Major Water Infrastructure and Institutions in the Development of the American West

Canals, Dams, and Hydropower
  • Zeynep K. HansenEmail author
  • Scott E. Lowe
Living reference work entry


In the history of western expansion in the United States, arguably no natural resource has impacted the economy of the American west more than water. As a consumptive natural resource, water is necessary for urban growth and development, industrial mining, and for irrigated agriculture. However, water resources also provide non-consumptive, in-stream benefits, by allowing for transportation, energy production, and recreation. This chapter addresses the roles that water resources played in enabling western expansion in the United States, first into the trans-Appalachian west, and later into the more arid western territories. We address the institutions that arose in tandem with the development of water resources, and the complexities that competing demands have introduced to the management of these (often) constrained water resources.


Irrigated agriculture Dams Mining Western expansion Water resources 


Fresh water is a raw, consumptive natural resource, necessary for urban growth and development. However, fresh water is also an input to production that can be used to increase the productivity of mining and industrial processes and enable irrigated agriculture. In addition to its value as an input to production, water and water resources may offer transportation, energy, recreation, and environmental benefits, benefits that may be recognized in tandem with the consumptive or industrial uses and benefits that may in fact dominate the consumptive uses. In the history of western expansion in the United States, arguably no natural resource has impacted the economy of the American west more than water. However, for all of the benefits that they enable, water resources are not without costs and complexities. When scarce, water resources are virtually priceless but when abundant can be costly to restrain and even more costly when they generate damages via flooding. Unlike many of the in situ or sedentary natural resources, riparian water resources in the natural environment are transient and transboundary, crossing sociopolitical boundaries and meandering over time. Water resources are also fleeting – uncertain from day to day, month to month, and year to year, particularly in an age of heightened climate uncertainty and variability and even more so in the arid parts of the world in which water is the constraining input. Water resources are often of varying quality and can be rendered worthless due to degradation and pollution. Water is bulky and difficult to move but can be lost due to evaporation and groundwater recharge.

As much of the precipitation in the western United States falls in the high mountains and is stored in snowpack at a great distance from anthropogenic demand, humankind has been bequeathed with a natural, environmental buffer and storage service. However, the meting of water resources in the arid western United States rarely aligns with demand, so in order to overcome some of these complexities and uncertainties, humankind has developed great water works to store, pump, and move water and to put it toward beneficial uses. In tandem, water institutions and governance have evolved to regulate and distribute the vast water resources. Dams, canals, and aqueducts crisscross the American west, storing, elevating, and transporting water resources. Although effective and able to remove uncertainty from an otherwise exceedingly complex resource, major water infrastructure projects are costly and have often involved decades-long negotiations and politicking. This chapter addresses the role of major water infrastructure in the economic development of the American west.

Focusing first on western migration from the eastern seaboard to the trans-Appalachian west, we address the growth of the US canal system and the ways in which these canals enabled industrial growth, opened up new markets, and changed the composition of the Midwestern United States. Working in tandem with a growing rail industry, canals created a great commercial center in the Midwest. Contributions by Bogart (1913), Turner (1920), Rae (1944), North (1956), Cranmer (1960), and Ransom (1964), all addressed in this chapter, illuminate this epoch in the great American migration. This newfound access was not without cost – the urbanization and industrialization that resulted had a deleterious impact on the quality of life, noted by Haines et al. (2003) and Chanda et al. (2008).

Following this great first migration into the trans-Appalachian west, we look to the second great migration westward, into the more arid territories. Perhaps based on prior experiences and the great wealth that was created in the Midwest, pioneers and pilgrims found new wealth in the arid west in the form of mining and agriculture. Unlike the east, where water supplies were plentiful, water in the new arid west was a constraining resource: water supplies were snowpack-determined, and often were not available for many months of the year. As such, major water works and infrastructure provided a man-made source of storage, allowed pioneers to reclaim the desert, lengthened the growing season, and enabled the planting of crops that were previously thought impossible to grow. Hydraulic mining for precious metals required the diversion of rivers and the development of high-pressure water extraction techniques. Pisani (1984) and Reisner (1986) provide insights into the mining and agricultural booms in western American history.

The growth of water infrastructure and storage in the arid western United States necessitated a new era of water governance. Federal legislation, including the Homestead and Reclamation Acts, facilitated the migration west but also introduced a number of issues and complications. Coman (1911), Libecap (1981, 2011), Libecap and Hansen (2002), Hansen and Libecap (2004a, b), McCool (1994), and Rhode (1995), among others, detail these issues and complications.

Hansen and Libecap (2004a) discuss US land policy and show that the Homestead Act of 1862 worked well initially in the northern plains while sufficient precipitation (precipitation without prolonged drought periods) allowed farmers to utilize familiar farming practices on small farms. Although there were warnings (e.g., Powell’s call for a minimum of 2560-acre pastoral regions in the arid lands) and proposed bills to change federal policy, these were not considered, and strong sentiment for maintaining the emphasis on small farms remained. The prolonged drought during 1917–1921 was especially difficult for the homestead farmers of the northern plains, and as a result, many small farms failed. The prevalence of 160-acre and 320-acre farms in the region (and as a result a decline in average farm size) was due largely to the policy model and the restrictions imposed by the Homestead Act. Moreover, the prescribed dry farming techniques that called for intense cultivation of small farms (Libecap and Hansen 2002) produced further disastrous results for farmers in arid regions. Hansen and Libecap (2004b) address these externalities and analyze the origins of the great drought of the 1930s, linking the severe drought and wind erosion to the prevalence of small farms created by the Homestead Act (Hansen and Libecap 2004b). Farm size played a major role in contributing to severe wind erosion as well as inhibiting corrective action as most farmers were not operating at productively efficient sizes to adopt wind erosion controls, such as putting a part of their cropland to fallow.

Prior to the development of major water infrastructure in the arid western United States, conflicts between water users were particularly common, and given the limits of in-stream supplies, demand often outpaced supply (Coman 1911). Although the presence of large dams in the region, partially due to the Reclamation Act, enabled the spatial and temporal transfer of water resources across seasons making agricultural production viable, there were many negative environmental impacts, including the major declines in wild fish stock due to very low water levels in many streams and rivers (Hansen et al. 2014).

