Property rights on river - FAQ

I spend some good amount of time on evolving the idea of property rights on water resources, especially rivers. I checked the community threads about it, but most people (even here) have fallen back on the idea having rivers treated as public property, since craving property rights on river sounds too complicated.

Q: How do you define the property rights on the river?

Ans: The definition of property rights on the river would be through homestreading principle.

Anyone making first use of the water has a right to own it. In the current setup, the most practical way of doing that is to have various river banks treated as the property(technically even today they are property because they are on land) of their homesteaders. With evolution in technology anyone making use of surface of the river will get property rights on it.

Q: How much water can an owner extract, what rights does he have?

Ans: The property owner can extract as much water as he wants, and can. In market that water will be sold to the people whose property does not have direct access to the river. This is not an extra charge for nothing, the river owner is asking money for supplying water through his proerty which is a usage of his property.

Q: Does this mean that those who live far away from the river will have a disadvantage?

Ans: No! The land prices of a property far from river will be less than a property right next to river, because it costs more to get water to a farther area than to a property close to the river. Also the price you pay for receiving water that far would be quite just considering the costs involved. You will be paying the land owners from whose property the water line goes through.

This is similar to the ongoing Iran-Pakistan-India gas pipeline project. India is going to paying heavy amount of money every year to Pakistan so that latter ensures that the pipeline remains secure and is not disturbed. This is a service Pak govt will provide to Indian govt.

Q: What are the rights of downstream owners? Wouldn't upstream owners take all the water from the river, leaving nothing for the downstream owners? Nobody would want to be in downstream.

Ans: Well its true that the upstream owner can extract all the water from the river, or even stop the flow of the water(provided he can do that without causing flood), and it will not be a violation of private property rights, of the downstream owner, it would not be a bad situation. The downstream owner will have to buy the water from upstream owner. The rate would be the same market rate at which the upstream owner supplies the water to upstream basin people(lets call it the upstream water market). The downstream owner will be able to afford this rate because he also has a market of water buyers who need to use it(lets call it the downstream water market).

Q: This raises an interesting question, wouldn't upstream people be using the water too much since they just have the water very easily available to them? They will be filling up their swimming pools and water parks, when the downstream people will be going thirsty.

Ans: The answer lies in marginal utility of river water.  When the urgent needs of upstream people are fulfilled the marginal utility of water to them is now reduced, at the same time, since the downstream people have no water, so the marginal utility of water has increased for them. Consider it this way, if a guy needs water to fill up his pool, and another guy needs water to drink, which one of them would be willing to pay a higher price for the water? The answer is, the thirsty guy.

So for the upstream river owner, the only next best price he can get from buyers would be from downstream owner. So once water is supplied to the urgent needs of upstream people, the water will be now supplied to downstream people. The upstream guy will now sell the water to the downstream people. Once the urgent need of downstream people is fulfilled, now whomsoever needs to really fill up his pool will get the water(because his marginal utility is now on priority).

Q: Does that mean that living in downstream is costly than living upstream, compared to the time when the river was a public property?

Ans: Only marginally. See you are not paying an exhorbant amount of price for the water. You are merely buying clean water from the upstream river owner. Today if you live downstream, the river is really filthy, you cannot get clean water. So to get clean water, you are paying a small amount of fee to the upstream owners.

This fee is basically paid so that they don't pollute the water. Also if upstream guy pollutes the water, the downstream owner gets to drag him to court for damages.

Q: Are there any other advantage of having private property rights on river?

Ans: Lots of them. First of all, the marginal utility of water will directly decide how much water is supplied to whom. For example in a delta of two rivers, there is a plenty amount of water. So the the marginal utility of water for the people living here would be less than to upstream owners. This means the upstream owners can extract more water and supply it to more needy people.

The downstream people will get clean water which currently is not possible. There will be no pollution, there is no way factories will be able to dump their waste in the river because it won't be worth the cost.

 

Feel free to agree/disagree on these issues, I would love to get some output from people here. Also if there are any new question, I would add them, and make it a bit more comprehensive FAQ. I have realized that FAQs are the best way to explain Libertarian concepts to people, because generally Libertarianism deals with encountering govt indoctrination in the minds of people, so questions-and-answer format is the best way to explain it to people.

