UC Irvine

This dissertation examines water supply management in the arid American West, focusing on water suppliers in Southern California, and asks, how does the growing reach of financial markets into varied domains of political institutions and social life—a process known as financialization—impact public governance of natural resources? Water utilities are part of an expansive network of hydrological infrastructure and municipal organizations, which undergirds urban growth and economic development but also interferes with natural ecologies and reshapes socio-environmental relations. Additionally, water officials manage financial assets worth billions of dollars and issue billions in municipal debt. To unpack the relationship between the macroeconomic phenomenon of financialization and meso-level outcomes for municipalities and environmental governance, this dissertation presents three empirical studies. Using quantitative and qualitative archival data on the largest provider of drinking water in the nation, Chapter 2 examines financial investing by water officials, finding that, following the period of financial deregulation in the 1980’s, public money became deeply entangled in financial markets and that investments in such markets are increasingly used as a source of revenue for public agencies. Chapter 3, using archival data, investigates how debt accumulation affects water districts, finding a drastic increase of revenue-backed debt as the primary source of funding for water agencies and a corresponding decline of tax-backed municipal debt. As a result, financial gatekeepers, especially credit rating agencies, push finance-oriented objectives on water managers that include commodifying water to maximize revenue, avoiding expenditures, and flouting climatological realities of scarcity. Chapter 4, using data from interviews and participant-observations with water managers, analyzes how they navigate overlapping and conflicting policy domains, like legal and environmental domains of activity, finding that financialized institutional logics are prominent drivers of action across all policy domains, even the non-financial ones, like those oriented on environmental and legal matters. Ultimately, this dissertation shows that contemporary public governance is dependent upon and shaped by the interests of private capital, which are often at odds with environmental and social objectives. Theoretically, this dissertation interrogates the financialization of natural resources to identify positive and negative financial feedbacks, whereby negative feedbacks result in the financial pathology of institutions, a phenomenon in which public governance organizations are systematically drawn away from their substantive charges (such as environmental stewardship) in pursuit of financial objectives in a cyclical, self-reinforcing process. As such, this dissertation advances an economic sociology of the environment and contributes to understanding how financialization affects public governance.