As cities grew, urban demands increased, creating the need to move water from distant sources. Technological developments allowed for hydroelectric power. Vast amounts of hydroelectric power fueled an industrial renaissance and electrified the farm, thus allowing agriculture to thrive in areas where even canals and aqueducts could not reach. Erie and Joassart-Marcelli (2000), Libecap (2009), Kitchens and Fishback (2015), Kitchens (2014), Kline and Moretti (2014), Reisner (1986), and Pisani (1984) all reinforce the importance of major water infrastructure in the electrification of the farm and home.

Westward Expansion

Scholars note that many canal openings, such as the Erie Canal in 1825, were viewed as “epoch-making events” – allowing for the growth of many of the larger northwestern cities and their development into centers of global commerce (Turner 1920). With the Appalachian Mountains geographically dividing the Midwestern lands from markets on the eastern seaboard, canals such as the Erie “provided dramatic proof that a canal to the West was both technically feasible and economically profitable” (Ransom 1964, pp. 365). The canals served as the “highway for a new migration” and provided thoroughfares that moved people into the new west and in turn returned the surpluses of the American west – namely, agricultural commodities and raw natural resources – to the urban centers from which they fled (Turner 1920; Rae 1944). The opening of canals in Ohio had a profound (and predictable) impact on commodity prices. The availability of new markets in the east resulted in a two- or threefold increase in prices paid for western agricultural commodities such as timber, wool, pork, wheat, and corn. Nonagricultural mineral commodities such as coal, salt, pig iron, and stone found easy access to eastern market. Similarly, the access to commodities sold by eastern markets resulted in a decline in the cost of finished goods such as pins, coffee, and sugar, as purchased by Ohio residents (Bogart 1913). Some canals, such as the Wabash and Erie Canal in Indiana, stimulated so much migration that the populations of the counties that it served had quintupled in less than 10 years (Rae 1944). Political historians have identified the new American west, at this time, as holding the balance of power and setting the course for future national progress, particularly with regard to the public domain, tariff systems, banking and currency systems, and interstate commerce rules (Turner 1920).

The growing canal system, together with the related growth in railroad access, “gave birth to the cities of Chicago, Milwaukee, St. Paul, and Minneapolis, as well as to a multitude of lesser cities” (Turner 1920, pp. 137). The Sault Ste. Marie Canal in Canada, at that time representing a small fraction of the total distance of water-based and canal traffic for all of the Midwestern commerce, saw more tonnage than the Suez Canal (Turner 1920). This Great Lakes traffic resulted in the development of several freshwater port cities, such as Chicago, Detroit, Cleveland, and Buffalo, with Chicago recognized by historians as the “metropolis of the Mississippi Valley” (Rae 1944). The growth resulted in a subsequent industrial and commercial revolution in the Great Lakes region after 1866 – “the tonnage doubled; wooden ships gave way to steel; sailing vessels yielded to steam; and huge docks, derricks and elevators, triumphs of mechanical skill, were constructed” (Turner 1920, pp. 150). Similarly, the economic and policy practices such as the fixation of rates by government officials – practices that would eventually be identified with railway management – had their genesis in early canal development and management (Bogart 1913).

Historically, there has been some debate regarding the overarching economic impact of canal investment. Ransom (1964) notes that many economists are quick to point out the indirect and induced effects of canal investments but ignore the fact that the returns from some canals were insufficient to justify the investments that were made in their construction. Cranmer (1960) identifies three distinct cycles in canal investment between 1815 and 1860: a first wave (1815–1831) noted by Cranmer as “canal mania,” in which approximately $50 M was spent on both public and private canals that were viewed to be some of the most successful canals constructed in the United States; a second cycle (1832–1844) in which over $70 M was spent on largely public canals; and a third cycle (1845–1860) in which approximately $56 M was spent, ending precipitously at the outset of the Civil War. The first phase of development was intended to serve as main arteries of transportation, whereas the last wave was intended to improve navigation to and from the Great Lakes (Rae 1944).

Ransom (1964) notes that by 1860, approximately 4,250 miles of canal had been constructed in the United States, with a total capital investment of over $190 M, reflected by a number of “spectacular successes… and spectacular failures”(1964, pp. 366). Using benefits estimated based on canal traffic and revenues generated, Ransom identifies approximately 25 canal segments (located in New York, Ohio, Pennsylvania, Indiana, Illinois, Maryland, and Virginia,) representing $102 M in state investment, and divides them into “probably successful” and “probably not successful” in terms of their benefits being greater than the costs of construction. Of the $102 M in state investment, he notes that only $16.3 M of the total was spent on canals that he deemed to be “probably successful.” Toward the end of the canal construction boom, he argues that it is undeniable that some canals were worthwhile investments that contributed considerable impetus to growth and increased the efficiency of the larger US economy. However, he is quick to note that in other cases, canal investments were unnecessary – there were too many canals that were competing with one another, perhaps replicating existing low-cost transportation opportunities such as rail, as opposed to opening new avenues of trade between regions. In many parts of the Midwest, freezing winters would shut down canal commerce and transit for many months of the year, making rail the only option for moving goods.

In support of the growing canal system, and to assist in their construction, the federal government provided aid in the form of land grants (Rae 1944). Unlike the development of the rail system, which received a substantial land grant allocation totaling over 130 M acres, the land grants earmarked toward canal development totaled only about 4.5 M acres (Rae 1944). As the precursors to the rail land grants, canal land granting adopted an alternating section practice, so as to stimulate development along the length of the canal – a practice which was later successfully applied to rail-focused land grants. Given the shorter length and capital intensiveness of the canal system, relative to the rail system, the land grant was viewed as only part of the financial package necessary to fund the canals and was of “slight assistance” (Rae 1944). At the time, there was very little political opposition to the land grants, particularly given the “prudent proprietor” doctrine, which posited that “since completion of the canals would greatly increase the price of the adjoining public land, Congress would simply be making a sound investment if it gave part of its estate away for a purpose that would enhance the value of the remainder” (Rae 1944, pp. 169). In reality, the intent of the land grant was not to fully fund the canal, but rather to “give some aid and encouragement to enterprises that were considered to be of national importance” (Rae 1944, pp. 177).

