmarketable. Pricing mechanics are not equal to the collec- 

 tion of payment so long as protection cannot be denied one who 

 is delinquent without simultaneously denying protection to those 

 who willingly meet their obligations. In the absence of extra- 

 market incentives, no private enterprise has an incentive to 

 provide the requisite services. Conventional market channels, 

 therefore, are inadequate to assure economically efficient resource 

 allocation for the provision of the water derivative. 



IRRIGATION 



Flood protection is perhaps the clearest illustration of the 

 impossibility of gratifying every variety of human want in the 

 field of river development through the intermediary of the market. 

 But there are a number of instances in which neither satisfactions 

 nor employment of productive services having their origin in water 

 derivatives can be made contingent on the payment of a price. 

 Physical interdependence in resource use, or what has been referred 

 to as "technological external economies," ® represents the primary 

 source of this difficulty. An example concerns the use of Millerton 

 Lake storage (Central Valley Project, California) for gravity-flow 

 irrigation in Tulare and Kern counties. Aquifers, underlying much 

 of the irrigated land, are recharged in the process of gravity-flow 

 irrigation using surface sources. A significant part of the irrigation 

 farming in Kern County, however, consists in use of water pumped 

 from subsurface aquifers. Recharging these aquifers stabilizes the 

 ground water cables and, thereby, reduces costs of pumping ground 

 water. The recharging occurs as an interrelated result of gravity- 

 flow irrigation. Accordingly, compensation cannot be exacted (by 

 threat of discontinuing the service) without interfering with the 

 success of the irrigation activities requiring the surface sources. The 

 irrigators using ground water adjacent to the irrigation district 



* Tibor Scitovsky, "Two Concepts of External Economics," Journal of Political 

 Economy, April 1954. 



