United States Experience

Abstract

The nature of property rights regimes has great influence on patterns of water and other natural resource development, and hence on economic development in general. Although in capitalist societies property rights are predominantly "private," their actual form and content are shaped by a wide range of political, economic, legal, and social institutions, so that the boundary between "public" and "private" is often very hard to define. The case of water is especially problematic: its peculiar physical characteristics mean that private rights are typically rights to use rather than ownership, and the need for public regulation to coordinate users is inescapable. In addition it is commonly believed that water rights regimes are much affected by geographic conditions: primarily whether the climate is wet or dry. This paper presents a North American case study of property rights and State involvement in water development that has several features similar to contemporary Latin America: geographic contrasts, economic transformation from agricultural to urban/industrial development, and political conflict over the role of the State and the limits of private property. The case is that of the Slate of Washington from the late 19th century to the Second World War, characterized by two contradictory water rights doctrines and a dramatically changing balance between irrigation and hydroelectricity. Several general lessons for the Latin American region can be drawn from this case: i) geographic conditions are much less important to legal doctrine and institutions than the redefinition and security of private rights needed to stimulate capital investment; ii) the importance of water development for regional economic growth depends on State involvement to overcome the limitations of the private sector; iii) private property can take several different and incompatible forms: a point which both its proponents and critics often ignore; iv) a private property regime geared to dynamic economic development can only be established and maintained with the active support of State intervention and administration, and v) such a regime can so effectively overcome (he geographic and social obstacles presented by Nature to private property that the legal and institutional reforms needed to ensure "environmentally sustainable development" will probably have to be more fundamental than is often supposed.