Canals provided a direct connection between markets in the east and the raw material in the west, stimulated migration, and set the foundation for further western expansion. However, the presence of the canals also opened up existing nearby lands that were inaccessible and/or wilderness (Bogart 1913). In 1845, before the completion of the Miami and Erie Canal, “not a single bushel of grain nor a single barrel of flour or pork was exported,” but by 1846, “over 125,000 barrels of flour and almost 2M bushels of grain were sent through the canal to the northern market” (Bogart 1913, pp. 58–59). The first-growth forests of the region were harvested for lumber and sold in eastern markets. Whereas previously wooded areas were cleared by burning, the presence of canal boats made clearing the land and selling the lumber in eastern markets more profitable. In general, however, the development of a canal or rail system did not open up new land, but rather made existing land available where it had been previously inaccessible for commercial production (North 1956).

The development of major water infrastructure energized the US economy, expanded agricultural outputs, increased urbanization and industrialization, and ultimately impacted the standard of living of all Americans (Haines et al. 2003; Chanda et al. 2008). The aggregate of the impacts resulted in a complex, often counterintuitive, outcome. Throughout the nineteenth century, as the major water infrastructure of the nation was being developed, the human health of the nation was at first heterogeneous but eventually became more homogeneous, converging toward a steady state. Access to clean water and improved sanitation eventually increased personal hygiene and thus the quality of life; access to more varied food sources, at a lower cost, of a higher quality and the ability to refrigerate foodstuffs increased the quality of life. However, urbanization and industrialization had negative impacts on the quality of life as well. Improved transportation served as a vector for disease transmission, and as cities grew, with their inhabitants often working long hours inside factories, people “lived closer together and were exposed to a larger set of diseases” (Chanda et al. 2008, pp. 23). Haines et al. (2003, pp. 409) find that “being born in a county with water transport connections in 1840 also is consistent with both a contagion and a commercialization view. The result that farmers were taller and that laborers were shorter is also supportive of these rural-urban effects.”

The Development of the Urban West: Mining to Agriculture

By the middle of the nineteenth century, although the mining boom in California was in full swing, agricultural development was still in its infancy, with many agricultural commodities still being shipped in from Europe and Asia (Pisani 1984). This would not last for long, as the skills that the miners acquired in building the vast mining waterworks that were used to extract precious metals from the mountain were eventually applied to building agricultural and municipal water infrastructure. Pisani (1984) notes that by 1867, the mining industry had constructed over 300 individual ditch systems across a total of 6,000 miles. Although many of these systems still remain, it wasn’t the infrastructure itself that would drive agricultural development in California, but rather the skills that were developed – the ability to design and construct irrigation works and water systems and the adaptation of mining tool fabrication processes to agricultural and industrial machinery.

Although the mining boom in California was fleeting, the growth of its agricultural industry would persist, starting with an agricultural boom in the 1860s and 1870s that mirrored the mining boom of the 1840s and 1850s. Pisani (1984) notes that by 1870 the number of miners in California had fallen from a peak of 83,000, 10 years earlier, to a mere 36,000. Conversely, over this same time span, the number of farmers more than doubled from 20,000 to 48,000, and the acreage of wheat farmland more than quadrupled. The growth in demand for agricultural products spurred a demand for the delivery of water resources. By the end of the 1860s, there was only a single canal, aqueduct, or dam in California; over the next decade, nearly two dozen more would be constructed (Pisani 1984). By the turn of the twenty-first century, California would be carpeted with over 1,200 major reservoirs, and almost every major river in the state would be dammed, some more than 14 times (Reisner 1986).

Migration west after the Civil War saw the number of farms, and the total population of California increase by nearly 50% throughout the 1870s. Whereas, in the early years of the agricultural boom, many farmers were planting forage crops and cereals, by the turn of the twentieth century, the plantings had changed – vegetables, grapes, citrus, and orchards were the norm, which in turn demanded additional water resources and infrastructure. By the late 1870s, only 200,000 acres of farmland in California were irrigated, but a mere 10 years later, the irrigated acreage had increased by 500% (Pisani 1984).

The Development of Agriculture and Water Infrastructure in the Arid West

Water rights laws and major water infrastructure in the arid western United States have long gone hand-in-hand and are reflective of the close relationship between the land and water. This land-water relationship has been an essential attribute of westward expansion since at least the middle of the nineteenth century, when most of the land in the western states and territories was still in the public domain and homesteading was a major policy emphasis (Hibbard 1924). Unfortunately, the Homestead Act of 1862, which was well designed for the humid lands located east of the 100th meridian, did not fit well with the arid conditions of the west (Xu et al. 2014). The western agricultural landscape boasts some of the most arid and rugged terrain in the continental United States. Agricultural lands in the arid western United States exhibit tremendous heterogeneity in topography, climate, soil types, and water resources, and for much of the arid west, melting snowpack comprises a majority of the agricultural water supply that is available during the growing season (Brosnan 1918; Hansen et al. 2011, 2014). Unlike farming in the east, which could rely on rain-fed, seasonal irrigation, agriculture in the western United States is entirely reliant on man-made irrigation and therefore is much more subject to the influence of the water infrastructure and water rights institutions where it is located.

Thomas Jefferson defined the dominant focus of US land policy as small, family farms when he claimed: “The earth is given as a common stock for man to labor and live on...(T)he small landholders are the most precious part of the state” (Hibbard 1924). US land policy, which began with the Land Ordinances of 1785 and 1787 that called for the orderly, systematic distribution of federal property to private claimants, continued with the Homestead Acts and between 1862 and 1935 became a period of major federal land dispersal (Gates 1979; Robbins 1942). The Homestead Act of 1862 allowed any family head to claim federal land between 40 and 160 acres and to receive title after satisfying the continuous residence and improvement requirement. The Homestead Act was modified in 1909 to increase the claims of land to 320 acres and again in 1912 to change residency requirement to 3 years. Moreover, the required fees and commissions under the law were adjusted. Following the Homestead Act, the Timber Culture Act, which granted 160 acres if settlers planted 40 acres of trees, was repealed in 1891 (Gates 1979). Hansen and Libecap (2004a) argue that the Homestead Act, the most commonly used law to claim federal lands, worked well initially, east of the 98th meridian, as the “familiar conditions” in soil quality and sufficient precipitation allowed farmers to transplant existing farming practices and knowledge. However, conditions were quite different in the Great Plains (Hansen and Libecap 2004a). Although John Wesley Powell made a warning in his “Report on the Lands of the Arid Region of the United States” to Congress in 1879 that arid lands necessitated new agricultural methods and called for a minimum of 2,560-acre homesteads for “pastoral regions” and proposed bills to change federal policy, these were not considered, and no significant modifications to land policy were implemented. The strong sentiment for maintaining the emphasis on small farms remained as illustrated by the statement of Representative George W. Julian of Indiana:

