The Anti-Speculation Doctrine and its Implications for Collaborative Water Management

39 Pages Posted: 18 Apr 2008

See all articles by Sandra B. Zellmer

Sandra B. Zellmer

University of Montana - Alexander Blewett III School of Law


From Texas tycoon T. Boone Pickens to former corporate conglomerate Enron, grandiose schemes to profit from large-scale, transbasin water transfers have proliferated in the past decade. Reactions range from outrage at the commoditization of this precious resource to support for letting the market and its pricing signals move water to the most efficient use.

The long-standing prohibition against speculation in water is an impediment to commoditization and, consequently, water marketing in the western United States. By contrast, acquiring real estate, grain, art, and other types of property in hopes of profiting from future market fluctuations is not at all unusual. If speculation in water were allowed, speculators could buy water rights, not for the purpose of immediately using or selling the water or products derived from it, but rather to hoard the water with the hope that its value will increase over time. But locking up scarce and essential water resources from use by individuals and communities who have an immediate need to slake their thirst or grow crops on which to sustain themselves is deemed a mortal sin under western water law.

This article determines that the anti-speculation doctrine continues to serve an important public purpose. It curbs the worst potential abuses of market forces by forcing transacting parties to articulate how and when the water will be applied to actual, beneficial uses, and by providing an administrative or judicial "check" on speculative transactions that adversely affect third parties and ecological needs by depriving them of water. Moreover, exceptions for municipal planning, Indian reserved rights, and instream flow protection operate as an effective safety valve to liberate collaborative initiatives for certain specified uses that serve important, contemporary public purposes.

Keywords: water, property, antitrust, speculation, marketing, prior appropriation

JEL Classification: Q25, Q28, K11, K21, K32

Suggested Citation

Zellmer, Sandra B., The Anti-Speculation Doctrine and its Implications for Collaborative Water Management. Nevada Law Review, Forthcoming, Available at SSRN:

Sandra B. Zellmer (Contact Author)

University of Montana - Alexander Blewett III School of Law ( email )

Missoula, MT 59812-0002
United States
406-243-6653 (Phone)


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