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Political Externalities in Water Resources Management: The Experience of the Western United States

Congress: 2008
Author(s): Chennat Gopalakrishnan
Chennat Gopalakrishnan is a professor of natural resources and environmental management at the University of Hawaii at Manoa. His special area of expertise is water resource economics and policy. Gopalakrishnan has published five books and approximately ninety research papers dealing with current and emerging issues in natural resources economics and policy, a significant number of them in the water resources field. His most recent book is: Gopalakrishnan, Chennat, Tortajada C., and Biswas, A.K., eds. 2005 Water Institutions: Structure, Performance and Prospects (Springer) Gopalakrishnan has been the recipient of numerous academic awards and other honors. These include: · Fellow, American Water Resources Association, 2003 · Member, Editorial Board, Water Resources Development and Management Series, Springer, 2004-present · Member, Editorial Board, International Journal of Water Resources Development, 2001-present · Guest Editor, IJWRD Special Issues, 2005,2003 and 2000 Gopalakrishnan has presented on a sustained basis invited and selected papers at major national and international conferences on natural resource economics and policy, with special emphasis on water.

Keyword(s): political externalities, water resources management, Western United States, project performance
AbstractThe term “political externalities” is used to describe the many ways in which decisions and actions concerning the ownership, allocation, planning and management of water resources are influenced via the political process. The intrinsic problem with this process is that such decisions, viewed in light of past experience, all too often have been taken without paying due consideration to the basic economic principles of efficiency, equity, and sustainability. The overarching consideration that has guided the decision-makers in these cases has been the political benefits that could accrue from water management decisions favoring stakeholders or parties with significant political clout. Virtually every state in the 17 states in the American west and also in Hawaii and Alaska provide numerous examples of the pervasive presence of political externalities in the sphere of water resource decision-making. For instance, the many decisions handed down with respect to the allocation and diversion of water from the Colorado River to California and Arizona furnish examples of the role of political externalities. As well, California provides a further example of intrastate water transfer (from the water-rich north to the water-short south) triggered by political considerations. The objective of this research paper is to analyze specific water projects in the Western United States funded during the last fifty years through congressional appropriation with a view to determine their effectiveness in achieving the objectives of optimal water resource management. In this context, “effectiveness” is evaluated in terms of efficiency, equity and sustainability. The method used to achieve the objective is an analysis of a sampling of congressionally- funded water projects selected from a number of states in the Western United States, among them California, Arizona, Colorado, Oregon, and New Mexico. A comprehensive study of the benefits and costs associated with the selected projects, using both market and non-market valuation techniques, has been carried out to determine the efficacy of huge expenditures in promoting economic growth, environmental quality, employment, agricultural production, power generation, navigation and other ancillary objectives. The findings from the study are then examined using well- defined criteria of project performance. The study results point to a pattern of funding of water projects based on political expediency- the clout exercised by lobbyists and political action committees of elected officials and congressional delegates. In many instances, a positive correlation can be established between the size of the contributions of the political action committees and the nature of the funding outcome. The flurry of litigation that is currently underway questioning and challenging the propriety of decisions made with respect to allocation of tax revenues for pet projects of politicians is a clear indication of the pervasive presence of political externalities. The proposed paper will define and discuss the conceptual and empirical dimensions of political externalities, drawing on case studies and the review of extensive primary and secondary data, examine their implications for water resource management, and suggest possible policy options to address the problem.
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