Traditionally, a river served as a dividing line between two properties.  Each landowner owned up to the center line of the bounding river.  He could take only a "reasonable" amount of water from the river - e.g. enough to satisfy stock grazing on his land, but not necessarily enough to irrigate his land.  He was not allowed to dam the river, even in conjunction with his opposite neighbour, since that would interrupt the flow downstream.  Nor is he allowed to pollute the river, and he has to pay compensation if he does.

According to your principles, I could come to an existing riverine community, and build an enormous dam at the head of the river, enough to deprive everyone downstream of water.  They would then have to buy from me.  That seems most unfair.

You might as well say that anyone can intercept sunlight from someone's property, e.g. by constructing huge solar panels next door.

Or that anyone is entitled to leave rotting carcasses on their land, inflicting a stink on landowners downwind.

I think the traditional concept of riverine rights is more attractive.

LanceH:

According to your principles, I could come to an existing riverine community, and build an enormous dam at the head of the river, enough to deprive everyone downstream of water.  They would then have to buy from me.  That seems most unfair.

I think I already covered the point my post here:

Q: What are the rights of downstream owners? Wouldn't upstream owners take all the water from the river, leaving nothing for the downstream owners? Nobody would want to be in downstream.

Ans: Well its true that the upstream owner can extract all the water from the river, or even stop the flow of the water(provided he can do that without causing flood), and it will not be a violation of private property rights, of the downstream owner, it would not be a bad situation. The downstream owner will have to buy the water from upstream owner. The rate would be the same market rate at which the upstream owner supplies the water to upstream basin people(lets call it the upstream water market). The downstream owner will be able to afford this rate because he also has a market of water buyers who need to use it(lets call it the downstream water market).

and here:

Q: This raises an interesting question, wouldn't upstream people be using the water too much since they just have the water very easily available to them? They will be filling up their swimming pools and water parks, when the downstream people will be going thirsty.

Ans: The answer lies in marginal utility of river water.  When the urgent needs of upstream people are fulfilled the marginal utility of water to them is now reduced, at the same time, since the downstream people have no water, so the marginal utility of water has increased for them. Consider it this way, if a guy needs water to fill up his pool, and another guy needs water to drink, which one of them would be willing to pay a higher price for the water? The answer is, the thirsty guy.

So for the upstream river owner, the only next best price he can get from buyers would be from downstream owner. So once water is supplied to the urgent needs of upstream people, the water will be now supplied to downstream people. The upstream guy will now sell the water to the downstream people. Once the urgent need of downstream people is fulfilled, now whomsoever needs to really fill up his pool will get the water(because his marginal utility is now on priority).

Yes, OK, so the most upstream owner pays nothing for water while the most downstream owner earns nothing for water.

Suppose settler X is the first one to pick a spot of land around a river.  All is going well, until settler Y moves in upstream and hogs all the water.  X doesn't want to pay Y, so he moves upstream of Y.  And they continue to play leapfrog.

No, X should continue to have the same right to a reasonable amount of water that he had before Y turned up.

Yeah, I don't buy it.

If you lived on a river bank and had established usage rights for the river and someone who lived upstream of you decided one day to stop  (or divert) the flow of the water unless you paid them for allowing the water to pass through their property they would be violating your previously established homesteading rights.

Or if they tried to charge you for 'delivering' unpolluted water where it existed before they started whatever activities were causing the pollution.

I think you are trying to fit a monopoly model where it is inappropriate. I'm not saying that the rivers can or should be socialized like they are now but it isn't as clear cut of a case of ownership rights as owning a bunch of trees.

More of a case of negotiation between the conflicting parties with the acknowledgment of prior usage patterns taken into consideration.

I think this FAQ would scare more people away than convince them that libertarianism is the way to go.

Oh, I guess that's the big L party line or something now that I notice the usage...

LanceH:

Yes, OK, so the most upstream owner pays nothing for water while the most downstream owner earns nothing for water.

Lemme quote another question from the FAQ, I have dealt with that part too.

