TY - JOUR
T1 - Collective action by contract
T2 - Prior appropriation and the development of irrigation in the Western United States
AU - Leonard, Bryan
AU - Libecap, Gary D.
N1 - Funding Information:
For helpful comments we thank an anonymous reviewer, Christopher Costello, Olivier Des-chênes, Catherine Hafer, Lakshmi Iyer, Louis Kaplow, Dean Lueck, Steve Shavell, Henry Smith, Dick Startz, and Jonathan Yoder and participants at workshops at the National Bureau of Economic Research’s Development of the American Economy Summer Institute; the Political Institutions and Economic Policy Working Group; the Ostrom Workshop at Indiana University; University of California (UC), Santa Barbara; Arizona State University; Columbia University Law School; Harvard Law School; UCLA Law; UC Irvine; Montana State University; University of Arizona; Washington State University; Binghamton University; Carnegie Mellon University; College of Charleston; University of Virginia Law School; the 2017 Society for Organizational and Institutional Economics meetings; and the 2016 Western Economics Association meetings. We also thank the Walton Family Foundation and the Sustainable Water Markets program at UC Santa Barbara for supporting this research. Excellent research assistance was provided by Cody Wilgas, Love Goyal, and A. J. Leon.
Publisher Copyright:
© 2019 by The University of Chicago. All rights reserved.
PY - 2019/2/1
Y1 - 2019/2/1
N2 - We analyze the economic characteristics of prior-appropriation water rights adopted across the US West in the 19th century. Much of the region’s massive irrigation infrastructure was developed by private irrigators. We develop a model to show how prior appropriation facilitated investment by securing water against future claims and defining a property right to a specific amount of water that was the basis for contracting among numerous heterogeneous agents. We construct a data set of over 7,000 water rights in Colorado from 1852 to 2013, including location, date, size, infrastructure investment, irrigated acreage, and geographic characteristics to test the predictions of the model. We find that prior appropriation facilitated cooperation through contracting, increasing infrastructure investment, and promoting irrigated agriculture that contributed up to 16 percent of western states’ income by 1930. Areas with preexisting norms for supporting collective action exhibit smaller differences in investment based on formal contracts.
AB - We analyze the economic characteristics of prior-appropriation water rights adopted across the US West in the 19th century. Much of the region’s massive irrigation infrastructure was developed by private irrigators. We develop a model to show how prior appropriation facilitated investment by securing water against future claims and defining a property right to a specific amount of water that was the basis for contracting among numerous heterogeneous agents. We construct a data set of over 7,000 water rights in Colorado from 1852 to 2013, including location, date, size, infrastructure investment, irrigated acreage, and geographic characteristics to test the predictions of the model. We find that prior appropriation facilitated cooperation through contracting, increasing infrastructure investment, and promoting irrigated agriculture that contributed up to 16 percent of western states’ income by 1930. Areas with preexisting norms for supporting collective action exhibit smaller differences in investment based on formal contracts.
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U2 - 10.1086/700934
DO - 10.1086/700934
M3 - Article
AN - SCOPUS:85068935081
SN - 0022-2186
VL - 62
SP - 67
EP - 115
JO - Journal of Law and Economics
JF - Journal of Law and Economics
IS - 1
ER -