The Federal government can undermine or support state water laws and programs by asserting its legislative power to manage domestic water resources. Predicting the future thrust of the Federal government's legislative involvement in water resources can help states build flexibility into their plans and anticipate where they may be able to get Federal funds to accomplish their water management plans. This paper applies the economic concept of technological externalities to predict that future Federal involvement. The hypothesis of this paper has two parts: 1) that in addition to becoming involved in water resources management to provide public goods and promote the settlement of the West, the Federal government also used its legislative power when externalities were present; and 2) that the externalities are non-excludable, non-rival, negative, and affect a large number of people. To test this hypothesis, historical areas of Federal water resources legislation are reviewed. They include: 1) changing or limiting surface water quantity, location, and use; 2) protection of surface water quantity; 3) protection of air quality; 4) ground water use; and 5) protection of ground water quality. The first part of the hypothesis is supported because externalities have been corrected. However, the second part of the hypothesis is rejected because the externalities associated with these areas are non-rival or rival, not just non-rival. The historical pattern of Federal involvement is that it attempted to correct non-excludable, non-rival or rival, negative externalities that affect a large number of people. Applying this pattern to future areas highlights five potential areas of future involvement: instream flows, cloud seeding, wetlands, vegetation, and non-point source pollution. States should incorporate these areas into their management plans and identify other externalities to maximize their use of Federal resources.
Neir, Alyssa M.. "The history of the Federal government's involvement in water resources : an attempt to correct externalities?." (2010). https://digitalrepository.unm.edu/wr_sp/141