Active Water Resource Management: Pariah or Blueprint for Western Water Management?

Introduction

The western United States is plagued with chronic water shortages, frequent drought, and unclear water rights. Attempts to deal with shortages are a complicated web of federal, state, and local management. Many river basins suffer from imperfect data about water ownership and priority (Matthews, 2004; Tarlock, 2006), constraining water managers during periods of water scarcity. The fallout from inadequate water planning is conflated by attributes of water rights being undefined. Considerable research has focused on watershed-level planning (Howe, 2005; Cohen and Davidson, 2011). Additional focus is needed on intergenerational planning (Mullin, 2009). Daly (1977) referred to such long-range planning as "moral growth," and it icould be considered a cornerstone of sustainable water use. It could also be considered a "third rail" of multi-scalar resource management (Liverman, 2004; Perramond, 2012).

Many drought-stricken regions default to additional groundwater pumping during periods of water scarcity. Increasingly regions have recognized the need to restrict such action because of the deleterious effect it can have on senior surface water users (California Sustainable Groundwater Act, 2015; Whatcom County v. Western Washington Growth Management Hearings Board, 2016). Mullin (2009) stated, "Communities are beginning to develop strategies for managing existing resources more effectively as it becomes more difficult to build their way out of water shortages."

Field of Dreams or Wall Street?

At the risk of gross oversimplification, there are two entrenched groups of western water sects; these can be characterized by two VHS-era cult classic movies. The first group are those that view new water projects as key to "make new water"; these are the Field of Dreams supporters who ascribe to the tautology of "build it and they will come." The others are the adherents of Wall Street, believing that "greed is good" and free market exchanges are the best way to manage water. The former has been the dominant operating platform since the creation of the Bureau of Reclamation (Newlands Reclamation Act, 1902) and the beginning of the Reclamation Era. Numerous eulogies have been given to the end of the "big project era" (Sax, 1990; Dziegielewski, 2003). Recent evidence including the Water Infrastructure Improvements for the Nation Act (2016), Yakima Basin Integrated Water Resource Management Plan, and the Navajo Pipeline suggest large water projects are still part of our water management paradigm even if some of the projects are "spurred on by ideology more than common sense" (Beard, 2016). However, these projects are reliant on billions of federal dollars. With the inherent uncertainties of congressional funding priorities, options that do not rely upon large infrastructure projects are needed. As former U.S. Bureau of Reclamation Commissioner Beard stated, "The most fundamental change we need to make is to thoroughly understand how we can use the water we have already available most effectively" (Beard, 2016). Reallocation of existing water supplies has been touted as a more cost-effective option than new supply-side options for water management (McCormick, 1994a; Dinar et al., 1997; Colby, 1988; Brookshire et al., 2004; Howe, 2012). Some "success" stories exist for water reallocations (Howe and Goemans, 2003; Brewer et al., 2007). However, water markets have been plagued by numerous social and institutional challenges, including a lack of price signals, difficulties linking interested buyers and willing sellers, and third-party considerations (Howe, 2000; Matthews, 2003; Hennessy, 2004; Roth et al., 2005; Howe, 2012). Certain reclamation rights possess limitations on place of use; a few interstate compacts place limitations on out-of-state water transfers (Matthews and Pease, 2006; Willis et al., 2008). Krutilla (2010) provides a thorough review of transaction costs precluding efficient natural resource transfers; many of these are applicable to water transfers. Markets for water will never be "free markets" (Dellapenna, 2005); however, few if any goods truly meet such a definition. Despite the limitations of "completely free" markets, willing buyers and sellers can reallocate water in using price signals to reflect the scarcity of water (Johansson et al., 2002).

It is unlikely bulk water sales will ever be a freely traded homogeneous good (Michelsen...