Interior Secretary Bruce Babbitt, in a speech yesterday in Colorado to Western water officials, proposed setting minimum water levels for rivers and signaled his intention to redirect water toward environmental uses rather than agricultural irrigation or residential growth. Babbitt said that in coming years, more dams will be breached or modified to help restore rivers, wetlands, and fisheries. He asserted that Western water woes be alleviated through conservation measures, water marketing, and recharging of aquifers. He also predicted a truce in a skirmish that has prevented large-scale water sales between California’s Imperial Valley and San Diego; officials are scrambling to work out an agreement between the feuding parties this month.