The Economic Value of Clarifying Property Rights: Evidence from Water in Idaho's Snake River Basin

Monday, February 12, 2018 at 3:30pm

This is a past event.

Verna and Peter Dauterive Hall (VPD), 203
635 Downey Way, Los Angeles, CA 90089

Solutions Lab for a Sustainable and Equitable Future

The Economic Value of Clarifying Property Rights:

Evidence from Water in Idaho's Snake River Basin


Abstract: This paper exploits a novel reform in Idaho to measure the monetary value created by clarifying property rights for water. Between 1987 and 2014, the Snake River Basin Adjudication determined who had legal rights to use water and what trades would be hydrologically permissible, covering 139,000 water rights and 90% of Idaho's water use. Using differences in the timing of adjudication between different sub-basins, I identify the medium-run impacts of this adjudication. I find that adjudication caused a 140% increase in the frequency of water right trading, that these trades moved water to relatively more productive parcels of land, and that adjudication increased total crop acreage by 3.9%. To evaluate whether these benefits justify the $94 million Idaho spent in legal proceedings during the adjudication, I use a revealed preference framework and exploit quasi-random variation in federally-administered crop insurance prices to monetize the value of changes in crop choice after adjudication. I find that the one-time adjudication of the Snake River Basin increased the value of Idaho's agricultural output by $250 million per year.


Bio: Oliver Browne is a Ph.D. Candidate in The Department of Economics and a Research Fellow at the Urban Energy and Environment Lab at the University of Chicago. His research is at the intersection of applied micro-economics and industrial organization with a focus on energy and environmental markets.

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