Association for Public Policy Analysis & Management

The development of the West can be linked to both a top-down and bottom-up institutional framework, which was defined by the priority of settling and extraction of natural resources of the frontier West. The public policy of economic development coupled with a high degree of local de facto control, drove the definition of rights to these resources. Despite these interests, the emergence of these rights regimes did not produce similar property rights. The property rights definition of Indian land experienced a departure from settlement of other western lands. Where western lands, in general, advanced in a mix of bottom-up and top-down institutional evolution, Indian rights development experienced solely a top-down development. I argue the difference in these 19^th Century institutional design choices governing western lands has demonstrable effects that persist in land use into the 21^st Century. However, measuring the economic outcomes of these design choices presents data requirements that are often insurmountable. I overcome these stringent data requirements by using a natural experiment of land demarcation, within the State of Colorado. Using GIS data on geographic characteristics and shale development data, I create a dataset which allows a spatial link between institutions, natural resource development, and other parcel metrics, allowing me to test how institutions governing property affect shale development. Employing a border discontinuity, testing the Southern Ute Indian Reservation Public Land Survey System (“PLSS”) regions against neighboring PLSS sections, I expose that Indian land experiences 10-14% more shale development, depending on the type of well activity, compared to the neighboring private, state, and federal lands containing similar potential for shale development. In sum, this study contributes to the property rights scholarship by providing empirical evidence on how institutional design choices governing property rights affect the development of a natural resource and suggests how Indian tribes can create institutions that reduce transaction costs and produce clearer defined property rights, which has the potential to promote economic development within reservations.