People seem to have been more upset about my support for market-based water pricing than anything else I've written in a good while. And they found it particularly egregious that I dared take a stance on this questions without being a full-time expert. Well, if you want a full-time water expert who agrees with me check out this blog Aguanomics.
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Aguanomics
17 Jul 2008 11:56 am
Comments (23)
Since the California electricity deregulation worked so well, let's do it with water!
Methinks somebody reads the Freakonomics Blog. The coincidence is too great.
Considering Argibuisness wastes about 8 times the water the rest of the population does, deal with them first.
Also with you leaving the Atlantic who will be the token liberal?
Rob, don't be so shrill.
California's "deregulation" were not free-market by any means. It involved arbitrary rules written by and for large energy companies, that gave individual corporations overwhelming market power.
A functional free-market deregulation regime would have included the system-wide abolition of price controls, forced breakups of companies to prevent pricing power, and proper anti-trust enforcement.
Rob, don't be so shrill.
California's "deregulation" were not free-market by any means. It involved arbitrary rules written by and for large energy companies, that gave individual corporations overwhelming market power.
A functional free-market deregulation regime would have included the system-wide abolition of price controls, forced breakups of companies to prevent pricing power, and proper anti-trust enforcement.
Yes David. And just because the same forces that pushed for electricity deregulation are pushing for water deregulation means absolutely nothing. I'm sure things will be different this time...
Yes in a libertarian dream world it might work, but we know the type of world we actually live in and what the probable outcome actually is.
Yes, please, let's let private companies exploit a naturally monopolous market on WATER of all things. I'm sure that can't possibly go wrong.
Rob,
Understandable point. But unlike the Californian electricity market, which worked fairly well before deregulation, the water market works dismally. Some sort of change is necessary.
Personally, I'd prefer a government monopoly with specific legal mandates to raise prices(Uniform across sectors) until supply equals demand, with supply targets determined by some type of environmental council.
But failing that, Matt's approach seems better than the status quo as well.
I wasn't one of the ones condemning you earlier, but a quick scan of this expert blog didn't impress me very much. One can also find expert economists who oppose measures to subsidize mass transit and alternative fuels, preferring the market to work everything out.
The relevant question is why Matthew Yglesias would defer to libertopian economists on issues he doesn't know much about while taking a more progressive stance on issues he does know something about.
I would argue that cheap energy, bad water policies, and market-driven demand for sunny weather led to a number of very large, sprawling cities being built in deserts and market-based pricing might shift that trend. But the people already there need water and will be resistant to leaving. The resulting market will encourage bulk purchasing from places like the Great Lakes region, which would suffer economic harms from declining water levels... the harms would be broadly dispersed but many individuals would profit from the sale.
The situation has "tragedy of the commons" written all over it, and seems tailor-made for price gouging and localized environmental disasters.
Step 1. Yglesias is asked about water policy.
Step 2. Yglesias finds a link to the first thing on water policy he remembers reading in months, and posts a link to it.
Step 3. People point out it sounds like the link in question is full of shit.
Step 4. Yglesias spends another couple days looking for a waterblogger who supports his randomly-chosen policy on water scarcity. Ta-da!
California's "deregulation" were not free-market by any means. It involved arbitrary rules written by and for large energy companies, that gave individual corporations overwhelming market power. A functional free-market deregulation regime would have included the system-wide abolition of price controls, forced breakups of companies to prevent pricing power, and proper anti-trust enforcement.
In related news, the Soviet Union was not communist by any means. It involved a one-party state seizing control of every aspect of life in society and granting unequal benefits to party members while allowing others to starve. Real communism would have involved the people in power choosing to follow noble ideological principles instead of using the power to enrich themselves.
Obviously, instead of questioning our assumptions regarding the real-world viability of our ideological assumptions, we should blame the people who implemented the plan and assume that it will go better next time.
The author of Aguanomics writes thoughtfully about changing the method of pricing urban, potable water.
The author appears to be uneducable on the legal, political, and economic restrictions on re-allocating water from ag use to urban use. "Let the market decide!", he writes. He's also not been particularly clear as to whether he supports involuntary transfers from ag to urban.
What market? Water ain't flour; you don't have a choice of competing brands for the water that comes through the water main. So there's no retail market. And at the wholesale level? All government. Water rights holders? Government. Infrastructure owners? Government. Power generators to move the stuff around? Government.
The single greatest restriction in easing the drought in Southern California is a lack of infrastructure around the swamp that lies east of San Francisco known as the Bay-Delta. Who's going to get that multi-billion dollar facility built? Government.
The second greatest restriction on water transfers is that farmers own the water rights and don't want to sell. Their water rights derive from the California constitution. Want to change the nature of their rights? Start passing around an initiative. If someone asks nicely, I'll even help draft it.
There's plenty wrong with the California ag business, including the way many of them treat their workers and the ag discharges back to the Bay Delta and to groundwater that are contaminating precious water supplies. But a little greater respect among us liberals for the rule of law would be nice.
Oh, and who put government in charge? We did. Us, the voters. When reading through Aguanomics, please note just how often voters get mentioned.
I wrote a thesis on the subject of water pricing in the Middle East. I'm with Matt. So is the World Bank, and the Global Water Partnership, and really just about every major commentator on water issues. Nobody thinks the market alone is the answer, but it's almost definitely a piece of the answer. But hey, you know, don't let that stop your anti-market rants or anything.
