Abstract: The American West confronts the challenge of fulfilling indigenous claims to water within the context of increasingly scarce and variable water supplies. 170 of 226 American Indian reservations have unresolved water claims that potentially exceed the region’s hydrological capacity, generating uncertainty for tribes and off-reservation water users. To help resolve key uncertainties about dispute origins and outcomes, we construct a complete and novel dataset on Indian water settlements and reservation characteristics which we then analyze using a bargaining framework from economics. We find that rapid off-reservation population growth, water scarcity, and large anticipated water entitlements catalyze disputes. When more users are involved in the negotiations, transaction costs delay settlement, increasing water insecurity. We use our findings to predict allocations for 25 ongoing water right negotiations. These estimates help bound the uncertainty facing water managers throughout the American West.

Food systems are particularly sensitive to changing precipitation patterns. Resilience via irrigation will depend on baseline conditions, water source, and institutional constraints which have not been studied jointly. We draw on over 100 years of agricultural production and weather data across the United States to identify the extent to which access to stored water - distinguished by its source and location - affects drought resiliency. Arid regions with access to stored water avoided the 13% losses in crop value experienced in irrigated areas with more limited storage during droughts. Humid regions are also beginning to adopt irrigation, but with less aggregate impact during drought. The incomplete governance of groundwater withdrawals in many areas allow resiliency in the near-term, but potentially at the expense of future water availability. Conversely, surface water rights allow for the widespread application of irrigation water, but with less resiliency during significant periods of drought.

Water scarcity and drought have determined the structure, location, and fate of civilizations throughout history. Drought remains an important factor in the performance of developed and developing economies, especially in the agricultural sector. While significant attention has been paid to drought as a meteorological phenomenon and on its economic impact, comparative institutional analysis of the economics of drought is limited. In this review, we focus on how economic institutions, the humanly devised constraints that shape the allocation and use of water, impact the severity and incidence of droughts. Water property rights in developed countries encourage infrastructure investments and reallocations that mitigate drought impacts, although such institutions may codify inequitable water access during drought. Developing economies rely more on informal strategies for mitigating drought and remain more vulnerable, experiencing economic losses, conflict, and violence.

Collective action to remedy the losses of open access to common-pool resources often is late and incomplete, extending rent dissipation. Examples include persistent over-exploitation of oil fields and ocean fisheries, despite general agreement that production constraints are needed. Contracting costs encountered in assigning property rights are an explanation, but analysis of their role is limited by a lack of systematic data. We examine governance institutions in California’s 445 groundwater basins using a new dataset to identify factors that influence the adoption of extraction controls. In 309 basins, institutions allow unconstrained pumping, while an additional 105 basins have weak management plans. Twenty of these basins are severely overdrafted. Meanwhile, users in 31 basins have defined groundwater property rights, the most complete solution. We document the critical role of the transaction costs associated with contracting in explaining this variation in responses. This research adds to the literatures on open access, transaction costs, bargaining, and property rights.

Abstract: Water diversions for agriculture reduce ecosystem services provided by saline lakes around the world. Exposed lakebed surfaces are major sources of dust emissions that may exacerbate existing environmental inequities. This paper studies the effects of water diversions and their impacts on particulate pollution arising from reduced inflows to the Salton Sea in California via a spatially explicit particle transport model and changing lakebed exposure. We demonstrate that lakebed dust emissions increased ambient and concentrations and worsened environmental inequalities, with historically disadvantaged communities receiving a disproportionate increase in pollution. Water diversion decisions are often determined by political processes; our findings demonstrate the need for distributional analysis of such decisions to ensure equitable compensation.

The paper outlines some of the collective action problems involved in implementing SGMA.