The Evolution of Markets for Water

The Evolution of Markets for Water

Theory and Practice in Australia

New Horizons in Environmental Economics series

Edited by Jeff Bennett

This book presents a detailed picture of the evolutionary processes at work in water markets with a particular focus on theory and practice in Australia. Policymakers are striving to strike a balance between the pros and cons of a property rights/market based approach to the allocation of water resources, as opposed to an approach that centres on government regulation. The current movement in Australia is toward the use of markets, and numerous reforms are either underway or under consideration in that direction. This provides an ideal opportunity to observe the factors at play in determining the balance and hence the mix of policy instruments at work. The distinguished contributors offer a range of perspectives – economic, legal, environmental – and combine conceptual analysis with evidence from real policy decisions.

Chapter 3: The Historical Variation in Water Rights

Richard A. Epstein

Subjects: business and management, management and sustainability, development studies, agricultural economics, economics and finance, agricultural economics, environmental economics, environment, agricultural economics, ecological economics, environmental economics, environmental management, water

Extract

Richard A. Epstein THE THEORETICAL AND CUSTOMARY FOUNDATIONS OF WATER RIGHTS At the outset let me admit that I do not know anything about the peculiar rules of any regimes in water rights within 5000 miles of Australia. The systems that I understand are the American markets and the English markets, especially with regard to the influences that the latter have had in shaping the operation of the former. What I propose to do here therefore is to offer a complementary approach to the one provided by Freebairn in Chapter 2 of this book. I hope to explain how it is possible to work through all of the problems he identified, not so much via the modern system designs for the administrative state, but looking at the institutional origins and evolution of water law through three stages: at common law, through legislation, and then ultimately through constitutional challenge, which counts as the hallmark of the American system. Water rights, precisely because they are so difficult to calibrate and so difficult to quantify, have proved to be the source of immense complexity not only at the theoretical level, but also in the fits and starts of their historical evolution. My task is to give some hints about its winding course of development. In searching for a convenient starting place, I can think of no better place to look than one of my favourite philosophers, John Locke, who for all his brilliance made a profound, and hence instructive, mistake in the analysis...

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