common sense on water??

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

"The Importance of Getting Names Right: The Myth of Markets for
  Water"
       William and Mary Environmental Law and Policy Review, Vol.

       25, Pp. 317-377, 2000

       BY:  JOSEPH W. DELLAPENNA
               Villanova University School of Law

Document:  Available from the SSRN Electronic Paper Collection:
            http://papers.ssrn.com/paper.taf?abstract_id=272670

Paper ID:  Villanova Law/Public Policy Research Paper No. 2001-3
     Date:  Fall 2000

  Contact:  JOSEPH W. DELLAPENNA
    Email:  Mailto:dellapen@xxxxxxxxxxxxxxxxx
   Postal:  Villanova University School of Law
            299 N. Spring Mill Road
            Villanova, PA 19085  USA
    Phone:  610-519-7075
      Fax:  610-519-5672

Paper Requests:
  Contact Mary E. Cornaby, Director of Academic Computing,
  Villanova University School of Law, Phone: (610)519-6043.
  Mailto:cornaby@xxxxxxxxxxxxxxxxx

ABSTRACT:
  Markets allegedly are ideal institutions for managing water
both
  nationally and internationally. Markets are presented as
  functioning automatically and nearly painlessly. As a result,
  they are much in vogue among policy makers today. True markets,

  however, have seldom existed for water rights and there are
good
  reasons for believing that they seldom will. Water is an
ambient
  resource where the actions of any one user necessarily affect
  many other users. Thus, if true markets are to be relied on to
  allocate for particular uses and distribute water among users,
  the transaction costs of organizing contracts with all holders
  of water rights (let alone those holding less formal claims
  affected by a sale or lease) generally have been and will be
  prohibitive. Water, in short, is the quintessential public good

  for which markets simply do not work. This paper explores the
  nature of markets and the forms of property developed for the
  rights to use water, beginning by explaining why water has
  customarily been treated as a public good. The paper then
  explains why treating water as common property leads into a
  tragic over exploitation as soon as water becomes a scarce
  commodity, and goes on to describe the market failures that are

  characteristic of treating the right to use water as private
  property. The paper then explores the California Water Bank,
  often described as proving that markets for water work, but
  finding instead regulation masquerading as a market. As
  Confucius reminds us, if we do not get the names right, we
  cannot expect affairs to be in order. Finally, the paper
  presents the "regulated riparian" mode of water management that

  operates on the basis that water is a form of inherently public

  property about which basic allocation distribution decisions
  must be made by public agencies. The paper concludes that
  various economic incentives, including fees, taxes, and "water
  banks," have a useful role to play in managing public property,

  but that true markets must remain a phenomenon marginal to the
  enterprise of managing large quantities of water for the
benefit
  of numerous users.


--

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx