Many parts of the West are experiencing substantial growth pressures that have
increased the demand for water. These new demands come at a time when most of the
water in the West has been fully appropriated by traditional uses such as agriculture,
mining, and industry. Some attempts are being made to accommodate this new demand by
reallocating water rights through market forces. Most western water markets are in their infancy at present, and have had limited trading activity; this has resulted in large variations in prices. Oregon's water market is no exception to this situation; little market information is available. The market is most appropriately characterized as a gray market. This thesis gives color to Oregon's gray water market. The first step was to assess current market activity. A review of the Oregon Water Resources Department water right transfer records identified 140 potential water right sales
during the five year period from 1989 to 1994. A mail survey was used to collect market information on these potential sales. Reported sale prices exhibited a large degree of variation, ranging from 5peracre−foottoasmuchas1388 per acre-foot. The data
suggests that there are two types of markets for water rights in Oregon. The first is a
commercial market that includes participants such as commercial farmers, industries, and
municipalities. The second is an amenity market whose participants have primary
occupations unrelated to the use of the water right and who generally use water for smallscale, low-valued agricultural production. The second step in giving color to Oregon's gray water market was to identify
potential price determinants for water rights. An econometric model based on hedonic price theory was constructed to analyze the relationship between potential price determinants and market prices. Results indicated that the duty of the water right, its relative seniority, the parcel size of the sale, and the geographic location of the sale are determinants of water right prices