If our institutions are to be preserved, we must insist upon the policy of small farms, thrifty villages, compact settlements, free schools, and equality of political rights, instead of large estates, slovenly agriculture, wide-scattered settlements, popular ignorance and a pampered aristocracy lording it over the people. This is the overshadowing question of American politics. Worster (2002)

Libecap and Hansen (2002) explain that at the time, there wasn’t any scientific or experiential knowledge to support Powell’s claim. Their view is that the science was inconclusive to support the politically controversial modifications in federal land policy. Thus, they analyze the weather information problem in the Great Plains and show that the absence of knowledge about the region’s climate combined with the positive experience of homestead farms during wet periods, which corresponded with major settlement in the northern plains, led to optimism. The rise of folk theories to explain the weather “rain follows the plow,” which held that precipitation would increase with cultivation, and the pseudoscientific prescriptions for farming practices “dry farming doctrine,” which explained how the use of tillage would solve or alleviate the problems with drought, were readily accepted (Libecap and Hansen 2002).

A more accurate understanding of the region’s climate and the implications for small farms only emerged when the 1917–1921 drought was particularly hard on farmers. Prior to the 1917–1921 drought, optimism among farmers and western politicians was common, and Powell’s suggested distributions, which were 16 times the size of existing allocations, were considered extreme, and it was commonly believed that they would drastically reduce the number of farmers that could settle in the region. Politicians, however, wanted to increase the number of farmers (and hence the population) in their jurisdictions in order to encourage economic development and therefore supported the existing land policies. As Representative Thomas Patterson of Colorado explained: “…our agricultural lands… are limited, and the number of our population following agricultural pursuits must also be limited. But to have that number as great as possible, to swell it to its maximum,” the 160-acre homestead must not be exceeded (Patterson 1879 as quoted in Hansen and Libecap 2004a). In addition, a greater population expedited the territorial progress to statehood and increased the chance of having more voting members in the US House of Representatives. Thus, western politicians, including the territorial delegates, strongly opposed any major changes in the size of plots, and the Homestead Act remained generally unmodified except for a few minor changes, including the 1909 Enlarged Homestead Act that increased the claims of land to 320 acres. These 320-acre plots were still far smaller than those suggested by Powell, and subsequent events would reveal that they also were too small for long-term survival on the Great Plains.

A more complete analysis of the origins of the Dust Bowl of the 1930s, one of the most severe environmental disasters in North America, links this severe drought and wind erosion to the prevalence of small farms created by the Homestead Act (Hansen and Libecap 2004b). This analysis emphasizes the important role that farm size played in contributing to severe wind erosion as well as inhibiting corrective action. Most farmers were not operating at productively efficient sizes to adopt wind erosion control, such as putting a part of cropland to fallow. Larger farms had greater shares of fallow, and erosion was more severe in those Great Plains counties where cultivation shares were greater (Hansen and Libecap 2004b). Soil conservation districts, which could be as large as 600,000 acres, helped coordinate erosion control as farmers within districts entered into regulatory contracts. These regulations, combined with the gradual consolidation of farms, led to changes in cultivation practices that better protected the soil. Thus, when droughts affected the Great Plains in the 1950 and 1970s, the region was less vulnerable to wind erosion. Nace and Pluhowski (1965) report that while the 1950s drought was at least as severe as that of the 1930s, the wind erosion in the 1930s happened to be much more extensive and damaging.

The homesteading led to a decline in average farm size in the Great Plains as the settlers claimed and subdivided the land that had been previously occupied by very large ranches. Under the federal land laws, ranchers could not obtain title to these large plots, and many were broken up as the homesteaders arrived (Libecap 1981; Dennen 1976; Fletcher 1960). For example, in Fergus County, Montana, in 1904, prior to major homestead migration to the northern plains, there were 472 farms or ranches with an average size of 1,300 acres. By 1916, however, the number of farms had grown by over eightfold to 3,843, and average farm size had fallen to 322 acres, a decline of 75% (Libecap and Hansen 2002).

Indeed, homestead settlement led to the proliferation of small farms throughout the Great Plains. Over one million original homestead entries were filed for 202,298,425 acres in western Kansas, Nebraska, the Dakotas, eastern Colorado, and Montana between 1880 and 1925 (U.S. Department of Interior, General Land Office, Annual Reports of the Commissioner). Most farms were 160 acres, although the average homestead sizes larger than that were due to the 1909, 320-acre Homestead law. The prevalence of 160-acre and 320-acre farms was due largely to the model and restrictions of the Homestead Act. Indeed, the dry farming techniques prescribed by the USDA extension service and experiment stations from the region’s land grant colleges prior to 1917 called for intense cultivation of small farms of 160 or 320 acres (Libecap and Hansen 2002).

As mining opportunities and homesteading opportunities drew settlers west, those same miners and the earlier Mormon settlers from Utah (Coman 1911; Xu et al. 2014) heavily influenced the agricultural landscape in much of the arid western United States. In the arid northwestern United States for much of the nineteenth century, the only convenient water sources were located in close proximity to the riparian corridors; therefore early settlements rarely veered far from the major waterways. With the development of the Oregon Short Line Railroad in the 1880s, and major water infrastructure developments in the early twentieth century, settlements began to extend further away from the riparian corridors (Brosnan 1918).

A number of federal laws including the Carey Act (1894) and the Reclamation Act (1902) promoted the major water infrastructure projects in the arid western United States. The Carey Act encouraged private investment in water infrastructure and allowed for the private capture of profits from water sales (Xu et al. 2014). Unlike the Carey Act, which focused on private investments in major water infrastructure, the Reclamation Act provided federally subsidized funding for major water infrastructure projects in the arid western states and required the establishment of local water supply organizations to govern the use and distribution of water resources. These major water infrastructure projects profoundly transformed the agricultural landscape of the western states (Coman 1911; Hansen et al. 2011).

