ALLOW lamb to come to room temperature for about 30 minutes before roasting. Season lamb on all sides with salt and pepper.
PREHEAT oven to 400° F.
HEAT oil in large oven-proof skillet over medium-high heat. Place lamb racks, fat-side-down, in skillet; sear until browned. Turn racks over and sear other side. Turn racks meat-side up; place skillet in the oven for 15 to 20 minutes or until thermometer placed in thickest portion registers 125-130° F (medium-rare). Transfer lamb racks to work surface; let rest for 10 minutes. Meanwhile, prepare the pesto.
COMBINE pesto, mint and water in medium bowl; stir well to combine. Stir in 1 tablespoon lemon juice. Taste and add 1 more tablespoon if you prefer more tang. Cut the lamb between the bones into single chops. Arrange chops on plates; drizzle with pesto.