ABSTRACT
This chapter explores the economic implications of using ad valorem taxes assessed on real property in lieu of direct user charges (prices) to pay for water development and allocation. It addresses specific objections by the water districts and their supporters to replacing the property tax with direct user charges. The chapter discusses the water-conservation implications of using direct charges in lieu of property taxes to pay for water. The geographical focus of the analysis is Utah, the state that ranks second to Nevada as the highest per capita consumer of water and which also has some of the lowest water prices in the western United States. The property tax is a highly dependable source of funds for the districts as it supplements the revenues from direct water sales. In a market economy prices signal information to consumers and producers.
