| This dissertation investigates a recent phenomenon in New Mexico's water history: the emergence of large and complex water rights settlement agreements as a mechanism for resolving longstanding problems regarding water allocation and management. The settlements stem from water rights adjudication lawsuits that have been ongoing for decades, and they are connected in some cases to efforts to resolve Native American claims. The adjudications and associated settlement agreements involve thousands of diverse litigants and stakeholders with a wide variety of interests, including tribes and pueblos, centuries-old acequia communities descending from Spanish land grants, other non-Indian irrigators, ranchers, municipalities, industrial interests, and domestic-well owners. Using case studies of four settlement agreements signed between 2003 and 2006 as the basis for the analysis, the research examined why the settlements were negotiated, how they differ from traditional litigated water rights adjudications, and the extent to which they represent institutional change in the allocation and management of water resources. The research is based on information obtained from document reviews, observation of relevant meetings, and interviews.;The central argument presented is as follows: the settlement agreements were negotiated to short-circuit the extremely slow and expensive court-based water rights adjudication process; to reduce uncertainty regarding water availability; and, especially, to resolve serious over-allocation problems without using priority administration, which would have caused major negative consequences for the state's economy. Water is significantly over-allocated in key basins in New Mexico, resulting in unsustainable use of water and diminishing resources, a situation that will need to be corrected with increasing frequency in the future. Although New Mexico water law and management is fundamentally based on the doctrine of prior appropriation, using priority administration to curtail total water use would result in severe economic welfare losses because the lowest-priority water uses generally yield the highest increments of economic value (i.e., marginal benefits). Market transfers of water have the potential to mitigate some of the welfare losses, and trade in water rights has a long history in the state, but the existing market mechanisms are inadequate to avoid the large welfare losses that would follow if rigorous enforcement of priority was used to correct over-allocation.;The settlements differ from traditional litigated water rights adjudications in that they allow water rights to be determined through collaboration and negotiation among the various claimants and stakeholders instead of following the relatively rigid and inherently adversarial court process. More alternatives are possible with settlements, such as opportunities to streamline the process and obtain government funding to provide incentives for compromise. In addition, contrary to traditional adjudications, the water rights settlement agreements alter the rules for how water rights will be administered in the future. Defining institutions as the formal and informal rules societies use to govern themselves, and given that five major water rights settlement agreements representing more than a third of the water consumed annually in New Mexico have been signed to date, the settlements can be viewed as a fundamental change in institutions governing both how water rights are determined and how they will be administered. |
