Consider two different legal systems for managing water from a river.

• System 1: Landowners along the river can use the water, but this right is tied to their land and cannot be sold separately. The amount they can use is based on a 'reasonable' standard decided by courts.
• System 2: The right to use a specific amount of water is granted to the first person who puts it to productive use. This water right can be bought and sold like any other asset, independent of land ownership.

From the perspective that economic interactions are fundamentally transfers of rights, evaluate how the design of these two systems would likely affect economic activity related to water use. Which system facilitates a broader range of economic transactions involving water, and why?