The question of how and why water has been governed by regimes of private, public, and common property has occupied scholars for some time, often in tandem with the normative issue of which type of property regime is best for the resource.
As in many other fields, economic analysis has proved to be a dominant theoretical lens for understanding the development of water rights, generating both direct insights and provoking trenchant critiques. On the level of positive theory, many have built on the framework of Harold Demsetz's (1967) theory of property rights, according to which property regimes progress from common to private property as the increasing value of the resource in question, or pressure on it, renders the advantages of its privatization greater than the administrative costs of establishing and maintaining a private-property regime. According to this theory, we should expect to see water regimes characterized by relatively open access or common property in societies and environments characterized by an abundance of water, and increasing reliance on private rights as pressure on the resource increases. An influential work in this tradition is Anderson and Hill (1975), which posits that the abandonment of a common-property regime (riparian rights) in favor of private rights (the prior appropriation doctrine) in the American West was a result of the region's aridity and consequent pressure on the resource.
Economic analysis has also developed a normative critique of existing systems of water rights. Beginning with the work of Milliman (1956, 1959) and others, many scholars have argued that common property in water leads to waste, inefficiency, and depletion of the resource. The solution, according to this line of argument, is the creation or recognition of completely specified private property rights in water, rights that will allow the functioning of an efficient market that will move water to its most valuable uses and create incentives to avoid waste (Charles J. Meyers & Richard A. Posner (1971) Market Transfers of Water Rights: Toward an Improved Market in Water Resources. Arlington: National Water Commission; Terry L. Anderson (ed.) (1983) Water Rights: Scarce Resource Allocation, Bureaucracy, and the Environment. Cambridge: Ballinger). This sort of argument has obviously resonated with Hardin's (1968) famous article on the tragedy of the commons, and also fit in well with general enthusiasm for market solutions to policy issues in recent decades. It continues to be advanced in various contexts, such as with regard to water rights in China (Speed, 2009).
Yet other theorists have questioned the above conclusions, both positive and normative.
In an influential article in which she argued that in some situations the value of a resource should be maximized not by private property, as commonly assumed, but by public ownership, Carol Rose (1986) used water as an example; certain uses, such as navigation, power, or recreation, are limited by the exclusionary aspects of private property and encouraged by a regime of public property. Shortly thereafter (1990) she used this insight to challenge Demsetz's thesis on the progression of property from common to private property driven by increasing pressure on the resource; the apparent regression in the nineteenth-century common law of riparian rights from a private-property-like rule of first possession to the commons-like rule of reasonable use, she argued, was driven by the increasing value that industrializing New and Old England placed on non-rival uses of watercourses, especially for producing power. Henry Smith (2008), too, has argued for modification of Demsetz's thesis with regard to water rights. Property systems in water are typically what he terms a "semicommons", with interaction between common-property governance and private-property exclusion. This, he argues, is due to the difficulty of measuring water and the high value of non-exclusive uses of it.
Others have questioned the superiority private rights in water from other directions. Mason Gaffney (1969, 1997), for instance, has focused on the numerous externalities of water use that prevent efficient functioning of a market in water rights. Many critics (e.g. Trawick, 2001; Shiva, 2002) have attacked privatization of water, whatever its supposed economic merits, as unjust or immoral. In recent years, corporate control of water systems has come under attack (e.g. Barlow and Clark, 2005) as representing an unjust enclosure, or privatization, of the commons. Even formal recognition of traditional, customary water rights has been critiqued for weakening local control over water (De Vos et al., 2006; Boelens and Seemann, 2014).
Next: Property in water: Empirical and historical evidence. The full article is here.