Despite a century and a half of opportunity and mounting need, the dominant culture of the American West has not yet adapted to the West's defining physical feature--its aridity. Variable overall yet profound in many places, aridity marks the West as a land different from the humid East, and different too from England, the well-watered home of American legal culture.(1) As English-speaking settlers came to the West's dry places, they re-created ways of life that they knew, ways of life based on the assumption of plentiful clean water. When water ran short, as it did quickly and often, nature was pushed hard to furnish more.(2) Ditches, dams, and reservoirs soon notched the West, followed in time by deep shafts, pumps, and pipelines. Irrigation was able to make the desert bloom in alfalfa, cotton, corn, lawns, and golf courses, but it did so only at the heavy cost of depleted rivers, declining fisheries, salinized waterflows, salt-crusted soils, and altered ecosystems.(3)
Until a few decades ago, Western water was freely available for the taking, chiefly under the rules of prior appropriation.(4) The act of appropriation gave rise to a water right, a form of private property recognized and protected by law. Early users faced only the minimal duty to avoid egregious waste, a standard easily satisfied even by unlined irrigation ditches, unmetered municipal water systems, and groundwater pumping in excess of recharge rates.(5) Users could continue seizing water so long as a single drop remained in the stream or aquifer: No minimum stream flows were maintained; no planning for future needs took place.(6) Looking back today, it is painfully clear that the law allowed too much water to pass into private hands. Too little water was left in rivers to sustain aquatic life, to maintain riparian corridors, and to meet recreational and aesthetic needs.(7)
This legacy of overappropriation now confronts makers of Western water policy. Major shifts are needed in water-use patterns, principally shifts from water uses that benefit individual owners to uses that directly sustain the health of natural and human communities.(8) But can these shifts occur, given that so many water flows are fully claimed by private owners? Can they occur without tinkering with, if not altering greatly, the privileges enjoyed by current water rights holders? Put simply, are private water rights consistent with the common wealth?
Advocates of private property and open markets propose two methods for bringing about the much-needed shifts in water-use practices: voluntary market transfers of water rights and government purchases.(9) The reasoning behind this popular position is four-fold. First, the main virtue of a free market is its ability to guide valuable things to their highest and best uses. As alternate resource uses fluctuate in value over time, the market provides a low-cost, quick-acting way of bringing about transfers. When the market works well, resources end up shifting to higher valued uses, and the lowest valued uses come to an end.
Second, people today value certain water uses more than they used to, particularly instream flow uses for fishing, recreation, ecological integrity, aesthetics, and the like. When allowed to function, the market can meet these new uses. Those who value them can purchase the water they want from low-valued uses, and the change will occur.
Third, some new needs for water are so peculiarly public that no private group is likely to step forward and buy the water needed to meet the needs. In such instances, tax money should be used to bring about the transfers, either through purchases on the open market or by way of condemnation.(10)
Finally--and, for many proponents, most centrally--all of this can occur without tampering with now-vested water rights or with the idea of private property rights in water flows.
Is this reasoning persuasive when applied to …