Water Right Exactions

Abstract

Water rights and their associated infrastructure support human wants and needs but also create significant external costs, including impacts on other infrastructure, ecosystems, and food production. Current approaches to managing water rights do not adequately address the externalities associated with water withdrawals, leading to economically inefficient water use, over-consumption of water, and subsequent loss of the goods and services provided by intact water systems. I propose a novel solution: the exactions framework. Long used by local governments to manage or mitigate public costs associated with land use changes, exactions offer a framework for water rights permitting that would address these shortcomings. State water management agencies should condition both new and existing water rights with exactions that require funding or in-kind contributions to offset the external costs associated with water rights and associated infrastructure. Water right exactions could internalize the public costs of water withdrawals, mitigate existing distributive concerns, and provide dedicated funding and water for mitigation of public costs of water use. Imposition of water right exactions would dramatically improve water use decisions.

Keywords: water rights, west, exactions, water law, ecosystem management, biodiversity, law and economics, externalities