Playing by Different Rules? Property Rights in Land and Water
Richard A. Epstein
New York University School of Law; Stanford University - Hoover Institution on War, Revolution and Peace; University of Chicago - Law School
December 3, 2010
EVOLUTION OF PROPERTY RIGHTS RELATED TO LAND AND NATURAL RESOURCES, Lincoln Institute, 2010
NYU Law and Economics Research Paper No. 10-56
This article examines both the similarities and differences between the law of land and water in both a private law and constitutional law setting. The first critical difference is that the nature of the two resources differs enough such that exclusive rights for occupation usually sets the right framework for analyzing land use disputes, while a system of shared, correlative duties work best for water. Once these baselines are established, it follows that an accurate rendition of the constitutional law issues necessarily rests on the proper articulation of private law rules of adjudication. Unless those efficient private rules are used as a baseline for constitutional adjudication, it becomes impossible to explain which government actions result simply in a "mere" loss of economic value and which government actions generate losses that require compensation. Parties can engage in wasteful political arbitrage without limitation.
In dealing with the private law issues, the first step is to develop principles of parity between private claimants, to the extent that this approach is physically possible. The second step then picks the set of rules that maximizes the overall utility of all parties concerned, subject to the parity constraint. This system must yield to reasonableness considerations when the conditions of physical parity cannot be satisfied, which covers all cases of dispute between upper and lower owners of land, as well as upstream and downstream riparians. In both these settings, the objective is to create, whenever possible, rules that treat the last element of loss to one party equal to the last element of gain of the next.
Using these natural law baselines produces by and large efficient results in private disputes. The rejection of these rules in the takings context in both land and water cases yields the opposite result, by conceding far too much power to state authorities in both land and water cases. It is no mistake that the modern law of regulatory takings for land, as developed in the 1978 Penn Central case, explicitly rests on the same intellectual confusions about property rights and economic losses that underlie the 1944 Willow River case, dealing with water rights. The only rationalization of both areas of law requires that the constitutional protection of private property start with the definitions of private property that have worked so well in practice under the natural law traditions of private law.
Number of Pages in PDF File: 61
Keywords: water rights, riparian rights, takings; exactions, natural flow, reasonable user, navigation servitude alluvion
Date posted: December 5, 2010