An examination of water rights transition in colonial Victoria, Australia 1840-1886

This paper analyses the transition of water rights institutions in Victoria, Australia, between 1840 and 1886. It will focus on the shift from the common law doctrine of riparian rights to government control of water supplies via quasi-government organisations known as irrigation trusts examining factors leading to this transition and whether it increased institutional efficiency. Evidence suggests transition to government control resulted from two factors. First, the decreasing costs of using government relative to costs of private redefinition because settlement numbers increased thereby increasing scarcity while adding to costs of private investment in redefinition due to higher negotiation and enforcement costs, legal uncertainty, and the inability for private actors to capture the full benefit of a transition. In this way, transition was efficient as it lowered transaction costs associated with creating irrigation schemes to provide water supply security. Second, crisis of drought that increased in magnitude over the period due to changes in dominant farming methods from land extensive grazing to land intensive crop farming. Drought escalated demands, via lobbying, for government action. Combined, these two factors explain why an efficiency enhancing transition from riparian rights to government control took place at this juncture in Victoria’s history.