Chapter 1.3 - Institutional Aspects and Policy Background of Water Scarcity Problems in the United States

Abstract

The prior appropriation doctrine promoted the rapid development of the western United States by securing scarce water to irrigated agriculture when it was the major economic sector. It currently frustrates water reallocation to emerging nonappropriative uses whose contribution to social welfare increases as irrigated agriculture's historic contribution declines. This chapter investigates how the doctrine thwarts reallocation that could occur through water markets, and how it could be more receptive. Key doctrinal barriers include exclusion of key market participants, incompletely specified water rights failing to account for hydrologic and legal impacts of water use, restrictions on water-right transferability to mitigate third-party impacts, and poor enforcement of water-right priorities by state judicial and administrative branches. Appropriative rights can be expanded to include nondiversional instream-flow uses, and more fully specified to include key parameters needed to monitor water use including agricultural water consumption. Specialized transfer mechanisms can limit the extent and duration of third-party impairment.