Preventing Water Wars Through Strong Property Rights

The Supreme Court’s recent order to the Karnataka government to release 15,000 cusecs of Cauvery river water to Tamil Nadu, which was later revised to 12,000 cusecs following violent protests in Bengaluru, underscores the gravity of the challenge of water crises faced by the nation.

The social unrest is merely symptomatic. Its roots, and perhaps even a relatively better solution than historically implemented ones, lie at the fundamentals of economics. I am not alluding to better mathematical formulae for distributing water, but to a more foundational question: Who owns water?

There’s no doubt that given its value to the humankind, water is a fundamental human right. But like any other resource, it’s also scarce. There’s only so much water available to feed the needs and requirements of everyone on earth. If equitable distribution of water were pragmatically possible, water wars would never have occurred – at least not to such magnitude. But the issue is complex and solutions must therefore account for this complexity.

It’s also evident by now that India’s historically attempted solutions to water crises have been nowhere proximate to eliminating the crux of the problem. On the contrary, the crisis seems to be exacerbating every year. This behooves us to at least begin discussing the truly audacious questions about ownership. Clarity about ownership shall inevitably lead to clarity about its sharing.

India derives its water laws from the English common law, which bases ownership according to the riparian system of water rights. In simple terms, this system allocates water according to land ownership adjacent to the water body. Evidently, those living in the interior, landlocked regions have weaker, more subordinate property rights under this system.

The alternative to riparian system is the legal doctrine of prior appropriation, which was adopted in most of the western states of North America owing to their aridity and acute water scarcity. Prior appropriation accords water rights to the person who first takes water for “beneficial use”, regardless of whether he owns the land. Property rights are strongly defined under this system, which makes water allocation as well as sharing simpler.

In India, the issue of water sharing was first dealt with, extensively but insufficiently, by the Indus Commission’s report in 1942. The commission was appointed to investigate the complaint of the government of Sind over its right to the waters of river Indus and its consequent disputes with Punjab.

Its report was the first authoritative examination of the issues surrounding the rights relating to inter-state water bodies, and discussed the water law as it applied in three cases: between individual riparian owners; between a provincial government and its inhabitants; and between two provinces.

With regards to water rights between two provinces, the commission held what it called the principle of “equitable apportionment” or the distribution of waters according to each state’s fair share of an inter-state river. This was categorically different from both riparian as well as appropriation doctrine. The only problem was the question of what exactly was a state’s “fair share” was left on the circumstances of each case. This left the door open for discretion and arbitrariness, the ramifications of which are reflected in the today’s Cauvery water sharing issue.

Interestingly, an April 2016 paper titled ‘Economic Analysis of Property Rights: First Possession of Water in the American West’, published by the National Bureau of Economic Research, throws light on the favorable effects of prior appropriation doctrine of water rights on economic growth. The authors Bryan Leonard and Gary Libecap studied 7,800 rights in Colorado, United States, established between 1852 and 2013, and found that this doctrine led to large scale investments in irrigation as it granted the right to divert water to lands distant from a stream.

Investments in turn led to long-run increases in income per acre in agriculture. This, Leonard and Libecap write, “does not incorporate multiplier effects from higher agricultural incomes that might have doubled the economic impact in each state.” You can read the entire paper here.

The bottom line being that property rights are critical to the solution of any disputes relating to the distribution of scarce resources such as water. These rights need to be defined properly, following which they also need to be strongly protected. The water wars pertaining to the Cauvery river would have been prevented had India adopted the prior appropriation doctrine that guarantees those rights.

Interestingly, the farmers of Tamil Nadu had an upper hand in the 1894 and 1924 water sharing agreement negotiations partly because the Chola kings had built dams and reservoirs as far back as the 10th century. The rulers of Karnataka built their first reservoir only in 1934. This is the classic prior appropriation doctrine at work, albeit subtly.

It may be radical, even primitive, for India at this stage of economic and social evolution to consider shifting to prior appropriation doctrine given the numerous political and social exigencies. But then an alternative, better, long term and sustainable solution is far from sight!