Q: Does that mean that living in downstream is costly than living upstream, compared to the time when the river was a public property?

Ans: Only marginally. See you are not paying an exhorbant amount of price for the water. You are merely buying clean water from the upstream river owner. Today if you live downstream, the river is really filthy, you cannot get clean water. So to get clean water, you are paying a small amount of fee to the upstream owners.

This fee is basically paid so that they don't pollute the water. Also if upstream guy pollutes the water, the downstream owner gets to drag him to court for damages.

As you see, when a guy comes to live upstream you cannot claim that by homestreaming principle that the downstream guy owns that upstream point or the water flowing through it. That point(that bank) and the water flowing through it are unclaimed part of the nature. Before making the "reasonable quanity" claim you gotta show me where has the labor of downstream guy mixed with the water?

Surely his labor is mixed with that piece of land, or any water he extracts, but not the water coming to his property.

Now somehow If you establish that the water coming to his property is homestead(which I don't believe, but lets say you proved it) then you become the full owner of the river. There is no question of any upstream guy comin in, and there is now question of "reasonable amount"

Reasonable

Now coming to this term. You keep on using it. You do realize that its a purely State-derived term. This term exists because State has a final authority in every matter, so whenever you and me are in conflict, state says "ok, you must let him give a reasonable usage of your commonly owned house", and who decides the "reasonablity"....the State!

In Market Anarchy courts, the term "reasonable amount" cannot be used. Solely for one reason, no two courts can agree on same amount as "reasonable". The things must be absolute, and precise, and they MUST have a reason behind it. When you own a land, and you decide to pore all your bodily waste on it, your neighbors must not be allowed to complain to a court that you must do a "reasonable use" of that property, and that despite of the fact there is no stench being transferred to their property, somehow they have the power to enforce reasonable use on their neighbors.

In Statist societies, "Reasonable usage" is defined for by the govt courts who have final authority instilled in them by the Govt.Today ISPs claim to provide you 256 KBps unlimited usage, but then in fine print its written "it must be "Fair use" as defined by California statute".

How the hell govt gets to decide what's fair or reasonable use? Because it has utlimate authority on it.

On the other hand in an ancap society the courts do not have utlitmate authority. They must either allow you to use internet as much as you want by making the ISPs comply to what they promised, or they must remove the "unlimited usage" clause from their advertizements.

prashantpawar:

Also if there are any new question, I would add them, and make it a bit more comprehensive FAQ.

You should incorporate the incentive that people have to seek alternate sources of water.  For example: digging wells or water purification or rain barrels. 

prashantpawar:

I have realized that FAQs are the best way to explain Libertarian concepts to people, because generally Libertarianism deals with encountering govt indoctrination in the minds of people, so questions-and-answer format is the best way to explain it to people.

So long as you start your FAQ or whatever it is that you are doing with the Non-Aggression Principle, you should be on the right track.  Otherwise, you will not be presenting libertarian concepts to people, in my opinion, but rather, you will just be presenting suppositions of possible market activity which is technically different.  The non-libertarian will always be able to counter your arguments by simply saying: "Yeah, well that is stupid!  The government can easily take control and hand out water to everybody!"

For the lazy citizen of the State, having the government supply a product or service can always be better than earning it himself.

Anonymous Coward:

If you lived on a river bank and had established usage rights for the river and someone who lived upstream of you decided one day to stop  (or divert) the flow of the water unless you paid them for allowing the water to pass through their property they would be violating your previously established homesteading rights.

As I said, explain how your homestreading rights are extended on the water which hasn't even come to your property yet, and once you do it, then the whole river becomes your property just by homesteading a downstream part of it, becuase then THAT will be the proper application of your homesteading rights.

But all I know, no court is going to buy your claim onto a part of nature which hasn't even come on to your property yet, unless you are really really convincing.

Anonymous Coward:

Or if they tried to charge you for 'delivering' unpolluted water where it existed before they started whatever activities were causing the pollution.

Here is how it works. To charge you for delivering unpolluted water they must demonstrate:

1) Capability to take out all the water from the river

2) Demonstrate that they have a market for all that extra water.

