Link to the Special issue’s ‘Introduction’.








Abstract: We analyze the economics of first-possession property rights to a large heterogeneous resource allocated under incomplete information and competitive claiming by agents. Our focus is on prior-appropriation surface water rights used in 18 western US states and generally in at least 3 western Canadian provinces, with specific attention to Colorado, 1852-2013. Prior appropriation was an institutional innovation, replacing common-law riparian rights, in a setting where water supplies were scarce, unevenly distributed, and remote from production sites where water was a key input. Prior appropriation emerged very rapidly within 20 years or less to be the dominant rights regime covering an immense area of over 1,197,000 square miles, suggesting large economic advantages relative to the incumbent institutional regime. Voluntary, large-scale property rights changes are unusual empirically. Prior appropriation encouraged valuable search and narrowed the information required to establish ownership to that described in immediate water diversion rather than an entire river basin. It thereby also lowered individual bounding and enforcement costs. Beneficial use revealed how much water remained for subsequent rights claimants. We examine the economic advantages of prior appropriation. The benefits of prior appropriation in general depended upon how rights were obtained, an issue that we examine in detail. At the time of claiming water there was little information about water source characteristics, and the process of claiming revealed such information. Hence, there was a tradeoff between claiming at a particular time and waiting. At any time, water rights claimants were equal in their lack of knowledge of the best water diversion locations. Each round of claiming revealed new information, but the quantities of remaining high-quality diversion sites were reduced. Individual claims were based on observable resource characteristics, such as current stream flow or quantity, distance to stream head, terrain topography, and proximate soil quality. Because claiming initially took place under open-access conditions, there was potential for rent dissipation. Nevertheless, so long as search revealed critical resource characteristics, they were stable, and individual claims were recognized, there was no basis for rent dissipation, even in a rush to claim given the number of claimants and resource size. In this regard we differ from the literature on first possession that generally points to full dissipation. Prior appropriation water rights became the basis for water trade, investment in dams and canals, and expansion of irrigated agriculture and other activities critical for economic development. Prior appropriation rights endure, affecting the distribution of water ownership and exchange. Assessment of the prior appropriation’s welfare effects requires accounting for its role in generating property rights to water, investment, production, and the transaction costs of water exchange.



Abstract: The French Pacific island ‘collectivity’ of New Caledonia has faced serious challenges in decolonising since the Second World War because, unlike Australia, New Zealand, Canada and the US, it is a settler country manqué. Instead of becoming a small minority, the indigenous Melanesian inhabitants (today called Kanak (invariable spelling)) comprise nearly half the population and hold 46% of the seats in the Congress. Most of them seek independence, whereas most settlers want to remain part of France, albeit with autonomy. For a century after French annexation in 1853, colonial segregation onto small, marginal native reserves and a lack of civil rights created a unified consciousness among the 30 indigenous language groups. Apart from forced or low-wage labour situations or conversion by missionaries, they intermingled very little with settlers, who included French convicts and small farmers, ranchers and nickel miners, as well as indentured Asian labourers and Polynesian workers from Wallis and Futuna or French Polynesia. The Kanak finally received civil rights in 1946 and were a demographic majority, so they supported a multiracial political party for a generation while the territory gained autonomy. However, in the 1960s, Paris revoked such self-governing powers during a nickel boom, and new immigration made the Kanak a minority, which hardened ethno-political polarisation and sparked an independence movement that culminated in a Kanak revolt in the 1980s. Two peace accords ensued, which restored autonomy and proposed a ‘common destiny’ for local citizens. The May 2014 elections chose a Congress that can hold a referendum on independence, but factionalism within each ethno-political bloc delayed forming a cabinet until April 2015, when some pro-independence leaders chose to cooperate with some loyalists.