Land Ownership and Irrigation on American Indian Reservations

American Indian reservations are often characterized by low income and high rates of poverty relative to adjacent non-reservation land. To understand the role institutions governing land ownership play in these outcomes, we examine agricultural land use and irrigation on parcels on and adjacent to the Uintah-Ouray Indian Reservation in eastern Utah. Land within the reservation is held in trust by the federal government and has significant restrictions on its use and development. We predict that this land will see lower investment in irrigation and therefore lower agricultural productivity. We use the exogenous allocation boundaries of a 1905 land allotment as a natural experiment, employing both a sharp and a fuzzy regression discontinuity (RD) design to explore how land ownership has affected agricultural land use, irrigation levels, and irrigation investment. Our results suggest that the original allocations provided land of similar quality across the border. Despite this, tribal lands are around 18 percentage points less likely to be irrigated today, and conditional on being irrigated, tribal land has a 31 percentage point lower rate of capital-intensive sprinkler irrigation. Tribal land is also less likely to grow high-value crops. These results suggest that trust ownership creates significant barriers to the acquisition of capital for agricultural investment, and helps explain lagging agricultural development on reservations.