For example, if they have only 10 customers(read it as having only a small market), and they are trying to charge you for the full flow you are not going to pay them for that. They must let it go as is. Even if they don't, the demand is very less for him, so you get the water for dirt cheap.

On the top of that, you only pay for the water you use, and sell to your customers.

Lemme quote myself from a blog entry I wrote a few days ago on the same issue, the example is more localized to Indian audience.

Let’s take a hypothetical example of River Missisippi
Following major cities (in the other of upstream to downstream) are located on Missisippi:
Minneapolis, St Louis, Memphis, Greenville, Vicksburg, Baton Rouge, New Orleans
For the ease of example, lets presume these cities to be individuals/entities which own the river Minneapolis since its on the uppermost stream of the river, can take the full water out of River Missisippi(lets talk in terms of percentage of water taken, taking 100% water means no water is leaving out from that point, 0% water means no water is being taken at that point).

Minneapolis supplies water to Minnesota, North Dakota, South Dakota and other states (let’s call it Minneapolis's market).
Since there is literally no water being left for St Louis, Greenville and other downstream owners, and they too want water, so St Louis offers Minneapolis to buy water they want at Minneapolis's market selling price of water.

Here Minneapolis is being offered the market price of his water; it will sell the water to St Louis. Whatever water St Louis needs for its customers.
Now Greenville, is going buy the quantity of water it wants on the Market price of St Louis's water. This is an increased demand, so St Louis will in turn buy it from Minneapolis.

So it works like in a chain. New Orleans will buy what water it needs from Baton Rouge, which will buy the water it needs from Vicksburg, which will buy water from Greenville. Of course someone at the end of the river, like New Orleans, will have to pay a bit more price than what Greenville or St Louis pays, but then in return St Louis and Greenville and all the upstream owners are doing service to New Orleans to keep the river clean, to provide clean water to New Orleans. If the downstream owner gets polluted water, it can sue for property damages to upstream owners. So it’s the responsibility of upstream owners to not to pollute the river for downstream owners.

Yes, living downstream is bit more expensive than living upstream, but then you will be getting the same quality of water everywhere, without this system right now; downstream people get more polluted water than upstream people. Today New York city cannot sue the city of Albany for polluting River Hudson. After all it’s the same government everywhere.

If you were a poor man who lives in New York, you cannot get clean water, the people of Albany pollute it a lot, and you cannot sue the people of Albany because no property rights exist, so you have to buy it from the govt through Asokan reservoir.

Hope this example helps.

Anonymous Coward:

I think this FAQ would scare more people away than convince them that libertarianism is the way to go.

Surprisingly I have written an article about the same on my Indian friend's blog, and their she recieved some really good feedback from Indians, who are way too much brainwashed and hardwired into statism. I honestly didn't expect this kind of negative feedback on Mises.org. Maybe that article is written better than this one.

Anyways you can read them at:

http://designinglifenhappenings.blogspot.com/2008/05/case-for-private-ownership-of-natural_8298.html

Its mostly derived from "For a New Liberty".

As I said, explain how your homestreading rights are extended on the water which hasn't even come to your property yet, and once you do it, then the whole river becomes your property just by homesteading a downstream part of it, becuase then THAT will be the proper application of your homesteading rights.

Would you apply the same standard for rain and sunlight?

Ego:

Would you apply the same standard for rain and sunlight?

If the rain falls on your property, it becomes yours, nobody can build a shed on your property to collect water falling on your property. So its pointless to talk about Rain.

Sunlight is interesting issue. A person must have full rights to use his property in anyway. Stopping me from making a skyscrapper because it will block sunlight on your property would be a violation of my property rights.

On the other hand,claiming sunlight which hasn't come to your property sounds a weak argument against a guy who merely wants to creae a mile high skyscrapper on his property.

So the neighbor's skyscrapper right trumps your right to recieve sunlight. Moreover, right to sunlight is a positive right, we don't have positive rights in Libertarianism. Only negative rights. Though someone can say "Oh I must have a right to receive to not to be obstructed in receiving sunlight", but then the other guy has a right to not to be aggressed in using his property in anyway. As far as I know he is merely using his own property in a way he desires.