All told, the Reclamation Act authorized the development of hundreds of major water infrastructure projects, which were spread across the seventeen western states. With tens of billions in federal investment, Reclamation Act projects provide water resources to industrial, agricultural, and domestic users and hydroelectric resources for millions of those same users (Pisani 2002; Hansen et al. 2011). One of the primary goals of reclamation was to transform water resources into commodities that could be bought and sold (Pisani 2002). While the primary motivation for the Reclamation Act was to provide agricultural water, the water infrastructure provided a number of secondary benefits, including flood, tailings and debris control, fire protection, recreation, and navigation, among others (Hansen et al. 2011). Many of the projects that the Reclamation Act funded were financed through a Reclamation Fund, which was in turn financed through a cost-sharing agreement between the federal government and the local water supply organizations and through the sale of public lands (Pisani 2002). Immediately after the passing of the Reclamation Act, the federal government set aside some 40 million acres of public lands from use – including 1.5 million acres in Colorado, 2.7 million acres in California, 3.7 million acres in Idaho, 4.4 million acres in Nevada, and 8.5 million acres in Montana (Pisani 2002). The land that was “locked up” by the federal government through the Reclamation Act included many of the best reservoir sites and much of the publicly owned acreage that adjoined streams (Pisani 2002).

Over time, Hansen et al. (2011) find that the investments made by the federal government in the arid western states produced dividends. Those arid western counties with major water infrastructure were better able to deal with climatic variability, having more predictable agricultural production and fewer crop failures. The presence of major water infrastructure was particularly valuable during the regular drought or flooding events, when farms with access to major water infrastructure planted more acreage, of a higher value, with a greater harvest and fewer losses, than farms without access to a stable supply of water (Hansen et al. 2011, 2014).

Prior to the development of major water infrastructure in the arid western United States, conflicts between water users were common, and given the limits of in-stream supplies, demand often outpaced supply (Coman 1911). The riparian-based water laws that worked in the humid east, where water supplies were more plentiful and rarely were a binding constraint, did not work in the arid west. As settlements increased, population levels expanded, and large-scale agricultural practices replaced subsistence farming, a different rule of water law was needed. At the state level, in much of the arid west, appropriative-based water laws and rights were developed in order to establish and enforce the general rules of water use and to provide a mechanism for water distribution and ownership (Xu et al. 2014). These state-level rules of water law, many of which were being established at the same time that the territories were transitioning into statehood, and at a time when much of the nonirrigated land was still in the public domain, were profoundly influenced by earlier legislation. For example, the Desert Land Act (1877) set the stage for the wording of future appropriation legislation by requiring the identification of beneficial use and the documentation of the first date of use or prior appropriation (Xu et al. 2014). However, because of the nature of the water right, which often includes a place of use and a point of diversion from the riparian corridor, these water rights introduce barriers to trade that can limit the transferability of water and therefore may result in economic inefficiencies (Xu et al. 2014).

Water is a scarce resource in most regions, which is especially true in the western United States. The economic development of the west mostly followed the possession of and the ability to use water. Competition and conflict over water was common both for American Indians and non-Indian settlers (McCool 1994). Although the case of Winters v. United States (also known as the Reserved Rights Doctrine) of 1908 established that the federal government implicitly reserved the water rights of reservation lands, western states adopted water codes and policies that allocated water rights on the basis of priority of beneficial use (McCool 1994). Prior appropriation – first in time, first in right principle, which was also used to settle disputes in many natural resources, such as grazing rights and land use – became the legal principle applied to water use in the arid west, defining the development of the agriculture in the region (Pisani 1996). It has been argued that without prior appropriation, the capital needed to build dams and irrigation canals to transform the west into an agricultural region could not have been raised. Although the Reclamation Act of 1902 gave the authority and job of building irrigation projects to the federal government, private capital was used to reclaim most of the irrigated land in the west, and only about one in four irrigated acres used water provided by federally developed projects in the 1980s (Pisani 1996). Moreover, although westerners might have expected the federal government to foster the development of major irrigation projects, most (miners in California, western politicians, developers, and farmers) favored local control over water, where the administration of water rights were best left to individuals organized in irrigation districts (Pisani 1996; Worster 1985).

Utilization of prior appropriation in the western water allocation should not be considered only as a by-product, or the result, of its arid climate, as was first asserted by Walter Prescott Webb, since economic needs and conditions of the region were instrumental in shaping the water rights institutions in the western United States (Dunbar 1983; Webb 1931). Aridity in the west was a crucial limiting factor in the development of western agriculture, but the principle of prior appropriation was first considered in court cases regarding water use in mining in California. In mid-nineteenth-century California, prior appropriation allowed miners on the public lands to have the priority rights both in mineral claims and water with first possession or beneficial use (Pisani 1996). Thus, in some western states and territories, including California and Montana, the principle of prior appropriation was not intended to apply to agricultural lands initially. By the time the Desert Land Act was enacted in 1877, however, lawmakers formally recognized the rights of settlers to use water through the public lands for agriculture and other uses under the prior appropriation rules and procedures.

The Reclamation Act of 1902 was the culmination of a long political struggle to have the federal government help build major water infrastructures in the arid west. Although many westerners wanted federal funds for the irrigation projects, they did not want the federal control. The result was an act that was a compromise of federal funds and state control with prior appropriation laws. The reclamation iron triangle began to develop in 1889 with the creation of the Committee on Irrigation of Arid Lands in both congress and the states, even before the Act of 1902 (McCool 1994). This committee was made up of mostly pro-irrigation westerners well known for their regional emphasis and bias. Reclamation interests were also successful in sponsoring legislation through the Appropriations Committee, especially due to the chairmanship of Senator Carl Hayden of Arizona, who began serving on the Committee in 1928, became the chair in 1953, and served as the chair until his retirement in 1969 (McCool 1994). Among the many reclamation projects that Senator Hayden won for the west was the Central Arizona Project.

