The brother blog Indonesia Law Reporter has just posted a few reflections on an recent article by David Zetland, «Water Rights and Human Rights: The Poor Will not Need Our Charity if We Need Their Water».
This interesting article covers many important issues discussed by the Indonesia Law Reporter.
From a purely legal perspective, Zetland's article is guilty of totally ignoring the actual legal classifications pertaining to property rights and ownership, especially in the context of continental legal traditions.
In the Napoleonic tradition, property offers usus, fructus and abusus to the owner. Property may vary in form through specified modalities, and can be divided into constituent rights through recognised dismemberments.
These typologies and the related legal constructs and mechanisms, which are specific to each jurisdictions, have an important impact on the economic management of water resources because they often determine the transaction costs related to transfers of rights.
Unfortunately, blackboard economics tend to overlook the very significant impacts of legal «technicalities», which are particularly crucial in jurisdictions where the doctrine of numerus clausus is accepted (see for example this article).
According to this doctrine, the number of forms for property rights are not infinite, but limited to a specific few recognised forms. This forces newly proposed resources management regime to fit into the existing legal taxonomy for property rights, and constrains inovation.
Finally, although the assessment of the effectiveness of Zetland's proposal is entirely beyond the competences of this blog, it remains usefull to point out that all national scale experiments to create a water market for allocative efficiency have de facto failed up to now, and spectacularly so in most cases.