When this thing is established, that people don't have right to sunlight, now whether the person receives sunlight or not, is determined by the marginal utility of sunlight vs the skyscrapper. If the marginal utility of sunlight is more to the guy who wants to receive the sunlight then he will pay the skyscrapper builder to not build the skyscrapper.

If the marginal utility is not THAT much(because he would have to pay a really HUGE amount of money to not build it, but the guy would still want some sunlight, then we have a problem.

Problems in market are a way to attract solution. So market will find a technological way to provide sunlight to the guy. Like using mirrors installed on large trucks, and machines.

You can subscribe to Sunlight suppliers, just like you have water suppliers. It would come up as a utility service. Your neighborhood will be supplied with a large segmented mirror machine which will redirect sunlight to your individual houses based on the amount of intensity you require(which can be controlled by changing the curvature of the mirror. The mirrors will move automatically to adjust for the rotation of earth.

Today no such technologies are developed because Sunlight is either free, or not important to people. For example I rarely see sunlight in Manhattan, it is according to most sunlight starved area, but then for most people it doesn't matter at all.

If the rain falls on your property, it becomes yours, nobody can build a shed on your property to collect water falling on your property. So its pointless to talk about Rain.

What about catching rain before it falls?

we don't have positive rights in Libertarianism.

We have positive rights to our property.

prashantpawar:

Reasonable

Now coming to this term. You keep on using it. You do realize that its a purely State-derived term. This term exists because State has a final authority in every matter, so whenever you and me are in conflict, state says "ok, you must let him give a reasonable usage of your commonly owned house", and who decides the "reasonablity"....the State!

"Reasonable" is not a "state-derived term".  It is a common law term. Juries have to reach a verdict beyond "reasonable" doubt.  I have to take "reasonable" care when I am driving not to crash into anyone, regardless of any statutory limit.

As far as the river goes, "reasonable" use of water has also been determined by the common law.  If there is enough water to satisfy everyone, fine.  If not, everyone gets the right to take the SAME amount of water per square foot of river frontage that they own, and that amount is defined by the need to deliver a flow to ALL riparian landholders, no matter how far downstream.  It might even vary from year to year, and from season to season.

As for pollution, this was settled by the Court of Exchequer in 1866: "The person whose grass or corn is eaten down by the escaping cattle of his neighbour, or whose mine is flooded by the water from his neighbour's reservoir, or whose cellar is invaded by the filth of his neighbour's privy, or whose habitation is made unhealthy by the fumes and noisome vapours of his neighbour's alkali works, is damnified without any fault of his own; and it seems but reasonable and just that the neighbour..should be obliged to make good the damage."

These laws were not made to defend any interest of the state.  They arose from civil suits.  Some of the best judges in history have been engaged on these problems, and they have developed workable solutions.

I have no love for the State.  But I see no need to rewrite the common law gratuitously.

LanceH:

But I see no need to rewrite the common law gratuitously.

Here is the problem with that, common does not really have a Libertarian "non-aggression" basis. For example back in English common law courts, the people were quite conservative, so if a girl was proven to be promiscious, then her rape claim was not taken seriously.

Take for example Somali Islamic courts. They are not Libertarian in nature, what they are developing is Common Law through Shariat. If a new case comes in, its first looked up in Shariat, if its not there then its developed on that basis.

LanceH:

If there is enough water to satisfy everyone, fine.  If not, everyone gets the right to take the SAME amount of water per square foot of river frontage that they own, and that amount is defined by the need to deliver a flow to ALL riparian landholders, no matter how far downstream.  It might even vary from year to year, and from season to season.

I don't agree to this one. On the same grounds that we let a person who can pay more to pay more and acquire more in market. Should have equal-land distribution law because Land is also a natural resource. How about "equal opportunity law" in Ayn Rand's dystopia in Atlas Shrugged where "Everyone is entitled to recieve same amount of Metal from the metal manufacturer as everyone else".

If downstream people need more water more seriously, they will pay for it more than the upstream people. It downstream more people live than upstream then the best profit making motive for the upstream owner would be to sell more water to downstream owner.

