How markets can end persistent intra-organizational conflict

The literature has described the origin and cost of intra-organizational conflict within the Metropolitan Water District of Southern California (MET). This article explores how this conflict has persisted and suggest ways to resolve it. The key action requires that institutions designed with the assumption of abundant water be reformed to manage scarce water. Without modification to MET’s legal and operational structures, an internal auction market can efficiently and transparently allocate water among MET’s member agencies. A careful allocation of rights to water and revenues from that market make it possible to address issues of fairness (access to water for individuals) and to repay past member agency contributions that thus far have subsidized MET’s operations.