The decision-making process explaining the background and building of the Teton Dam in Idaho is a memorable example of the iron triangle of stakeholders, including interest groups, congressmen, and agencies working together as described by Engstrom (1976) soon after its collapse. To gain support for the Teton Dam project, its major advocates (the Bureau of Reclamation and the Fremont-Madison Irrigation District, represented by Mr. Willis Walker,) provided a significant quantity of favorable expert testimony to Congress and congressional committees and pushed for the building of the dam. These advocates wanted a multipurpose dam with flood, irrigation, and hydroelectric power production purposes. Although flood control was not the major purpose of the dam, the floods in the spring of 1962 and 1963 helped establish the need for a dam on the Teton River. The Army Corps of Engineers, which was also interested in the construction of a dam on the river, however, ruled it out after studying the feasibility of a levee system to help control the spring floods in 1955 (Engstrom 1976).

Since many farmers had “natural flow” water rights on the Teton River, the upstream users could only divert the surplus water after priority water rights were used. Thus, when the dam was built, it could not legally be filled with water unless the runoff was high. Thus, a plan was developed to put in a system of underground wells and pump water from the ground to the surface and into the river to meet the downstream water requirements. The plan called for 100 wells, with an estimated cost of $3,680,000 (Engstrom 1976). The storage was to provide supplemental irrigation water for approximately 114,000 acres in the Fremont-Madison Irrigation District. Phase II of the project was to provide water to 37,000 new acres of land carried by a 30-mile pump canal and 28-mile gravity canal. However, these benefits likely were overestimates, since 3 to 3.5 acre-feet of water could be sufficient to produce crops in the region and 87,000 of 111,000 acres already received an average of 11 acre-feet of water per acre of irrigated land (Engstrom 1976). Unfortunately, after the construction of Phase I was completed early in 1976, the dam was about 70% filled when the north side ruptured and collapsed, flooding the valley all the way to the American Falls Reservoir, killing 11 people and injuring hundreds.

As major water storage infrastructure was developed in the arid west, the water rights institutions within which they operated, in some cases, exacerbated the water distribution situation. For example, many of the storage water rights that are maintained at a great distance from the farms that utilize the water resources utilize existing riparian corridors to deliver the water resources. Therefore, a detailed knowledge of the river dynamics, taking into account losses from evaporation and groundwater recharge in addition to the ability to translate volumes of storage into dynamic flow measures, is necessary. Similarly, the electrification of the farm and the ability to tap into deepwater wells (which can be hydrologically connected to surface water sources) require a unified water rights system (Xu et al. 2014).

Although the direct (consumptive) impacts of the development of major water infrastructure in the arid western United States tended to be positive, the nonmarket impacts were most certainly negative. The presence of large storage dams, which enabled the spatial and temporal transfer of water resources across seasons, resulted in reductions in water available for ecosystem use and increased the intra-seasonal volatility in water deliveries (Hansen et al. 2014). Particularly in drought years, many streams and rivers in the arid western United States are dewatered for much of the year, reducing the opportunity for anadromous fish migration; this is particularly true for rivers in which the main channel is dammed. These rivers have seen major declines in wild fish stocks throughout the twentieth century (Hansen et al. 2014).

Rhode (1995) analyzes both the demand and supply forces that influenced the intensification of California agriculture from 1890 to 1914. There is a range of explanations for the transformation of California agriculture from extensive to intensive products, such as fruits. These explanations include improvements and changes in transportation with the completion of the transcontinental railroad, the spread of irrigation, and changes in labor market conditions with the increased availability of labor. Rhode, in his systematic investigation of economic forces to explain the shifts in California agriculture, finds that traditional literature overstates the relative importance of the transcontinental railroad in the transformation of California agriculture and instead finds falling interest rates due to decreasing scarcity of capital as well as advances in biological knowledge that resulted in increases in productivity to be relatively important supply-side forces in this transformation.

The Development of the Urban West: Agriculture to Urban Growth

Whereas canals and major water infrastructure in the eastern part of the United States used water resources as a capital input more akin to a technological input, for users in the arid west, water was a raw material input to production. In most cases, and in the whole of the arid western United States, water resources are the constraining input – there has always been far more land available to be irrigated than there is irrigation water available. Similarly, for many of the major metropolitan areas in the arid western United States, major water infrastructure enabled population growth and provides the water needed for urban, commercial, and industrial development. Examples include the greater Sacramento, Los Angeles, San Diego, Las Vegas, and Phoenix areas, which are home to nearly 10% of the total US population, and all of which receive less than 15 in. of precipitation per year.

The practice of importing vast quantities of water from distant sources in order to meet the consumptive demands of a burgeoning urban population was pioneered several millennia earlier by the Romans. Even in the arid southwestern United States, as recently as 1400 AD, the Hohokam civilization moved water dozens of miles in order to irrigate the desert (Reisner 1986). However, unlike the Romans and Hohokam, who relied on gravity to move the water from a relatively nearby source to site, many of the aqueducts that supply water in the arid western United States rely on costly pumping plants and move the water resources across elevational gradients, over many hundreds of miles. The City of Los Angeles “pioneered” the practice of importing water from a great distance – drawing water from the Colorado River, San Joaquin Delta, and Owens Valley. The Metropolitan Water District of Southern California, founded in 1928, serves more people, over a broader area, than any other water district in the United States. Without the availability of imported water, the existing local sources would only meet the needs of a small fraction of the total population (Erie and Joassart-Marcelli 2000).

In September of 1905, the City of Los Angeles issued and approved a $23 M (approximately $500 M in 2018 dollars) bond to build an aqueduct to deliver water to Los Angeles from Owens Valley, some 223 miles away (Reisner 1986). At the time, Owens Valley, which was agriculturally dominated, had vast water resources but very little agricultural potential – the volume of arable land was limited, the soil quality was poor, the growing season was short, and the cost of transporting agricultural commodities to market was steep (Libecap 2009). The aqueduct itself would take 6 years and upward of 6,000 people to build and in the process would result in 53 miles of tunnels, 120 miles of railroad track, 170 miles of electric transmission lines, and 500 miles of roads and trails (Reisner 1986). Surprisingly, in the early years, the aqueduct produced very little water for Los Angeles, with the lion’s share being delivered to higher-valued agricultural fields in the San Fernando Valley instead (Reisner 1986). In terms of total volume, by 1920 the Owens Valley watershed, via the Los Angeles Aqueduct, supplied four times as much water to Los Angeles as the Los Angeles River supplied (Libecap 2009). By 1930 (from 1900), property values in Los Angeles County had increased by 4408% but by only 917% in Inyo County, home to Owens Valley (Libecap 2009). This disparity is reflected in the current marginal value of water for agricultural uses ($15–$25 per acre-foot) when compared to urban uses (over $500 per acre-foot) (Libecap 2009).