Take River Ganges for example. One of the largest rivers in the world, it makes a delta with another large river Brhamaputra. Now their delta is considered to be one of the most fertile and most populated area.

More people live there because land is more fertile. On the Upstream plains of Ganges, there is little fertile area, and a desert quite close to it. If we allow Marginal utility to dominate(market to dominate the distribution of water) then people living in downstream have less marginal utility(because they have two large rivers) than people living upstream(where there is a desert,

So more water will be taken out upstream to be supplied to people in Thar desert. Same thing if done on the upstream basin of River Brahmaputra(which is in China) then overall more water is used in upstreams than downstreams. At the delta, there is less water recieved now(but still sufficient). Also now this motivates people to settle down in less fertile areas too because of availability of water.

 

If we follow what you are suggesting, the Socialist model of water distribution, or the "positive rights based" model of water distribution, we can never be profitably supply water to areas which have less water.

Ego:

What about catching rain before it falls?

As far as I know having a complete ownership of your property means it extends up in atmosphere. How can someone catch rain drops on your property without coming onto your property?

IF someone catches a cloud going to your property from his own property, without actually invading even the airspace of your property then no that's not a violation of your property rights. Cloud was going astray in sky, unclaimed, your neighbor claimed it and put it to some use. By homesteading principle he owns the raindrops/cloud now.

Ego:

We have positive rights to our property.

Actually not, we don't have a postive right to property, because that would mean everyone must have a property, or else that's a violation of property rights. Rather we have have a right to not to be aggressed by anyone else in enjoying our property.

For example right to Education implies everyone must have education, right to healthcare implies everybody must have healthcare. Right to big boobs means everybody must have big boobs. If anyone is not having access to big boobs despite of asking for them, then that's a violation of right to big boobs.

Libertarian society does not have ANY positive right. Rights must be universally applicable and any violation of the rights is unacceptable. For example right to bear arms is a negative right, but right to arms is a positive one.

Under the theory of positive and negative rights, a negative right is a right not to be subjected to an action of another human being, or group of people, such as a state, usually in the form of abuse or coercion. A positive right is a right to be provided with something through the action of another person or the state.

prashantpawar:

Here is how it works. To charge you for delivering unpolluted water they must demonstrate:

1) Capability to take out all the water from the river

2) Demonstrate that they have a market for all that extra water.

For example, if they have only 10 customers(read it as having only a small market), and they are trying to charge you for the full flow you are not going to pay them for that. They must let it go as is. Even if they don't, the demand is very less for him, so you get the water for dirt cheap.

On the top of that, you only pay for the water you use, and sell to your customers.

This doesn't even make sense...

Who do you pay for 'only the water you use'?

Every upstream owner? The River Water Delivery Service?

You are arguing against my claim that you have homesteading rights to a certain amount of river flow by making a claim that you have to pay a person who doesn't pollute the water for the amount you take out of the river when it flows across your property. How did they get rights to charge you for the use or your exclusive property (by your argument) just because the river flows across their property first and they let more than you can prove (to whom?) you can use leave their property?

So if they can't demonstrate that they have enough customers to divert the river from flowing across your property then they must let it flow? How is this any different than the homesteading principal that I proposed, you are advocating that they don't have exclusive rights to the water unless they can prove they can use all of it.

Yeah, I still think your FAQ is bunk...

 

prashantpawar:

As far as I know having a complete ownership of your property means it extends up in atmosphere.

No.  All physical matter is three dimensional and hence, so is your property.  All three of those dimensions must be homesteaded and delimited -- that includes the height.

prashantpawar:

How can someone catch rain drops on your property without coming onto your property?

You can not guard a neverending extension into the atmosphere.

Charles Anthony:

prashantpawar:

As far as I know having a complete ownership of your property means it extends up in atmosphere.

No.  All physical matter is three dimensional and hence, so is your property.  All three of those dimensions must be homesteaded and delimited -- that includes the height.

prashantpawar:

How can someone catch rain drops on your property without coming onto your property?

You can not guard a neverending extension into the atmosphere.

 

I agree. This is otherwise the same result as government titles to unlabored land.

Anonymous Coward:

Who do you pay for 'only the water you use'?

Ok lemme start again.

