The Costs of the Public Trust Doctrine in Environmental Protection and Natural Resource Conservation

We examine the costs of the public trust doctrine in environmental and natural resource protection and conservation. We provide a model of litigation and settlement among disputing parties where the doctrine is applied. The model suggests that use of the public trust doctrine is likely to introduce more costs and be more time consuming than would alternative approaches, such as the purchase of private rights through market transactions or application of eminent domain powers. Because the doctrine allows for uncompensated redistribution it is resisted by current resource owners. Further, by providing open standing to members of the “public” to challenge existing uses, public trust disputes encourage excessive demands and are more likely to go to trial than to be settled. This outcome is exacerbated if the plaintiffs are “zealots” and provide litigation services at below market cost, leading to greater investment in litigation. We present a case study of Mono Lake, part of the well-known 1983 litigation, National Audubon v. Superior Court to illustrate our arguments. We suggest that the costs of the public trust doctrine have limited its application.

Transferring Water in the American West: 1987-2005

Rising urban and environmental demand for water has created growing pressure to re-allocate water from traditional agricultural uses. Water markets are powerful institutions for facilitating this re-allocation, yet the evolution of water markets has been more complicated than those for other resources. In this paper, we set the context for water marketing with an overview of western water law that highlights unique aspects of water law that affect how or whether a water market can develop. Second, we present new, comprehensive data on the extent, nature, and timing of water transfers across 12 western states from 1987-2005. We describe the methodology and decision rules used to collect water transfer information. Third, we identify water market trends and movements to provide a greater understanding of the institutional structure and the mechanisms by which water is transferred in the American West

Water Markets in the West: Prices, Trading, and Contractual Forms

Rising urban and environmental demand for water has created growing pressure to re-allocate water from traditional agricultural uses. The evolution of water markets has been more complicated than those for other resources. In this paper, we first explain these differences by examining water rights and regulatory issues. Second, we place our research in the context of the economics literature on water marketing. Third, we present new, comprehensive data on prices and the extent, nature, and timing of water transfers across 12 western states from 1987- 2005. We find that prices are higher for agriculture-to- urban trades versus within-agriculture trades, in part, reflecting the differences in marginal values between the two uses. Prices for urban use are also growing relative to agricultural use. Markets are responding in that the number of agriculture-to-urban transactions is rising, whereas the number of agriculture-to-agriculture transfers is not. Further, there is a shift from using short-term leases to using multi- year leases of water and permanent sales of water rights. This pattern underscores the need to consider the amounts of water obligated over time, rather than examining only annual flows in assessing the quantities of water traded as is the common practice in the literature. Considering water obligated over time, termed committed water, we find significantly more is transferred and the direction of trading is different than if the focus is on annual flows. Finally, the data reveal considerable variation in water trading across the states.

Transferring Water in the American West: 1987-2005

Rising urban and environmental demand for water has created growing pressure to re-allocate water from traditional agricultural uses. Water markets are powerful institutions for facilitating this re-allocation, yet the evolution of water markets has been more complicated than those for other resources. In this paper, we set the context for water marketing with an overview of western water law that highlights unique aspects of water law that affect how or whether a water market can develop. Second, we present new, comprehensive data on the extent, nature, and timing of water transfers across 12 western states from 1987-2005. We describe the methodology and decision rules used to collect water transfer information. Third, we identify water market trends and movements to provide a greater understanding of the institutional structure and the mechanisms by which water is transferred in the American West

Law and the New Institutional Economics: Water Markets and Legal Change in California, 1987-2005

New Institutional Economics (NIE) focuses on the interaction between legal (formal and informal) institutions and economic behavior. Both directions of causality concern researchers in the field: how institutions influence economic behavior and how economic factors affect institutional change. As such, the NIE abandons standard neoclassical economics assumptions that individuals have perfect information about the market and important current or future events, as well as the assumption that transaction costs of exchange are zero. As a result, NIE introduces observed organization and information costs to neoclassical analysis, thereby providing more analytical richness and power for examining empirical activities. In the spirit of the NIE, we examine the interactions among regulation, property rights, and water markets in California from 1987–2005. We are interested in whether and how the definition of water rights and the regulation of water transfers have affected observed market activity in the extent and pattern of water trades and their duration, and the nature of the contracts used (short-term leases, long-term leases, and sales)

Property rights and the public trust doctrine in environmental protection and natural resource conservation

We examine the implications of the public trust doctrine in natural resource protection and conservation. A model of litigation and settlement among disputing parties suggests that the public trust doctrine introduces more costs and is more time consuming than would be the case with alternative approaches, such as the purchase of private rights through market transactions or application of eminent domain powers to reallocate the resource. Because the doctrine allows for uncompensated redistribution, it is resisted by current resource owners. Furthermore, by providing open standing to members of the public in challenging existing uses, public trust disputes encourage excessive demands, increasing the incidence of trial over settlement. This outcome is exacerbated if the plaintiffs derive utility from the ‘cause’ and provide litigation services at below-market rates, leading to greater investment in litigation. The costs of the public trust doctrine appear to have limited its application beyond the level anticipated by proponents. We present a case study of Mono Lake, part of the well-known 1983 litigation, National Audubon v. Superior Court to illustrate our arguments

Transferring Water in the American West: 1987-2005

Rising urban and environmental demand for water has created growing pressure to re-allocate water from traditional agricultural uses. Water markets are powerful institutions for facilitating this re-allocation, yet the evolution of water markets has been more complicated than those for other resources. In this paper, we set the context for water marketing with an overview of western water law that highlights unique aspects of water law that affect how or whether a water market can develop. Second, we present new, comprehensive data on the extent, nature, and timing of water transfers across 12 western states from 1987-2005. We describe the methodology and decision rules used to collect water transfer information. Third, we identify water market trends and movements to provide a greater understanding of the institutional structure and the mechanisms by which water is transferred in the American West