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Water rights transfers : a legal, economic, and informational analysis of water in Oregon Public Deposited

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  • In the last 20 years, a considerable volume of literature has emerged with respect to the efficacy of the market place in the allocation of water resources. Economists have been very willing to apply their tools of optimization in a comparative statics framework to indicate that any resource can be allocated in an efficient manner once the nature of the efficiency criteria had been decided. That the legal system for allocating the resource was found to be limiting became almost axiomatic for economic studies of water rights. This study has sought to examine the water (re)allocation issue vis a vis the performance of the legal water rights transfer mechanisms that exist under the prior appropriation doctrine of water law. As such the study is in part a positivistic analysis of the way water is allocated. To set the stage for this kind of investigation, Part 1 serves as an introduction to water rights transfers and the way that this issue is related to other problem areas in water resources such as upstream storage and minimum instream flow standards. Part 2 is devoted to a review of statutory, case law, and administrative law on the subject of water rights transfers. Part 2 also reports the results of a survey on the characteristics of legal water rights in Oregon from 1970 to 1980. The principal finding of the survey was that there were very few transfers of water taking place between two individuals along a single watercourse. Part 3 focuses on the measurement process in assessing the economically efficient use of water. A significant contribution of this study is the exploration of a means of estimating regional (i.e. any aggregation of single farm units) water use in irrigated agriculture while minimizing error due to the aggregation process. In Part 4, an examination of the way in which the legal system uses economic criteria to allocate water is undertaken. It is concluded that the appropriation doctrine statutes do constitute a workable reallocative system, provided that would-be transferrors of water rights gain more knowledge about the process of establishing claims in the legal system. Part 5 provides insights into the lack of initiation of transfers from an information theoretic point of view. The results of a survey of water users in eastern Oregon are presented showing that informal sharing arrangements exist, but that land transactions were preferable to severing water from irrigated land. Valuations of water in the area surveyed are reasonable approximations of the value of average contribution of water to the value of total production. In this area future shortages of water were thought to be amenable to being solved by implementing upstream storage.
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  • The work upon which this publication is based was supported in part by federal funds provided by the U.S. Department of the Interior, Washington, D.C. (Project No. B-069-ORE), as authorized under the Water Research and Development Act of 1978, P.L. 95-467.
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