Groundwater Management in California: Rent-Seeking Behavior Under the Correlative Rights Doctrine

Abstract

"Groundwater is managed in California under two separate property rights systems. In the urban portions of Southern California, groundwater rights have been adjudicated. Adjudication modifies the Correlative Rights Doctrine, as established by Katz v. Walkinshaw (1903), by granting private property rights to a fixed quantity of groundwater. Without this modification of the Correlative Rights Doctrine, groundwater use is governed by common property rights. Groundwater use under common property rights, as compared to private property rights, result is a higher rate of overdraft and a lower level of income. Groundwater users in the San Joaquin Valley, despite high rates of groundwater overdraft, have not adjudicated rights to groundwater. Rights to groundwater were adjudicated in the South Coastal Plain of Southern California because establishment of private property rights allowed those with these rights to capture a rent from groundwater use. Alternative water supplies, mainly from the Metropolitan Water District, were more expensive than the cost of groundwater which encouraged most water users to use groundwater. The demand on the groundwater resources of the area threatened to raise the cost of groundwater and eliminate the cost differential between groundwater and water from the Metropolitan Water District."