Abstract

This paper provides new evidence on the relationship between property rights to water and the demand for land on the American Frontier. Using geo-located records of individual land patents from the General Land Office, we compare rates of settlement in counties across western states that formally adopted the prior appropriation doctrine of water rights at different times. Using the latest difference-in-difference techniques, we find that settlement more than doubles in the years just after a state adopts prior appropriation. Comparing overall settlement as well as rates of homesteading vs. cash purchases of land across counties with different land and water resources, we present evidence consistent with the hypothesis that prior appropriation increased the value of agricultural land, paritcularly where water resources were most scarce.