[1] Water markets have many advantages for water reallocation. However, water markets do not always function efficiently because the property rights structure was not designed for market transactions. The potential for successful markets can be determined by looking at the 10 fundamental questions relevant to water rights. The questions are relevant to any system of water rights, but the examples used are largely from the western United States. The questions are designed to raise issues about the basic structure of a water rights system. After discussing these issues, the paper turns to recommendations on how a water rights structure could be modified to facilitate markets. The recommendations are not meant to be an end point but are intended too stimulate discussion.
The American Society of Civil Engineers (ASCE) Model State Water Code provides suggested statutory language and commentary helpful in guiding western water law reform. Departing from the past preference for stream diversions and consumptive uses, the code is sensitive to the public's interest in maintaining environmental quality. The traditional doctrine protected inefficient uses and in some states hampered transfers. The model code addresses these issues as well as advocating integrated manage. meat and water resource planning. The debate on how to reform water law has already started, and the model code provides material useful in the reform process. Even with the current draft code, a few gaps exist for later resolution. (KEY TERMS: water law; appropriation doctrine; reforming water policy; model code.)
The goal for any property rights system is to achieve equity, efficiency, and certainty. Trying to achieve these goals for ground water is difficult because a ground water right is not exclusive. To make matters more complicated, ground water is often under the jurisdiction of more than one political unit. The result is transboundary conflicts. Two critical elements must be included in any system of ground water rights. The system must define how the ground water can be used and define the relationships that each user and each use has with the other users and uses in the system. Unfortunately, these relationships are seldom completely defined and are made more complex by the transboundary scales at which they operate. As ground water moves horizontally across boundaries, different users or different jurisdictions have sequential control, creating conflicts between the first users and subsequent ones. Other problems occur because of vertical relationships, with more than one person or entity having control over ground water at the same time. This simultaneous exercise of authority can create conflicts between an individual who possesses a right to use ground water and a state or federal agency that regulates the same water. Transboundary conflicts occur at different scales and include conflicts between neighboring property owners as well as conflicts between countries. Scale, the property rights structure, and the nature of the relationship between users influence the way transboundary ground water conflicts are resolved.
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