Bargaining in the Shadow of Prior Appropriation: Concessions and Trade-Offs in Native American Water Settlement Negotiations

Water use in the western United States remains highly concentrated in irrigated agriculture, primarily due to the “first in time, first in right” tenets of appropriative water law, which shield irrigators, as senior appropriators, from legal challenges to their water use. However, the relatively recent recognition of Native American tribes’ senior water rights poses a rare legal threat to irrigators, drawing them into negotiations that potentially diminish their water entitlements. This study examines the effects of bargaining power asymmetries on tribal water settlement outcomes to 61 irrigation districts across 11 negotiations. The bargaining power of an irrigation district is evaluated as its relative vulnerability to water shortage under prior appropriation law, representing its fallback position if tribes’ water claims were resolved in court. Findings indicate that as shortage risk increases relative to other districts, irrigation districts relinquish larger shares of their water rights, presumably to avoid litigation. Financial compensation obtained in exchange for relinquishing water rights is increasing with the political influence of a settlement act’s congressional sponsor and with water scarcity. Results underscore the importance of tribes’ legally enforceable senior water rights as an important mechanism that motivates settlements through water right reallocations. They also demonstrate how legal and political institutions shape bargaining outcomes.