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Collective Action by Contract: Prior Appropriation and the Development of Irrigation in the Western United States

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  • Bryan Leonard
  • Gary D. Libecap

Abstract

We analyze the economic characteristics of prior-appropriation water rights adopted across the US West in the 19th century. Much of the region's massive irrigation infrastructure was developed by private irrigators. We develop a model to show how prior appropriation facilitated investment by securing water against future claims and defining a property right to a specific amount of water that was the basis for contracting among numerous heterogeneous agents. We construct a data set of over 7,000 water rights in Colorado from 1852 to 2013, including location, date, size, infrastructure investment, irrigated acreage, and geographic characteristics to test the predictions of the model. We find that prior appropriation facilitated cooperation through contracting, increasing infrastructure investment, and promoting irrigated agriculture that contributed up to 16 percent of western states' income by 1930. Areas with preexisting norms for supporting collective action exhibit smaller differences in investment based on formal contracts.

Suggested Citation

  • Bryan Leonard & Gary D. Libecap, 2019. "Collective Action by Contract: Prior Appropriation and the Development of Irrigation in the Western United States," Journal of Law and Economics, University of Chicago Press, vol. 62(1), pages 67-115.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/700934
    DOI: 10.1086/700934
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    Cited by:

    1. Daniel Cooley & Steven M. Smith, 2022. "Center Pivot Irrigation Systems as a Form of Drought Risk Mitigation in Humid Regions," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 135-171, National Bureau of Economic Research, Inc.
    2. Browne, Oliver R. & Ji, Xinde James, 2023. "The Economic Value of Clarifying Property Rights: Evidence from Water in Idaho’s Snake River Basin," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    3. Hannah Whitley, 2024. "Exogenous, Endogenous, and Peripheral Actors: A Situational Analysis of Stakeholder Inclusion within Transboundary Water Governance," Sustainability, MDPI, vol. 16(9), pages 1-28, April.
    4. Joey Blumberg & Christopher Goemans & Dale Manning, 2022. "Perceived Water Scarcity and Irrigation Technology Adoption," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 173-201, National Bureau of Economic Research, Inc.
    5. Halonen-Akatwijuka, Maija & Pafilis, Evagelos, 2020. "Common ownership of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 555-578.
    6. Bertone Oehninger, Ernst & Lin Lawell, C.-Y. Cynthia, 2021. "Property rights and groundwater management in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 63(C).
    7. Smith, Steven M., 2021. "The relative economic merits of alternative water right systems," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    8. Leonard, Bryan & Parker, Dominic P. & Anderson, Terry L., 2020. "Land quality, land rights, and indigenous poverty," Journal of Development Economics, Elsevier, vol. 143(C).
    9. Dietrich Earnhart & Nathan P. Hendricks, 2023. "Adapting to water restrictions: Intensive versus extensive adaptation over time differentiated by water right seniority," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1458-1490, October.
    10. Ellen M. Bruno & Nick Hagerty & Arthur R. Wardle, 2022. "The Political Economy of Groundwater Management: Descriptive Evidence from California," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 343-365, National Bureau of Economic Research, Inc.
    11. R. Aaron Hrozencik & Nicholas A. Potter & Steven Wallander, 2022. "The Cost-Effectiveness of Irrigation Canal Lining and Piping in the Western United States," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 107-134, National Bureau of Economic Research, Inc.
    12. Grumstrup, Ethan & Rollins, Kimberly S. & Pram, Kym & Koirala, Samjhana, 2021. "The Effect of Climate Change on Agricultural Production with Priority Water Rights," 2021 Annual Meeting, August 1-3, Austin, Texas 314068, Agricultural and Applied Economics Association.

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