Further north in the San Francisco Bay Area, the San Francisco Board of Supervisors, having already experienced a massive population surge during the mining boom of the mid-1800s, was interested in securing a long-range water source to meet the growing needs of the city (Starr 1996). This need was only amplified after the 1906 earthquake and major fire, which destroyed much of the city and led to calls for a high-pressure water system to prevent any future recurrences (Starr 1996). Over 150 miles away in the Sierra Nevada Mountains and, more significantly, entirely within the confines of Yosemite National Park, the supervisors identified the Hetch Hetchy Valley as the best site to build a reservoir on the Tuolumne River. After years of politicking, in 1923 the O’Shaughnessy Dam was completed – the second highest dam in the United States. It required 500 men and 3 years to complete (Starr 1996). Eleven years and $100 M later, the Tuolumne River waters arrived in San Francisco. All told, the Hetch Hetchy complex would encompass five major reservoirs, four dams, several hydroelectric facilities, and hundreds of miles of tunnels and pipeline (Starr 1996).

Until 1941, the water resources delivered to Los Angeles from the Owens Valley were the only sources of imported water (Libecap 2009). With a growing population, alternative sources were needed. The Colorado River Aqueduct and Storage Project, a $220 M project funded largely by property taxes, was completed in 1941. It supplied the greater Los Angeles area with two thirds of the power that it produced and over four million acre-feet of water (Reisner 1986). Unlike the earlier Owens Valley project, which was gravity fed, Colorado River water brought with it costly pumping requirements due to the need to move the water over great mountain ranges and across great distances (Erie and Joassart-Marcelli 2000). Hoover Dam “had been built to safeguard the future of the entire Southwest” and served as an example to all of the other states and countries that aspired to build truly massive water storage dams. The Colorado River, which the Hoover impedes, is not a huge river, ranking just outside of the top 25 in the United States in terms of total flow (Reisner 1986, pp. 257).

The California Water Plan, which had its genesis in the 1950s, presented a proposal for what would become the largest water project ever built by a state or local government (Reisner 1986). Previous water systems, such as New York’s Catskill Aqueduct or the Delaware Aqueduct System, which was completed during the Second World War and included 85 miles of underground tunnels, would be dwarfed in comparison with what was proposed in the California Water Plan. The California Plan, when compared to the Catskill Aqueduct that delivered water to New York City, would deliver four times the water over six times the distance (Reisner 1986). Unlike the Colorado River Aqueduct, the State Water Project, which includes the California Aqueduct and a number of smaller branch aqueducts and canals, was funded by water sales, as opposed to taxes (Erie and Joassart-Marcelli 2000). This is primarily because the water collection and distribution network is spread across the state, with dozens of dams and hundreds of miles of canals, tunnels, and pipelines.

The Electrification of the City and Farm

In the early 1930s, the Pacific Northwest region of the United States only had three million residents, over half of whom lived in rural communities. Of the rural population, over 70% had no access to electricity (Reisner 1986). Reisner (1986) notes that prior to 1933 the Columbia River didn’t possess a single dam; by the mid-1970s, the main stem of the Columbia and its tributaries possessed 36 great dams, including 13 “tremendous dams” such as the Grand Coulee, Bonneville, John Day, and Hells Canyon. As the Grand Coulee filled in the early 1930s, very little of its available hydroelectric power was utilized, which was due largely to the construction of the Bonneville Dam downriver (Reisner 1986). However, by the early 1940s, with wars raging in the Pacific and European theaters, over 90% of the hydroelectric power being produced by the Grand Coulee and Bonneville was going toward defense industries and processing the aluminum needed for weapons and airplanes (Reisner 1986). Reisner (1986, pp. 164) noted “the Axis powers were no match for two things: the Russian winters, and an American hydroelectric capacity that could turn out sixty thousand aircraft in four years.” Later, the Grand Coulee would provide inexpensive power to the burgeoning aerospace industry and would help to provide the electricity that was needed to develop the Hanford nuclear production facilities. To say that the Grand Coulee was a large dam was off considerably; according to Reisner (1986, pp. 159) “Hoover was big; Shasta was half again as big; Grand Coulee was bigger than both of them together.” The Grand Coulee was the largest dam in the world, both in the total mass of 10.5 million cubic yards of concrete and the crest length of nearly a mile, requiring 130 million board feet of lumber to build. The city that arose to support the workers had more bars and brothels within a 5-mile radius than any other area in the world (Reisner 1986).

The impact of the Rural Electrification Administration (REA), in tandem with the availability of relatively inexpensive hydroelectric power, brought electricity to rural farms and significantly increased crop productivity, output, and land values (Kitchens and Fishback 2015). The dams themselves not only provided flood control and water for irrigation but also increased the economic potential of farms at a distance from riparian water sources by providing electricity that could be used to pump groundwater and process agricultural commodities. Pisani (2002, pp. 204) estimates that the electrification of the farm “added 10 million acres of bench and mesa land into the West’s supply of irrigable land.” It is difficult to disentangle the REA benefits from the benefits that arose from the major water infrastructure complexes (Kitchens 2014). From the early years of the Reclamation Act, hydroelectric power was seen as a resource that would “revive and expand old industries as well as create new ones” (Pisani 2002, pp. 203). Given the sheer landmass of the arid west, its scattered population, and rugged terrain, a rail system built on electricity as opposed to coal made tremendous sense. Electric rail was believed to be “cheaper, faster, more efficient, and less vulnerable to cold weather and mechanical breakdown than steam-powered trains” (Pisani 2002, pp. 204).

