The NY Times returns to Owens Valley near Los Angeles. Recall that that water from Owens Valley played a key role in the growth of Los Angeles (we do use water here but it doesn't rain). A consequence of grabbing the Owens Valley water was that the lake dried up and dust from where the lake was blows around sharply raising air pollution in the Owens Valley area.
Several points arise.
1. There were gains to trade between the water sellers (the Owens Valley farmers) and the urbanites. The people of LA valued this water more than the farmers of Owens Valley. Gary Libecap has done great academic research on this topic for an ungated piece read this. Libecap argues that Los Angeles gained most of the consumer surplus from this trade but that the farmers still benefited.
2. The people who live near Owens Valley have suffered from elevated air pollution levels because of the dust. The good news is that smart engineers have come up with a water efficient solution to reducing the dust;
"In what may be the most startling development yet, the end of one of the great water battles in the West appears at hand: Instead of flooding the lake bed with nearly 25 billion gallons of Los Angeles water every year to hold the dust in place — the expensive and drought-defying stopgap solution that had been in place — engineers have begun to methodically till about 50 square miles of the lake bed, which will serve as the primary weapon to control dust in the valley."