SECONDARY DAMAGES IN INTERSTATE WATER COMPACT LITIGATION

Secondary economic damages have not generally been considered compensable in damage litigation. The reluctance to award secondary damages falls in part on the economics profession, since economists have found it difficult to measure these damages, and even to agree on their meaning. This paper addresses both the meaning and measurement of secondary damages in the context Of a recent U.S. Supreme Court case where one state successfully sought secondary damages resulting from failure to deliver water under an interstate water compact. This paper describes the case and considers whether this decision should be treated as a precedent for other damage cases.