The good folks over at the I Bet Ludwig von Mises Can Get More Fans Than John Maynard Keynes Facebook page forwarded the following (paraphrased) question from a reader:
Land Owner A has a river flowing through his property. Land owner B lives downstream and relies on the flow of water for his livelihood. How might a free society resolve a dispute should Land Owner A decide to dam the river to build a power plant?
The answer is through a previously-agreed upon contract for water rights.
Prior to purchasing land downstream from a river head, a responsible buyer will first ensure that a contract is in place to guard his water rights. This not only protects his flow of water but might also protect the water quality from pollution. Should an upstream land owner decide to dam the river, he would first have to get permission to break the contract or buy-out those living downstream.
Disputes over contract terms, renegotiation, or anything else of that nature would then be handled by a third-party arbitrator. In this way there is no need for violence or coercion; just peaceful, voluntary coexistence.