Premium
THE SACRAMENTO DIVERTERS CONTROVERSY–A STUDY IN THE LEGAL ADJUSTMENT OF EXTERNALITIES
Author(s) -
Shapiro David L.
Publication year - 1971
Publication title -
jawra journal of the american water resources association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.957
H-Index - 105
eISSN - 1752-1688
pISSN - 1093-474X
DOI - 10.1111/j.1752-1688.1971.tb05069.x
Subject(s) - settlement (finance) , revenue , externality , politics , adjudication , water right , law , public administration , business , natural resource economics , political science , economics , law and economics , finance , water resources , payment , microeconomics , ecology , biology
A water rights controversy involving the Bureau of Reclamation illustrates that public water projects may be built to eliminate ownership externalities (non‐enforceable water rights) that were created by existing legal institutions. The controversy followed the construction of the Shasta Dam in California and arose out of the use of the Sacramento River as a conduit for the projects water. Diverters along the river claimed rights to all water in excess of the “natural flow.” As the Bureau had built the project without determining the rights involved, 20 years elapsed and $3 million was expended to resolve the controversy. The Bureau's attempts at legal adjudication were thwarted by political pressures placed on the Secretary of the Interior who ordered a settlement that considerably deprived the Bureau of revenue and of water rights. The “shortages” created helped give impetus to the construction of the Trinity Project. The description of the controversy is followed by numerical estimates of the wealth losses to the general public caused by the controversy itself in loss of revenues as well as the losses occasioned by the Bureau's permanent loss of water rights.