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Alternative # 12: Ouantify the amount of water hydrologically available beneath particular surface formations and give each land- owner a vested righf towithdraw a particular quantity of water based on the number of acres of productive irrigable land owned by the overlying landowner. Alternative # 13: Codify the rules derived from Nebraska cases, as near as they can be determined. as the definition of ground- water property rights in Nebraska. Information Presented for Each Alternative For each alternative discussed below, informa- tion is presented under three headings: Description and Methods of Implementation; Socio-Economic Impacts; and Physical- Hydrological and Environmental Impacts. Information under the first heading, Description and Methods of Implementation, describes the alternative and how it could be implemented. For each alternative strengths and weaknesses are discussed. No water rights system has been entirely satisfactory. The weaknesses of many of the common law systems have become apparent over time. The ultimate importance of the property rights system adopted concerns who will make ultimate decisions on groundwater use, how those decisions will be made, and who will be the primary beneficiaries of the benefits that flow from the use of groundwater. Vested private property rights act as effective barriers to many management alternatives. Consequently. great care should be taken in making fundamental alterations in the existing system of rights. On the other hand, water users need some certai nty that their source of water will not be severely limited once the users have made substantial invest- ments relying on the availability of water. Finaliy, the limitations of the alternatives often can be understood best by examining problems en- countered in states where the rules have been adopted. Consequently, where appropriate, a subsection detaiiing a Case Study is included under this heading. Information under the second heading,Socio- Economic Impacts, describes how implement- ing the alternative would impact on economic efficiency 1 and equity.2 The discussion is necessarily theoretical, and consequently, no attempt is made to quantify the magnitude of the expected impacts. A change that increases economic effiCiency is generally desirable, how- ever, since an efficient change translates into a greater output of societal goods and services from a particular combination of resource inputs. 3-2 In a perfect economic world, the market would always allocate resources, goods, and services efficiently. For a variety of reasons, however, a market may not operate efficiently. The cost of completing a particular transaction that would increase satisfaction might well exceed the benefit to be gained from the transaction31n that case, a potential gain in economic efficiency will be prevented by transaction costs4 Alterna- tives that reduce transaction costs, therefore, generally increase economic efficiency. Similar- ly, an efficient transaction may not take place because the information necessary to evaluate the transaction is not avaiiable at low cost.5 Reducing information costs, therefore, also enhances economic efficiency. Equity refers roughly to the "fairness" of a particular system of production and con- sumption which may, or may not, be efficient. While economics cannot answer the question of what is fair or equitable, it can indicate what the equity impacts of a particular alternative are likely to be. An alternative has an equity impact if it results in benefits being conferred on some at the expense of uncompensated losses which must be borne by others. In theory, an efficient alternative should produce the necessary revenues to compensate anyone who suffers an adverse equity impact from adoption of the alternative.6 Whether or not such effects should be compensated for, however, is a political and social question caught up in personal notions of fairness and justice. Consequently, the equity effects of particular alternatives are noted with no attempt made to evaluate whether those effects are fair or not fair. Information under the final heading, Physical- Hydrologic and Environmental Impacts, describes the probable effect that changes in water use patterns, which would accompany the adoption of a given alternative, would have on hydrologic relationships and on the physical environment.7 Most of the alternatives identified in this chapter, however, do not lend themselves to detailed description of their probable physical/hydroiogical or environmental impacts. Since these alternatives are concerned only with property rights, and not with how exercise of those rights might be restricted or regulated, many variables potentially intervene between the policy alternatives and the impacts. Such variables include geographic factors, manage- ment systems. government regulation, techno- logical changes, and the effect of changing economic incentives and restraints on water use. Where, however, implementation of a particular alternative requires access to sophisticated hydrologic data, a discussion of the hydrologic problems involved is included under this head- ing.