The economics of indigenous water claim settlements in the American West

Abstract

The American West confronts the challenge of fulfilling indigenous claims to water within the context of increasingly scarce and variable water supplies. 170 of 226 American Indian reservations have unresolved water claims that potentially exceed the region's hydrological capacity, generating uncertainty for tribes and off-reservation water users. To help resolve key uncertainties about dispute origins and outcomes, we construct a complete and novel dataset on Indian water settlements and reservation characteristics which we then analyze using a bargaining framework from economics. We find that rapid off-reservation population growth, water scarcity, and large anticipated water entitlements catalyze disputes. When more users are involved in the negotiations, transaction costs delay settlement, increasing water insecurity. We use our findings to predict allocations for 25 ongoing water right negotiations. These estimates help bound the uncertainty facing water managers throughout the American West.