Path dependency, water markets, and institutional change: A case study of the Newlands project

This thesis analyses the evolution and development of the water transfer process taking place in the Newlands reclamation project in Nevada. Water transfers from existing agricultural uses to supply environmental needs, primarily the protection and sustainability of endangered species and ecological wetlands, are mandated by federal law. This law, the Truckee-Carson-Pyramid Lake Water Settlement Act (P.L. 101-618), specifically directs the Secretary of the Interior to facilitate the acquisition of water rights through "voluntary" means from "willing sellers." It is argued that the mandated water rights acquisition programs are being implemented in an economic environment that exhibits institutional path dependency and lock-in resulting from the historical use of the doctrine of prior appropriation to allocate scarce water resources in Nevada. The work of Douglass C. North and institutional economics are used to explain this developing water transfer process.