This paper examines the issues involved in the resolution of interjurisdictional water transfer disputes in Virginia. Current interjurisdictional water transfers take place without the full compensation of all individuals and corporate entities that are damaged by the transfers. Water transfer projects remove land from the property tax base of host jurisdiction without compensation for the permanent loss of property tax revenue involved. Due to these uncompensated losses political resistance to such proposals is automatic and intense and leads to delays in the implementation of even worthwhile projects with low levels of negative environmental and social impacts. The existence of these uncompensated, and in some cases unrecognised, external costs and the delays and costs associated with political opposition to water transfers leads to economically less than optimum proposals being adopted to satisfy the water needs of transferring jurisdictions. After examining the institutional mechanisms available in Virginia to facilitate the resolution of interjurisdictional disputes, and similar mechanisms in other states, a proposal is developed to help resolve such conflicts in a more efficient manner that will lead to more nearly optimum proposals for water supply development being adopted and a lessening of the political conflict currently associated with attempts to implement interjurisdictional water transfer proposals in Virginia. / M.S.