Kanazawa on Libecap, _Owens Valley Revisited: A Reassessment of the West's First Great Water Transfer_

[eh.net-review at eh.net]

Published by EH.NET (March 2008)

Gary D. Libecap, _Owens Valley Revisited: A Reassessment of the 
West's First Great Water Transfer_. Stanford, CA: Stanford University 
Press, 2007. vii + 209 pp. $65 (cloth), ISBN: 978-0-8047-5379-1.

Reviewed for EH.NET by Mark Kanazawa, Department of Economics, 
Carleton College.


Gary Libecap has had a long and distinguished career as one of our 
foremost economic historians working in the area of natural 
resources. Part of Libecap's richly-deserved reputation derives from 
his uncanny ability to identify important resource topics surrounded 
by popular myths, and to perform careful analysis based upon hard 
data, to explode those myths. Thanks to Libecap's research, we 
understand timber policy, oil and gas management, deforestation in 
the Amazon River basin, and the Dust Bowl -- to name only a few -- 
much better than we did pre-Libecap. In his latest book Owens Valley 
Revisited, Libecap takes on one of the most enduring myths in western 
water history -- the famous (or infamous, depending upon your point 
of view) transfer of water from Owens Valley to Los Angeles that 
occurred in the early part of the twentieth century. This particular 
myth holds enormous sway among water historians (which the average 
economic historian might be surprised to hear is a pretty sizable 
group), and continues to hold sway in the popular imagination thanks 
in part to its retelling in popular histories such as Marc Reisner's 
_Cadillac Desert_ and its popularization in movies such as Roman 
Polanski's _Chinatown_.

In _Owens Valley Revisited_, Libecap refuses to fall under the 
popular sway. Rather, as in everything he does, he tries to get to 
the factual bottom of things by carefully marshalling theory and 
evidence to tell the most compelling story he can. The result is 
impressive: using extensive archival data, Libecap manages to 
convincingly demonstrate that the popular "rape and pillage" myth 
surrounding Owens Valley is in actuality much more complicated than 
generally perceived. The more compelling story that Libecap 
documents, and one that economists in general will find much more 
satisfying, is not one in which water was stolen in the middle of the 
night. Rather, Los Angeles and Owens Valley farmers engaged in a 
complex set of strategies and negotiations over the division of the 
surplus from use of Owens Valley water. The ability of Los Angeles to 
extract surplus -- and they did manage to extract quite a bit -- 
depended in large part on their monopsony status in the market for 
the water, given transactions costs that often (but not always!) 
impeded successful organizing by the Owens Valley farmers. And in the 
end, it all mattered little: Owens Valley was not reduced to a 
wasteland because of the diversion of its water to Los Angeles. 
Irrigated farming was likely not to last much longer in Owens Valley 
in any case and the diversion only had the effect of nudging the 
local economy towards grazing, which was much better suited to local 
conditions - all of which Libecap documents in the first two-thirds 
of the book with careful argumentation, data, and statistical 
analysis.

The remainder of the book gives a brief account of what happened 
afterwards, as Los Angeles continued to buy up land in Owens Valley 
and expanded and consolidated its water diversion system to send more 
water south to Los Angeles. Water deliveries gradually increased over 
time, and then jumped in 1970 when a second aqueduct to Los Angeles 
was completed. 1970 is, of course, a year that is quite familiar to 
environmental historians, a year known for the first Earth Day and 
the passage of the Clean Air Act, a year considered by many to be 
when the modern environmental movement was born. The expanded 
environmental consciousness also played out in the post-1970 struggle 
over diversions from Owens Valley and the neighboring Mono Basin that 
imposed new environmental consequences including the famous 
desiccation of Mono Lake and gave rise to litigation to fight the 
diversions -- none of which is completely new to water historians or 
legal scholars. Libecap, however, takes the occasion to reinforce a 
central message of his book; namely, the desirability of (more) 
freely operating water transfers. Far better, he argues, to allow Los 
Angeles and Mono/Owens interests to sit down and negotiate over 
division of the water resources than to engage in the contentious 
litigation that has plagued the ongoing struggle over the water for 
more than three decades. Far better than relying on the public trust 
doctrine to allocate the water, which weakened private rights and 
only increased the likelihood of contentious litigation.

Some economists will find the post-episode discussion, contained in 
chapters 6 though 8, a bit less satisfying than the earlier account 
and analysis of the episode itself. These arguments are not new, nor 
are they supported by data or new analysis. Libecap invokes arguments 
of impeccable economic pedigree, such as the danger of property 
rights attenuation under the public trust doctrine and the 
accompanying disincentives for investment. More satisfying, however, 
would be a more sophisticated treatment that went beyond what some 
might construe as (and I will say this way too strongly) blind 
free-market advocacy, and instead systematically considered factors 
such as transaction costs, litigation costs, rent dissipation, and 
interest group advocacy that have been stressed by legal scholars 
such as Carol Rose and Saul Levmore. The point is that just as the 
public trust doctrine is unlikely to work perfectly, neither is an 
unfettered market: under conditions that vary with regard to the 
above factors, each may have a role to play. There is no doubt in my 
mind that Libecap recognizes all this, and that the market 
orientation of the book is a conscious strategy to combat the "water 
is different" attitude that continues to pervade many discussions of 
western water. However, in my view scholars need to move beyond the 
black-and-white of current discussions of water markets and into the 
larger grey area where there is still a lot of work to be done.

None of these comments are to be interpreted as fatal criticism of 
this very fine book, in which Gary Libecap continues to cement his 
well-deserved reputation as one of our generation's finest economic 
historians.


Mark Kanazawa (Department of Economics, Carleton College) is 
currently working on a book on the emergence of water rights during 
the California Gold Rush.

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