People have feared that the demise of California would be a massive earthquake that flattens buildings, destroys infrastructure, and sends the southern part of the state floating out to sea. Alas, the downfall of left coast could be death by dehydration.

The state of California is in the midst of a severe drought. “Experts” in fields such as Paleoclimatology suggest that the area has not experienced such scarce precipitation for five hundred years. This dire situation has caused the governor of California, Jerry Brown, to ask residents to decrease water usage by 20%. Many local communities have already put in place more stringent limits.

At a time like this it is prudent for libertarians to use this unfortunate circumstance as an opportunity to expose the problems created by a state controlled water supply. Why would we trust probably the most important resource for human existence in the incapable hands of the State?

To gain clarity on the issue of water rights we will be turning to Murray Rothbard. Before we hear from Murray, it is pertinent to read an excerpt from a letter submitted to the Foundation for Economic Education in November 1955. Later in the article Rothbard replies to this letter, submitted by an anonymous professor, who cites it as a guide to the correct libertarian viewpoint for water rights. The anonymous professor provides a good introduction to the discussion by defining the two common-law systems used at the time to allocate surface water, riparian and appropriation. The professor’s inquiry in its entirety can be found at FEE.org.

Basically, one of two common-law systems of allocating surface water (other than diffused) for private use is followed in this country. Statutes have codified and modified both. The first is called the riparian system, which still governs in most of the eastern states. According to this rule of law, the owner of land through which or along the boundaries of which streams flow has rights to the continued, undiminished, and unpolluted flow of the stream past his land. No one upstream, even another riparian landowner, can use the water so as to interfere with the flow to downstream riparian owners. This rule of law is usually qualified to permit reasonable domestic uses and stock watering by riparian owners even if such uses diminish the flow. The riparian owner can insist on maintenance of flow even though he is making no use of the water himself and does not even contemplate doing so. The riparian water right thus is attached to the riparian lands and is a right to use as long as the natural condition of the stream or lake is not appreciably altered. The other doctrine, which prevails in most western states, is called the appropriation doctrine. According to it, water rights may be acquired by either riparian or nonriparian landowners on a “first-come, first-served” basis. The first to make “beneficial” use of water acquires the right thereto, and in case of water shortage the rights acquired later in time have to give way first. This is not a system of pro rata distribution but a system of priorities in which prior (in time) water rights are entitled to be fully satisfied before subordinate rights can claim any water at all. These appropriation rights are rights to use certain amounts of water during specific periods of time for certain purposes. The holder of the right cannot ordinarily change the use without losing the right and cannot sell the water to someone else to use for any other purpose at any other place. The continuance of the right is dependent on exercise of it. Failure to use the water for a period of time results in forfeiture of the right.

In California, the main water storage facilities, reservoirs, and lakes are owned by the state. The opponents to a private property centered free society would argue that it would be more of a hassle than a help to privatize the system now.

In the past week, the authorities that run the State Water Project in California announced that they will stop releasing water from their large reserves in Northern California this spring. If the area does not receive substantial rain soon, things could get very bad in the golden state. There is no debate that the current situation in California is terrible. The people of California are left with few options and for many their ability to procure water is entirely out of their hands.

We will next look to Rothbard to define the ideal setup for flowing water in a private property centered society. The following excerpt was originally printed in the letters sections of the Freeman in March 1956.

Fixing the ownership of flowing water, as the professor points out, is more difficult. What’s the solution? We must concentrate first, not on extricating ourselves from the present property relations in water, should that be necessary, but in trying to visualize an ideal arrangement. After the ideal is known, then one can begin working toward it, given the present situation. But it is crucial not to confuse the two. The ideal for scarce goods, then, is first-ownership-to-first-user. It is immediately clear that the route to justice lies along the appropriation rather than the riparian path. Why riparian? What claim does a landowner have to any part of a stream just because his land adjoins the stream? No moral claim whatever. His riparian claim is not based on his having made use of the water; in fact, his only purpose seems to be to block anyone else from using the water, and the result is criminal waste of rivers and streams. Why should a riparian owner have a claim to a flow of water? The appropriation method is therefore far closer to the just one. Its chief flaw is that it has been too limited, and we are all indebted to the professor for his clear explanation of the various methods of property allocation. The way to amend the appropriation method is as follows: 1) eliminate all requirements for “beneficial” use — the term is meaningless, and can only be concretely decided on the free market; 2) the water must be the appropriator’s absolute property, not at the sufferance of the State. Hence, he must be free to sell his right to the water to anyone else for any purpose, or to stop using it altogether. If he fails either to use his property right or sell it, the inference is that it is not worth using on the market. At any rate, the decision must be the property owner’s — the appropriator’s. How to establish the absolute appropriation method in the Eastern states — whether with or without compensation to the present riparian owners — is something that must be settled. If downstream owners want to avoid pollution, there is one simple way they can do so, under the appropriation method: buy the stream together — as a corporation, perhaps — from the first appropriators, and then put it to nonpolluting uses, or keep it “fallow” altogether.

As Rothbard says it is important to focus on the ideal arrangement, and then begin to work towards attaining the ideal, given the obstacles and circumstances surrounding the current set up. The ideal arrangement would be the appropriation method applied to all flowing water. A stream or body of water that has market value would be put to use by the market. If it is not put to use, then it has no market value.

If the appropriation method is fully implemented, then a water shortage could never occur. All suitable water reserves would hold value on the market. As the supply of water decreased, in the case of the Californian drought, the price of distributing the water would rise accordingly. This would cause water to be allocated to the areas of the market with the highest demand. Price would rise, but water would be available.

The appropriation method might also prevent areas from attracting more people than water resources could support. It could even encourage investment in water transportation methods that could move water to areas where it is not naturally abundant. This could be appealing to investors if the economics are favorable and the project could be executed at a price acceptable to the market. Water would not be moved by government decree, but by the will of the people.

In today’s State worshiping society people are more inclined to demand more State involvement to fix problems that are a byproduct of the State distribution model. As a society, we must stop putting a band-aid on a gunshot wound. The road to peace and prosperity is not paved by State coercion, but instead is built brick by brick through peaceful transactions with others looking for a favorable return from the marketplace.

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