This book examines the origins of California surface water law in the earliest years of statehood: the decade of the 1850’s. This decade was dominated by a key event in California history, the Gold Rush. The Gold Rush comprised a major exogenous shock to the California economy, resulting in tremendous economic and population growth within an extremely short period of time, along with significant structural changes to the economy. Importantly, the Gold Rush caused a dramatic increase in the demand for water, a key factor input into placer mining. The increased use of water led to a large number of disputes among miners over its use, which set into motion a series of changes in how water rights were defined and how disputes over water rights were to be resolved. The emergence of California water law was a complex process that contained both formal and informal elements. A key component of the picture was the creation of basic legal principles within a network of mining camps. Many of these principles were subsequently incorporated into the official system of water law as promulgated by the courts. This book examines legal developments that governed disputes in three key areas: diversions of water, water quality, and dam failures. The resulting principles were broadly consistent with attempts to maximize rents within local water basins, including the minimization of various components of transaction costs, including enforcement and measurement costs.