Comment by wahern
9 hours ago
> and those are regularly treated as sacred
They indeed are treated as sacred, it's enshrined in the Takings Clause of the US Constitution. The big problem in the American West it that the model of property rights in water sources makes it very difficult as a technical matter to put a price on a specific claim and to adjudicate disputes, without triggering a cascade of pricing and rights dilemmas upstream and downstream (figuratively and literally). Western states could in theory exercise eminent domain to take back water rights, and I think they occasionally do, but it's just very fraught from countless legal angles even before getting into the politics of it, which compound the headaches a hundredfold (partly because of the interdependent nature of everybody's rights). Most of the time Western states try to hack around the issues with complicated regulatory and taxing schemes to try to claw back some semblance of control over water resources. But it's very inefficient and ineffective. Property rights are useful because you don't need to centralize all pricing and usage decisions, or when you do--e.g. regulation, taxation, eminent domain--the mechanisms for applying those decisions are simpler and more mechanical; but Western water rights are just a different kind of beast. What's needed is comprehensive reform that tries to shift the American West to a better water rights model, specifically a better model for how property rights inhere in water resources, to drastically improve transactional efficiency, both from a legal and market perspective. But there's no simple way, and in particular no cheap way from a budgetary perspective, to get there even if the motivation existed to get around the monumental collective action problem, which it doesn't.
> But there's no simple way, and in particular no cheap way from a budgetary perspective, to get there even if the motivation existed to get around the monumental collective action problem, which it doesn't.
It seems like maybe there is though.
The first problem is the "use it or lose it" provisions where someone has the rights to use water but not sell it, thereby encouraging waste. That one has a solid solution: If they have the right to use it, they get the right to sell it. Make sale inalienable from use. Then you don't have to pay them anything because you're giving them something instead of taking it. But you get higher water availability as now all these people wasting "free" water start selling it because the opportunity cost of not selling it is now worth more than the wasteful use. The only "problem" here is that they get a windfall, but we can solve that in the same way as the second "problem".
Which is the takings clause. The purpose of that is to prevent unequal takings. If the government needs your land to build a railroad, they have to pay you for it, because they're taking yours but not anyone else's. Whereas when they take everyone's property at the same rate it's called property tax, and that's allowed. So if you just got a windfall of water rights in a dry place, congrats, you now have a valuable property right which is subject to property tax. Not using the water and don't want to pay the tax? Then sell the water. Since the buyer values it at more than you do, and the tax is less than 100% of the value, everyone comes out ahead compared to the status quo. The previous inefficient user gets $100 in money instead of $10 worth of inefficient use, the government gets some proportion of that in new tax revenue (variously property tax on the rights and income tax on the sale), the buyer gets water it values at >$100.
Can you explain the issue from a more basic level for people who don’t know? what i’m imagining is that, like, an aquifer might connect over a very large area and every property owner in the area has the right to extract as much water as they want from it? Leading to a tragedy of the commons situation that states are unable to regulate for some reason?
Short answer: it's complicated. A somewhat longer answer: "Cadillac Desert". Marc Reisner. 1986.