Water rights III - Property in water: Theory
(Continuing the series on water rights:)
The question of how and why water has been governed by regimes of private, public, and common property has occupied scholars for some time, often in tandem with the normative issue of which type of property regime is best for the resource.
As in many other fields, economic analysis has proved to be a dominant theoretical lens for understanding the development of water rights, generating both direct insights and provoking trenchant critiques. On the level of positive theory, many have built on the framework of Harold Demsetz's (1967) theory of property rights, according to which property regimes progress from common to private property as the increasing value of the resource in question, or pressure on it, renders the advantages of its privatization greater than the administrative costs of establishing and maintaining a private-property regime. According to this theory, we should expect to see water regimes characterized by relatively open access or common property in societies and environments characterized by an abundance of water, and increasing reliance on private rights as pressure on the resource increases. An influential work in this tradition is Anderson and Hill (1975), which posits that the abandonment of a common-property regime (riparian rights) in favor of private rights (the prior appropriation doctrine) in the American West was a result of the region's aridity and consequent pressure on the resource.
Economic analysis has also developed a normative critique of existing systems of water rights. Beginning with the work of Milliman (1956, 1959) and others, many scholars have argued that common property in water leads to waste, inefficiency, and depletion of the resource. The solution, according to this line of argument, is the creation or recognition of completely specified private property rights in water, rights that will allow the functioning of an efficient market that will move water to its most valuable uses and create incentives to avoid waste (Charles J. Meyers & Richard A. Posner (1971) Market Transfers of Water Rights: Toward an Improved Market in Water Resources. Arlington: National Water Commission; Terry L. Anderson (ed.) (1983) Water Rights: Scarce Resource Allocation, Bureaucracy, and the Environment. Cambridge: Ballinger). This sort of argument has obviously resonated with Hardin's (1968) famous article on the tragedy of the commons, and also fit in well with general enthusiasm for market solutions to policy issues in recent decades. It continues to be advanced in various contexts, such as with regard to water rights in China (Speed, 2009).
Yet other theorists have questioned the above conclusions, both positive and normative.
Read more »
The question of how and why water has been governed by regimes of private, public, and common property has occupied scholars for some time, often in tandem with the normative issue of which type of property regime is best for the resource.
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| Harold Demsetz |
As in many other fields, economic analysis has proved to be a dominant theoretical lens for understanding the development of water rights, generating both direct insights and provoking trenchant critiques. On the level of positive theory, many have built on the framework of Harold Demsetz's (1967) theory of property rights, according to which property regimes progress from common to private property as the increasing value of the resource in question, or pressure on it, renders the advantages of its privatization greater than the administrative costs of establishing and maintaining a private-property regime. According to this theory, we should expect to see water regimes characterized by relatively open access or common property in societies and environments characterized by an abundance of water, and increasing reliance on private rights as pressure on the resource increases. An influential work in this tradition is Anderson and Hill (1975), which posits that the abandonment of a common-property regime (riparian rights) in favor of private rights (the prior appropriation doctrine) in the American West was a result of the region's aridity and consequent pressure on the resource.
Economic analysis has also developed a normative critique of existing systems of water rights. Beginning with the work of Milliman (1956, 1959) and others, many scholars have argued that common property in water leads to waste, inefficiency, and depletion of the resource. The solution, according to this line of argument, is the creation or recognition of completely specified private property rights in water, rights that will allow the functioning of an efficient market that will move water to its most valuable uses and create incentives to avoid waste (Charles J. Meyers & Richard A. Posner (1971) Market Transfers of Water Rights: Toward an Improved Market in Water Resources. Arlington: National Water Commission; Terry L. Anderson (ed.) (1983) Water Rights: Scarce Resource Allocation, Bureaucracy, and the Environment. Cambridge: Ballinger). This sort of argument has obviously resonated with Hardin's (1968) famous article on the tragedy of the commons, and also fit in well with general enthusiasm for market solutions to policy issues in recent decades. It continues to be advanced in various contexts, such as with regard to water rights in China (Speed, 2009).
Yet other theorists have questioned the above conclusions, both positive and normative.
Read more »
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