[wahern]

Discounts is a very misleading word in this context. The core issues relate to the fundamental legal doctrines surrounding water rights, particularly the Prior Appropriation Doctrine. See, e.g., https://en.wikipedia.org/wiki/Prior-appropriation_water_righ... and https://opensiuc.lib.siu.edu/cgi/viewcontent.cgi?referer=&ht...

People with prior appropriation rights to water don't need to pay for the water at all, except perhaps incidental fees and taxes. The right to use the water, contingent on availability, is a property right.

The prior appropriation doctrine threads through all water issues in the Western U.S. States also have appropriation rights as between each other. See, e.g., https://en.wikipedia.org/wiki/Colorado_River_Compact And then the Federal government introduces another dimension of complexity as they can pick and choose flow rates and distribution.

Theoretically, and AFAIU, there's nothing fundamentally anti-market with the prior appropriation doctrine. See https://en.wikipedia.org/wiki/Coase_theorem and also the above paper by Micha Gisser. And there are markets in prior appropriation rights--farmers buy and sell their prior appropriation rights. But apparently these markets aren't very extensive, presumably hindered by a century of complicating legislation and political bickering layered atop the underlying legal doctrines.