Matthew Yglesias (July 07, 2008) - The Personal and the Political (Domestic Policy)

There's a certain amount of potable water per person that is a basic need ... but evidently, charging water rates to households that allow them to water lawns in areas like the Los Angeles basin that import water from out of state on the basis of their basic need for water is just a rationalization.

Posted by BruceMcF | July 7, 2008 4:32 PM

a year or so ago i ran across a blog written by a couple living in arizona who had installed a rainwater collection system at their home which more than supplied their needs in any given year.

my brother has been living in arizona for over five years and has never heard of or seen any such thing.

if i were in charge, every new home would be outfitted with solar or wind power for electricity and rainwater collection systems, and government subsidies to retro-fit existing homes.

fortunately, i live in the northeast where the issue with water supply is primarily quality, but i would still be more than happy to use collected rainwater.

Posted by karen marie | July 7, 2008 4:33 PM

People who live in the desert southwest need to realize they are living in a fucking desert and move.

Duh.

Posted by calipygian | July 7, 2008 4:35 PM

The other thing is that allocating by price lets different people make different sets of trade-offs. If water is scarce and you put a high value on having a grassy lawn but I put a low value on having one, then allocating by price will let you have a nice big lush lawn while I go without one and buy something else. Under other kind of schemes, I'll get a so-so lawn that I don't really appreciate, and you'll have a so-so lawn that leaves you wanting more.

This is a telling, and troubling, example. The problem isn't whether middle-class and upper middle-class folks will be able to have lush lawns.

The problem is whether market pricing water will just further squeeze poorer folks, who have much less political capital and force to get their concerns heard.

New regulations on water and hte creation of a "market" would not produce a perfectly equitable arrangement that Matthew Yglesias would dream up, it would produce an arrangement tilted toward those in positions of power.

Posted by DivGuy | July 7, 2008 4:36 PM

I think the point being made is that a true market-based scheme is not possible given federalism concerns, the fact that water is a variable and mobile resource, the fact that certain uses affect downstream users in a variety of ways. So the public policy goal being advanced by a non-market solution is the goal of having a solution that reflects reality.

Posted by Scott de B. | July 7, 2008 4:36 PM

People who live in the desert southwest need to realize they are living in a fucking desert and move.

Duh.

Posted by calipygian | July 7, 2008 4:37 PM

Bruce, there's also a certain amount of food per person that is a basic need, but that's not a good argument for food rationing. The amount of water that you need to survive is just ridiculously cheap -- a few dollars a month. If you can afford a roof over your head, you can afford the water.

Posted by too many steves | July 7, 2008 4:37 PM

Just quit living in the damn desert, people. It ain't natural.

Posted by LaFollette Progressive | July 7, 2008 4:41 PM

You know what's really unnatural? Computers!

People! Stop this unnatural behavior at once!

Posted by peep | July 7, 2008 4:44 PM

You know what's not "natural"? Living where it snows.

People live all sorts of places that aren't natural. As long as they're willing to pay for those preferences, more power to 'em.

Posted by too many steves | July 7, 2008 4:45 PM

We certainly do NOT regulate electricity consumption by price, and there is a reason for that. We have efficiency standards that require a slightly higher purchase price but EVERYONE benefits from lower rates. Without standards, cheaters would buy cheap, inefficient appliances that would drive up the costs for everyone else. Water is no different.

Just substitute "water use" for "appliance efficiency" and you can start to understand why pricing alone does not work.

"Appliance efficiency standards represent environmental protection that pays consumers back. Efficiency standards currently adopted or under consideration by the Department of Energy will reduce energy use for all purposes in the United States by more than 4%, with comparable reductions in emissions.

The reduction in emissions of carbon dioxide will make a significant contribution to meeting the goal of climate stabilization. Reductions in emissions of air pollutants that damage human health could save some 2,000 lives per year.

Appliance efficiency standards can save consumers over $200 billion, or $2,000 per American household. These savings produce new jobs and enhance the global competitiveness of American industry.

"Beginning in the 1970s, policy makers supported setting minimum efficiency requirements on new residential appliances. These standards remove inefficient products from the marketplace, thereby assuring that all consumers benefit by obtaining less energy-intensive products. The standards lead to appliances that might cost a little more initially, but provide energy bill savings that pay back the extra first cost many times over for typical consumers. Standards also remove uncertainty while providing a level playing field and economies of scale for manufacturers."

http://www.aceee.org/pubs/a951.htm

Posted by bakho | July 7, 2008 4:59 PM

A big reason the water situation in the West is so f-ed up is that the government has been massively subsidizing irrigation water for farmers for generations as part of the legacy of "Manifest Destiny" and the desire to support farmers for political reasons. As a result, much of the water in many Western states is consumed by farmers who get it at massively subsidized rates and then use it to grow crops supported by another layer of massive subsidies. In many cases farmers can make more by selling their "water rights" (given to them by govt subsidy) back to the citizens of the state than they can by actually farming (despite all the farm subsidies). This is what water allocated by non-market means looks like. Almost any change to this ridiculous state of affairs would be an improvement.

"Cadillac Desert," the book and PBS series of the same name, are still good references for Easterners and others ignorant of these issues.

Posted by DCreader | July 7, 2008 5:01 PM

What is crazy is for people who live in the desert to have lush green lawns and somehow feel that they shouldn't have to pay for that. I don't know if Matt's idea is practical, but the incentives he talks about are good. If people want green lawns they should pay for them.

