This dissertation consists of three essays about the institutions that govern water use in the United States. In the first chapter, I examine property rights with incomplete definition and imperfect enforcement using a case study of the Klamath Basin in Oregon. Following an adjudication of surface water rights, water allocation switched from a de facto basis of location within a stream to formal enforcement of seniority-based rights. Because of prior knowledge of this change, my model of land value incorporates expectations about future water availability that depend on individual right attributes. Using a novel panel data set of individual water rights matched to tax parcels, I use a fixed effects model to estimate differential changes in land value over time for users based on their relative position upstream and degree of seniority. The results are consistent with the theoretical prediction that, as the shift from position-based allocation to seniority-based allocation approaches, position becomes relatively less valuable and seniority becomes increasingly valuable. The link between heterogeneous water right attributes and distributional impacts can inform ongoing adjudication proceedings in other regions.

In the second chapter, I consider the hypothetical gains from trade if water trades occurred more frequently between cities and farmers. In the western United States, agricultural water users generally pay less for water than municipal or industrial users, and the law of one price does not hold. This paper uses a simple model of unequal prices for water across sectors and computes the potential gains from trade. I use elasticities and real world data on prices and quantities to produce sector-level demand curves. Holding total regional water availability fixed, I allow for redistribution of water between sectors and compute equilibrium prices, quantities, and gains from trade. Repeating this process for multiple regions allows for comparison of the relative potential for welfare gains across regions. I find that the potential gains are largest in the Southern California groundwater basin when considering water rights sales, and largest in the Lower Sacramento basin for water leases. The wide range of potential gains from trade suggests that the benefits of reducing barriers to water markets will also vary significantly across regions.

Finally, in the third chapter I explore differences in Bureau of Reclamation (BOR) water management across its projects. BOR delivers water to farmers in Western states based on long-term contracts with irrigation districts that specify how much land can be irrigated, the quantity of water allotted per acre, and terms of payment. There is variation across Reclamation projects in terms of rights ownership, water allocation, and the ability to transfer water. These areas of institutional variation affect the security of farmers' claims to water, and security of rights in turn affects investment decisions, crop choice, and the value of water rights. This paper documents water management across five of the largest BOR irrigation projects and evaluates the implications of the variation.