Unbundling Property in Water

Abstract:     
The United Nations Intergovernmental Panel on Climate Change predicts that, in the foreseeable future, climate change will exacerbate water problems worldwide. In the United States, we are likely to see more severe flooding, more frequent droughts, and a rush to secure legal rights to water supplies. Sustainable management of water resources for present and future generations will become all the more imperative as we face increasing pressure on limited supplies.

The quest for sustainable management has stimulated a movement championing greater recognition of private property rights to attain efficient use and allocation of water. The World Bank and the International Monetary Fund have encouraged nations in the developing world to conform to a market paradigm by privatizing their water supplies. Affected communities are often less than enthusiastic about privatization. Throughout the world, attempts to privatize water resources have triggered a "morality play of rights versus markets, human need versus corporate greed."

The controversy is not limited to developing countries. One of the most divisive issues in contemporary natural resources law in the United States is whether interests in water are property. Absent legally recognized property rights, water markets are unlikely to thrive. According to the Restatement of Property, the term "property" describes "legal relations between persons with respect to a thing." Of course, not all economic relationships give rise to property rights. Judicial treatment of water is all over the map. The Court of Federal Claims awarded California irrigators millions of dollars as compensation for a taking of their property rights when flows were curtailed to protect endangered salmon, but a different panel of the very same court subsequently took that opinion to task for failing to consider whether interests in water are property under the Fifth Amendment. Likewise, other federal and state courts have reached contradictory results.

To unbundle the concept of property in water, this article critiques the conflicting approaches to water rights. It uses a web of interests as a strong yet flexible metaphor for property, complemented by a patterning definition representing elemental strands of the web. If the interest in question is not an irrevocable interest in the exclusive possession and use of a discrete, marketable asset, it is not takings property under the Fifth Amendment. Viewed through this lens, it becomes clear that interests in water in most jurisdictions are not takings property, although they may be a limited form of property for purposes of water transfers and due process or common law claims.

Keywords: Property, Water, Regulatory Takings, Conversion, Metaphor

Accepted Paper Series