The average American is getting pretty sick of market-based "solutions" that have served the people, in the end, dismally. Maybe it's peculiar to American-style crony capitalism and the house of cards market it spawned, I don't know.
But I do know the words "free market" bring up snorts of derision at the neighborhood barbecues and Sunday softball games.
About time.
Finally, a topic that people can have a civil conversation over.
My problem with market solutions is that people/organizations with money will come out on top regardless of the greater need. I may not have a "right" to clean, affordable water out of the tap but you can bet I will support any system that makes sure I do.
I was in CA last week (Salinas valley) and I was surprised to see lots of farms using large sprinkler systems on very hot days. Wasteful!
I think people got angry at the tone of this (I certainly did):
"Thus, I was strongly predisposed to favor this proposal for tradeable water rights from Michael Greenstone at Brookings when I read it months ago and reading it again it still seems right."
Given that you have at best only a superficial knowledge of the situation, why should anyone care what you think seems right or what you are strongly predisposed to? If you just said:
"One path to reform is a market solution and I read this from Michael Greenstone at Brookings proposing tradable water rights. I would be interested in the reaction of people who have studied the issue to his proposals."
You would not then have sounded like you were lecturing us western rubes.
I think people got angry at the tone of this (I certainly did):
"Thus, I was strongly predisposed to favor this proposal for tradeable water rights from Michael Greenstone at Brookings when I read it months ago and reading it again it still seems right."
Given that you have at best only a superficial knowledge of the situation, why should anyone care what you think seems right or what you are strongly predisposed to? If you just said:
"One path to reform is a market solution and I read this from Michael Greenstone at Brookings proposing tradable water rights. I would be interested in the reaction of people who have studied the issue to his proposals."
You would not then have sounded like you were lecturing us western rubes.
And they found it particularly egregious that I dared take a stance on this questions without being a full-time expert.
no, it's that you didn't do your homework and therefore didn't know what you were talking about.
LF Progressive - I would argue that cheap energy, bad water policies, and market-driven demand for sunny weather led to a number of very large, sprawling cities being built in deserts
In the sense that sprawling cities are built on wasteland rather than consume valuable arable land (Chicago, LA, Charlotte, etc. and reduce acquifer effectiveness - that is a good thing. Same with valuable wildlife habitat not being lost to sprawl - in Hawaii, Marin County, China, Kenya, etc instead of being placed in poor soil, low rain, low biological diversity land.
Or cities that choke scarce, strategically important harbors traffic or critical transportation chokepoints...or limited beachfront and recreational land.
And, if there is a water problem, it is in main due to not traditional use out West, but the Open Borders crowd exploding US population (and new water users). Cali had 8 million in 1960, is up to 36 million thirsty clothes washing, lawn watering Freds, Marias, Abdullahs, and Jamals today.
The US had 160 million people in 1950 and in 2050 is projected to have 436 million - more than China had at the turn of the 20th Century.
Like oil, arable land and water are reaching limits from unchecked population growth, the poor continuing to have large families motivated by welfare subsidies.
As Matt can no doubt see from the comments, the issue of water gets people emotional, and won't be easily solved.
The Aguanomics blog is at least interesting. The blogger is not a WATER expert, but an economist, which is a different thing. It is well and good to talk about common-carrier pipelines, but there is quite a difference between building overhead high-voltage lines for electricity to transfer power from the Columbia River to Los Angeles and building a 15-foot diameter pipeline to do the same thing.
I would agree that some review of the mostly federal subsidies to cheap irrigation water be reviewed. A slight reduction here could leave cities pretty flush with water, even in California.
In all of this water hubbub, we should remember that markets inherently are anti-democratic and lead to concentration of wealth and power. A water market would be no different.
The local hydrology in my neck of the ocean is just too small and isolated to risk pretending that "the market" is smart enough not to fuck it up.
Before Hawaii was American, about five or six families created huge water diversion projects to make sugar and pineapple fortunes possible.
In modern times, the State decided that fresh water on an island is a public trust held by the State, rather than something a corporation can continue to monopolize, long after they stopped growing anything.
As with the Colorado River Basin, there is more demand for water than can be sustained. So, as various streams and aquifers become overdrawn, the State steps in and mediates between competing interests, issuing permits to those deemed worthy, while keeping the overall consumption at or below the recharge rate.
In the meantime, the water rates are being adjusted to encourage conservation.
Water privatization will also solve overpopulation.
And it will raise the median income as poor people die of thirst.
One would expect that future increases in the cost of air conditioning would drive large businesses away from Phoenix, which would take jobs and therefore population away as well. AND if we let that market work, then we won't be risking the lives of millions of water-drinking people.
Comments closed July 31, 2008.
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Heads in the Sand
Well, if it means anything, this reader supports you. I fear the Democratic Party goes too far in condemning the market. There is a great number of things it does very well at distributing effectively. Just because we recognize the areas where it needs intervention for socially ideal outcomes (health care) doesn't mean we should discount it completely. And frankly, I'm for any policy that convinces people in the Southwest to stop making it look like the Southeast. I like the way the Southwest looks naturally.
Posted by Erik | July 17, 2008 12:20 PM