Evaluating Water Markets in the Texas High Plains

Rising water scarcity in the southwestern region of the United States has intensified the need for water transfers among different water users and locations. One of the most adverse impacts associated with water transfers is the negative externalities that they inflict on third-parties. This paper examines water transfers in Texas, and identifies the various third-party impacts that may accompany with these transfers. Due to the nature of the water property rights doctrine in Texas, these externalities create a serious challenge for water authorities, and are responsible for the recent public demand to revise the rule of capture in the state