If you are attracted by the libertarian ideas of Rand Paul, or those of Ted Cruz or Paul Ryan for that matter, you should pay attention to a little brouhaha over water rights in Nebraska.
It isn’t a refutation of their ideas. Indeed, one aspect supports what they advocate, but it does illustrate the knotty problems our country faces with a population rapidly approaching 320 million and increasing demand for natural resources. Perhaps libertarian-based policies could reduce government regulation in its current form, but that wouldn’t make underlying challenges or disputes go away.
Start with the basics of the problem. The Republican River basin covers parts of three states, northeastern Colorado, south-central Nebraska and northwest Kansas. It is 450 miles long and merges with a stream to form the Kansas River at Junction City. Not large enough for navigation, it is an important regional source of irrigation water.
In the West, the saying goes, “Whiskey is for drinking and water is for fighting over,” and the Republican is no exception. Higher water withdrawals up a stream inevitably reduce flows further down. On the Republican, Nebraska is upstream and Kansas downstream. Who gets to use how much water has been a fight for nearly a century. The two states, together with Colorado, where the headwaters arise, reached an agreement, or “interstate compact,” in 1934 specifying how much each state is allowed to use.
In water law, an agreement like this never really ends disputes, although one can narrow the scope of further litigation. Over the years, Kansas felt it was not getting the water due under the compact, and it brought suit. The case went to the U.S. Supreme Court, there was arbitration, and Nebraska agreed to let more water flow into Kansas.
Higher flows into Kansas mean that someone in Nebraska has to use less. The question is who.
There are two general approaches to allocating water in our country. The first, “riparian rights,” which derives from English common law, ties the right to use water to owning land along a stream or lake. Most states in the East, including Minnesota and Wisconsin, follow this doctrine.
The second, “prior appropriation,” severs the right to water from ownership of land. The key provisions are that it be taken for “beneficial use,” that “first in time is first in right” and that one must “use it or lose it.” This doctrine prevails in most arid Western states.
Some on the border, including, the Dakotas, Nebraska, Kansas, Oklahoma and Texas, have a hybrid approach that adapts some riparian rights to a basically prior appropriation system. So do the coastal states of California, Oregon and Washington.
In riparian systems, when a shortage forces cutbacks, these are shared by all, regardless of when any single user began to take water. Under prior appropriation, the newest or most “junior” permit holders get cut off sequentially to meet the shortfall.
That is what happened in Nebraska. The fight right now is not over whether the state of Nebraska has the right to cut off some permit holders but whether it owes them monetary compensation for doing so.
So what does this all have to do with contemporary politics? The answer is that this case exemplifies the common situation where the actions of one person harm another person, or what economists call an “external cost.”
As a teacher, I find that the libertarian ideas of individual responsibility and sharply limited government regulation of private activity are attractive to many young people. Rand Paul is the most overtly libertarian of the rising stars in the GOP, but Ted Cruz, Paul Ryan and even Scott Walker emphasize libertarian themes. And the Tea Party movement sounds some of the same notes, though not consistently.
Everyone has experienced apparently inane or stultifying regulation. So cutting back government control strikes a chord in many, but particularly among the young, who often have a romantic blindness to nuance.
But what do you then do when the actions of one person hurt another person?
Individual freedom is good, but it has always been recognized that the right to swing one’s fists stops short of your neighbor’s nose. What if such freedom involves taking water your neighbor could use or letting smoke or sewage from your property flow onto your neighbor’s?
One approach is to deny that any such conflicts arise. Sarah Palin argues that no one should be able to tell you that you cannot drill a well on your own property. A GOP party official in Mississippi, in speaking of coal, said government should not be able to bar you from using something you have. Some time ago, a popular libertarian pundit argued that government bureaucrats should be “beaten into a pulp” for saying you cannot buy detergents containing phosphorus.
But uncontrolled well drilling can destroy an aquifer. Burning coal can harm people and property downwind. Phosphorus in wastewater causes algae blooms that can taint drinking water, as recently happened in Lake Erie. All of these involve great economic inefficiency, great waste of useful resources. So if you don’t like government regulation, at least of the kind practiced now, what do you do?
Paul and Cruz generally avoid the issue, but if pressed would probably cite the work of Nobelist Ronald Coase, who argued regulation could be minimal as long as you specified everyone’s rights and responsibilities relative to property very precisely. Do that, and then leave settling disputes up to the courts.
In many ways, the “prior appropriation” doctrine of water law is an attempt to do that. Under that doctrine, states didn’t have to spell out detailed rules for water use. But slimmer regulation has been offset by voluminous litigation. And something like the flow levels of the Republican River are easy to define and measure. Even the effects of taking water from the Oglala aquifer are harder to quantify, and those of a power plant putting mercury or sulfur oxides into the air more difficult, indeed.
The 1934 river compact between Kansas and Nebraska heartens those who like “subsidiarity,” the principle of making decisions at the lowest practical level. I’m personally glad to see this be a matter between the two states rather than one for the Department of the Interior or Congress itself. But again, an agreement between two states over a precisely defined river basin is much easier than trying to address coal smoke from a dozen states affecting dozens of other states.
This controversy shows us there are alternatives to federal command-and-control regulation of every situation of external costs. It also shows that even if we switch to a libertarian approach, problems are still going to be vexing.