Spatial adjustment as a mechanism for resolving river basin conflicts: The US-Mexico case

The conventional wisdom is that water resources should be managed on a basin-wide scale. However, a closer look at the scale of transboundary water institutions reveals that, for the most part, this is not the case. This study seeks to understand the gap between reality and theory by arguing that due to the common spatial discrepancy between benefits and costs of cooperation at the basin scale, other scales are advanced in order to offset this discrepancy. To test this hypothesis, the negotiation process over the spatial scale of the 1944 treaty between the US and Mexico over transboundary water is examined. The analysis of this case study indicates that due to its weakening position in an upstream/downstream conflict over the Colorado's water in the early 20th century, Mexico demanded widening of the scale by integration of the negotiations over the Rio Grande with those over the Colorado's water. This allowed the parties to trade the Rio Grande's water for the Colorado's and thus to offset the spatial discrepancies that precluded agreements in previous basin-level negotiations. However, this spatial strategy was found to have a high political cost, especially in the decentralized US system. Hence, the US had to use additional mechanisms to mitigate these internal transaction costs.