By the early 1940s, many of the nation’s largest hydroelectric dams and complexes were completed – including the Grand Coulee, Hoover, and the Wilson and Norris Dams under the Tennessee Valley Authority (TVA). In the early 1930s, farming accounted for only 2.6% of all electricity consumed; by 1940, rural farm electrification had increased by 230% (Kitchens and Fishback 2015). As with most hydroelectric projects, the areas that receive the hydroelectric-produced electricity have some of the lowest, if not the lowest, electricity rates in the country (Kitchens 2014). This is certainly true of the TVA, which included a series of canals, roads, flood control systems, reservoirs, and dams (currently 29 hydroelectric dams) that provided hydroelectricity to many farms and homes that previously didn’t have access to electricity, as well as a broad array of co-benefits such as flood control and navigation improvements (Kline and Moretti 2014; Kitchens 2014). The TVA provided electricity to seven southeastern states, and although the short-term, aggregate economic impacts from the electrification that the TVA did provide, relative to its costs, aren’t substantial, the aggregate infrastructure investments, flood protection, and transportation safety resulted in “the model intervention for any nation that sought to develop its water resources” (Kitchens 2014, pp. 390). The fact that the TVA was a place-based investment raises the fear that any localized benefits may be offset by losses elsewhere in the United States (Kline and Moretti 2014). However, over the long run, Kline and Moretti (2014) found that the net present value of the benefits from the TVA is on the order of $6.5–19.2 billion, with notable industrialization and the creation of manufacturing employment opportunities and high-paying manufacturing jobs. Overall, there were minimal indirect effects from the TVA, but the lion’s share of the national direct impact, which was an increase in productivity of the domestic manufacturing sector by a third of a percent between 1940 and 1960, came directly from the investments in public infrastructure (Kline and Moretti 2014).

Concluding Thoughts

Water and water management are complex economic resources that have resulted in equally complex physical infrastructure, institutions, and governance. In the history of the US west and western migration, we argue that no natural resource has impacted the economy more than water and the infrastructure and governance that it promoted. The major water infrastructures of the west – dams, canals, and aqueducts – that crisscross the arid land have facilitated this migration by storing, elevating, and transporting water resources. Water in the arid west is the constraining input to growth, so major water works and infrastructure were needed in order to provide storage and to allow humankind to reclaim the desert. Federal legislation, including the Homestead and Reclamation Acts, encouraged and facilitated this migration. The institutions that developed in tandem with mining, agricultural, and urban water demand in the arid west bore little resemblance to the riparian water governance of the east. As cities grew in the arid west, urban demands increased, and technological innovations allowed the vast stored water resources to simultaneously create hydroelectric power, which fueled an industrial renaissance and electrified the farm.

In the age of heightened climate variability, major water infrastructure continues to play an important role in mitigating the potential impacts of floods and droughts (Hansen et al. 2011). Greater historical perspective, strengthened by the quantitative approach to economic history, i.e., cliometric research, has been essential in providing insights for the current debate about the effects of climate change and climate variability and how best to respond to it. The expansion of agriculture west of the 100th meridian during nineteenth and twentieth centuries in North America encountered climatic variability that was not predicted or previously experienced (Olmstead and Rhode 2008). Thus, historical analyses of how those variable climatic conditions were addressed in the past can and will provide valuable information for addressing heightened climatic variability and it impacts. For example, Hansen et al. (2011) show the significant impact of water infrastructure and water management on crop mixes, fallow practices, and agricultural production in the western United States using large-scale, comprehensive data, such as county-level water infrastructure data that is spatially linked to topographic characteristics, historical climate data, and historical agricultural data during the twentieth century. In addition to examining the agricultural land use and crop productivity benefits of water storage infrastructure, the literature has addressed some of the potential ecosystem impacts, such as low levels of stream flow and water supply variability that may have been exacerbated by the water supply infrastructure and water rights governance in Idaho using cliometric techniques and exploiting the long-term patterns of water transfers between cold and warm seasons (Hansen et al. 2014). This more comprehensive and quantitative way to evaluate the long-term impacts of water infrastructure development and its management on agriculture and natural ecosystems in the semiarid regions will continue to help illuminate the debate on the trade-off between the agricultural benefits and ecological impacts and lead to a set of more balanced policies in the future (Hansen et al. 2011). Comparative analyses of crop mixes and agricultural yields, hedonic analyses of the impact of water infrastructure on property values and recreational use values, and estimates of the value of the hydroelectric power that dams provide do not capture their true impacts, and such analyses require better understanding and the incorporation of institutional responses and more rigorous econometric analysis with a longer time frame (Libecap 2011; Hansen et al. 2011). The institutions that emerged in response to the agricultural needs in semiarid regions of the United States are still here today and play a key role in today’s water markets by raising the costs of reallocating water to higher-valued uses (Libecap 2011). Prior appropriation and governance of water rights systems provided framework for water allocation, use, and investment, and this framework continues to impact the contemporary use and allocation of water in response to new urbanization and environmental, industrial, and agricultural demands (Leonard and Libecap 2017).

The hydroelectric power enabled by the major water infrastructure provides a renewable and sustainable, carbon-neutral, inexpensive electricity production technology when compared to nonrenewable coal- or natural gas-based electricity technologies. Over a third of the US population lives in states at, or west of, the 100th meridian that also comprise a majority of the food-producing capacity in the United States. However, whereas in the past the focus was on constructing major water storage and transportation infrastructure, looking forward, much of the focus has been on decommissioning and removing this same infrastructure. Environmental awareness and a returned focus on the in-stream values of wild-flowing water, including recreational uses, first foods, and the survival of endangered and threatened native species, have elevated this conversation. Far more dams have been decommissioned than constructed since the last major dams were proposed in the late 1960s and early 1970s (Pisani 2002). In fact, much of the new major water infrastructure that has been proposed is focused more on rehabilitating the aging inventory of major dams, adding hydroelectric production capabilities to those that lack it, moving water resources away from the major dams, providing alternatives for migrating fish species, and raising the height of existing dams so as to provide storage for additional water resources. As climate-driven conversations emphasize the need for sustainable energy resources, and nonconsumptive uses exert more influence on water management decisions in the arid western United States, the contributions of cliometricians, in an attempt to better understand how we have arrived at the constrained situations that we find ourselves in today, are essential components of the discussion.



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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of EconimicsBoise State UniversityBoiseUSA

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