Lets say there is a river X, and there are 4 entreprenurs living on the banks of it. A,B, C & D respectively from upstream to downstream.

This is the requirement table for all four of them. The water required by them is the water they can either sell on their local market, or use for themselves. The water they are selling is basically only the water urgently required by the people(as in its marginal utility is high enough to be used for drinking, and other important usage, excluding usage like filling your pool with it etc).

Name - Water Quanitity required in tonnes

A - 100

B - 300

C - 200

D -100

For the sake argument lets presume that's the only quantity of water in the river(that is only 100+300+200+100=700  tonnes of water is availalble in the river). So basically whatever water is avialable in the river, its only sufficient enough to be used by the people for their urgent needs(I will deal with the less or more quantity later).

Now A mines the water and supplies to the people, exactly 100 tonnes, he realizes that if he takes more out of the river, then people would be using it for more stuff, and he will make more profit, because water's usage is quite flexible. Although there is nothing to stop him from taking all 700 tonnes of water out of the river and sell it to his customers, now B, C and D are being left with no water. All the people who comprise the market of B, C and D, have nothing to even drink. So the marginal utiltiy of water is much higher for the rest of 600 tonnes of water than the marginal utility of the same water to the people living around A. Basically B is now able to pay a price to A for his water which A's customers are not willing to pay.

So B now buys 300 tonnes of water from A, supplies it all to his people, his direct market. B may try to buy more water from A, but now since the basic requirement of his customers are fullfilled the marginal utility for more water has come down, and now its at the same level as for A's customers.

On the other hand C's customers are still thirsty and willing to pay more than B or A's customers for more water. So C will offer a higher price for 200 more tonnes of water to B, who will in turn buy this extra quantity of water from A. So now A is selling 200 tonnes of water to his own people, and 500 tonnes to B, who is in turn selling 300 tonnes to his people and 200 tonnes to C. C will now be offerred a good price to buy 100 extra tonne by D.

So at the end, A is selling its people 100 tonnes, B is selling 300 tonnes, C is selling 200 tonnes, and D is selling 100 tonnes to its people. All are getting their needs fulfilled, in the order of their Marginal utility of water.

In baseline it means, you take the amount of water you really need.

Now if A has no means to take all 700 tonnes of water out of the river, and has no market for that much amount of water, it cannot possibly ask B to pay for the water he is letting go. He has to let B know somehow that he has the market and technological capability to take the water out of the river totally, or else B will not pay A.

This is the only case where a payment for some river water would be made.

So first of all I am sorry for oversimplification of concept. Guilty as charged. I have explained in the above example what I meant by all that.

If river has MUCH more water than people's utility(which is usually the case), then its treated like air. Too much air around, so too less marginal utility. Same goes for water, people will not pay much for water, the prices will remain low.

Edit: I see all my points have been already stated in more or less the same words by the Anonymous Coward. :$ Failure to read the whole thread before posting -- loose one skill point.

Okay, I think I see the problem everyone has with this; there's some inherent contradiction that need to be resolved. Take this horribly contrived hypothetical example:

You purchase your riverside cottage, and inherent in the value is that it is a *riverside* cottage. Thus, that there is flowing water by it is part of the property. If someone upstream were to dam the flow completely, there would no longer be a river flowing beside it, thus it's value has been diminished. Is this not a property violation? Notably, if the river had been dammed before you moved there, the value to you would not be diminished and it would not be a property violation... maybe...

First and foremost, someone needs to define the terms of the debate. What does "property" mean, especially in the context of such flowing things... If someone were to purchase a sector of a solar system, do they then own all the comets and planets which pass through it? What about the person who owns the adjacent sector? what does he own?

What does property violation mean? Is it anything that diminishes the value of your property? Is it more general than that? Is it more specific?

With respect to this debate, I concurr that the concept of "reasonable use" is a fiction. But it is a useful fiction, and it does not do to denigrate it so.

Edit: I would concur with those above that what you own is the *flow* of water. Thus, in order extract water from the river, you must pay those *downstream* who will be denied this water by your extraction of it. Whether this applies to pollution or not is an interesting one, and one for you to debate amongst yourselves.