No. 5: Resource Allocation and Ownership, Externalities, Water Marketing, and - the State: Initial Comments

I'm a free-marketeer ... mostly. By that, I mean that a quasi-free-market system can provide more efficient solutions to a great many problems related to the ownership, management, and conservation of natural resources than one based entirely on State ownership and heavy-handed government regulation or a system predicated on pure laissez-faire economics.

As a quasi-free-marketeer, I do not discount the role of government, as I think that government exists for many legitimate reasons, especially to "establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty," but not to be dictatorial or to guarantee the garden-variety Socialist's dream of cradle-to-grave security. I became wary, years ago, of politicians and other representatives of government who told me that they were "here to help people." Such language is usually a prelude to more regulations and subtle-to-blatant assaults on the Rights enumerated by the Constitution of the United States of America.

I also learned to be cautious of anyone who thinks that there should be no limits to what anyone can do with whatever he owns or thinks belongs to him, as I think that another's freedoms end where my nose and property boundaries begin. A maxim which I firmly embrace is: "Don't do anything on/to your land for which others will have to suffer the consequences." A FEW examples are listed below:

(1) Don't make "improvements" on your property that will promote erosion and the runoff of silt to the creek that runs across another's land and the pond to which the creek flows, or

(2) Don't diminish the flow of surface water to another landowner's property by diverting excessive amounts of water or impounding water for your own use, or

(3) Don't pump large volumes of groundwater without regard to the impact that your pumpage might have on water tables, wells, springs, and streams beyond the boundaries of your property. (Groundwater is no longer secret and occult.)

When a stream that traverses the property of Landowner A becomes polluted, laden with silt, or streamflow slows to a trickle because of Landowner B's carelessness or efforts to claim either all or an inordinately large share of water, then Landowner A incurs environmental damage and economic loss.

In economics, losses or damages sustained by Landowner A are referred to as "negative externalities." Externalities can be either negative or positive. With regard to pollution, landscape degradation, or the destruction of a commons (e.g., Comanche Spring, Post #3 of this blog), the effects are decidedly negative.

Six points that I will argue in future posts to this blog are:

(1) Individuals, corporations, cities, etc. should be held to account for negative externalities stemming from their respective uses/abuses of water.

(2) A system of clearly defined, enforceable, and transferable groundwater rights is superior to conditions under the Rule of Capture doctrine or absolute ownership and control of groundwater by the State.

(3) Water rights are essential to ensure that one's business operations or property are not damaged or diminished in value by excessive pumpage or mismanagement of groundwater by others.

(4) Water markets, with reasonable degrees of regulation by the State, can provide efficient solutions to problems of water distribution, conservation, and resource valuation.

(5) There must exist a government with the authority to recognize the need for water rights, to assign and enforce water rights and to impose sensible regulations, where necessary, in order for groundwater markets to develop and to operate efficiently.

(6) It is incumbent upon the State and stakeholders within the different sectors of a State's economy to find the appropriate balance between commerce, property rights and regulation, especially with respect to the adoption of doctrines governing the recognition, assignment, and enforcement of groundwater rights.


Best Regards,

aquadoc
Southwest Groundwater Consulting, LLC