Posted by Craig | July 7, 2008 5:04 PM

Just quit living in the damn desert, people. It ain't natural.

Yeah, they should live in a natural environment instead. Like, er, Manhattan.

Posted by Mixner | July 7, 2008 5:09 PM

I'm sure you can think of plenty of BAD water pricing schemes, molded by special interests, that would be as bad or worse than the bad water distribution scheme that currently exists.

But, I don't think it would be that hard to design a good scheme. Maybe it could guarantee every house/apartment a certain quota of water every year at affordable prices, that would be more than enough for them to shower with, drink, etc. Any water use beyond that (swimming pool, hosing down a lawn, industrial use, agriculture, etc.) would then pay a market rate.

This would work because, as another commenter mentioned, household water use is a very small percent of overall water use. Most water used goes to agriculture. If it wasn't subsidized, people might realize the desert isn't the best place for that.

Posted by graeme | July 7, 2008 5:11 PM

"There's not a ton of fans....."

sheesh and jesus the syntactical sloppiness and laziness here...save your money send your kids to the local community college where this is expected but HAH!vud! Havud! ha ha havud

Posted by Andy Marvy | July 7, 2008 5:12 PM

Yeah, they should live in a natural environment instead. Like, er, Manhattan.

Millions of people live on Manhattan Island in a sustainable way, in a way that allowed a million people to live there a 100 years ago.

There is no way that a million people could possibly lived in Las Vegas or Phoenix a hundred years ago.

Manhattan isn't as sensitive to energy prices like Phoenix and Las Vegas are. Without cheap energy to power air conditioning, the southwest is uninhabitable.

Phoenix is malthusian overshoot like a motherfucker.

Posted by calipygian | July 7, 2008 5:15 PM

Yeah, they should live in a natural environment instead. Like, er, Manhattan.

Millions of people live on Manhattan Island in a sustainable way, in a way that allowed a million people to live there a 100 years ago.

There is no way that a million people could possibly lived in Las Vegas or Phoenix a hundred years ago.

Manhattan isn't as sensitive to energy prices like Phoenix and Las Vegas are. Without cheap energy to power air conditioning, the southwest is uninhabitable.

Phoenix is malthusian overshoot like a motherfucker.

Posted by calipygian | July 7, 2008 5:16 PM

No trading of water rights.

People will just need to leave the desert and move back to regions that are suitable for human habitation. The "Rust Belt" will be reborn in the 21st century for this reason.

Posted by TH | July 7, 2008 5:18 PM

What DCreader said.

There's plenty of water, it's the distribution and crazy quilt of subsidies and laws that makes it such an impenetrable issue. Development run amok (Las Vegas, San Diego, Phoenix, etc.) certainly doesn't help, but simply switching to water-efficient crops and/or drip irrigation will free up enough water for any anticipated population scenerio.

Climate change, however, is already disrupting the western water supply and will create a whole new set of problems that may not be so easily resolved.

Posted by trollhattan | July 7, 2008 5:19 PM

Yes, yes, people shouldn't be living in deserts. And if they are, not everyone should have a big bushy lawn.

But I think the point that's to be found in all this is that an economically efficient solution can both be environmentally sustainable and legally coherent. A system of tradable water rights subsumed within a framework that caps the total consumption of water from a given aquifer in a year, that allows for in-stream water rights, and is designed with an eye toward securing the available supply for many years to come is a *much better scheme* than the one currently in place.

Certainly we need to assess the point of a new system before a massive overhaul, but talk is cheap and alternatives are few and far between.

Posted by Brian | July 7, 2008 5:22 PM

Something along these lines was attempted in Brazil a few years ago. Water rights were privatized and bought and sold. If I recall correctly, the rights very quickly became conglomerated in the hands of a few, poor people were charged for their daily needs, riots ensued, and the entire system broke down.

I can envision a system with safeguards in place to avoid this scenario, but I suspect that there are lurking social justice implications to the tradable water rights idea, just as there are for almost any market-based solution. That's not to say that the idea couldn't work, and I like the notion of attaching costs to water use in the desert, but any arrangement would have to be exceedingly well-structured.

Posted by saucy sauce | July 7, 2008 5:24 PM

Which is to say, uh, what Matt said.

Posted by Brian | July 7, 2008 5:25 PM

I have a hazy memory that something along these lines was attempted in Brazil a few years ago. Water rights were privatized and bought and sold. If I recall correctly, the rights very quickly became conglomerated in the hands of a few, poor people were charged for their daily needs, riots ensued, and the entire system broke down. I'd be grateful if anyone else who remembers this could confirm or deny my version.

In any case, I can envision a system with safeguards in place to avoid the Brazil scenario, but I suspect that there are lurking social justice implications to the tradable water rights idea, just as there are for almost any market-based solution. That's not to say that the idea couldn't work, and I like the notion of attaching costs to water use in the desert, but any arrangement would have to be exceedingly well-structured.

Posted by saucy sauce | July 7, 2008 5:27 PM

Oops. Sorry for the double post!

Posted by saucy sauce | July 7, 2008 5:29 PM

The question, though, would have to be what policy goal is being advanced by adopting a non-market scheme -- environmental concerns, public health, what?

Which is why I asked the question in the first place. (I found the posts in the other thread just great by the way, and thanks to Matt for posting.) As a waterlogged Rust Belter, the issue is pretty much off my radar, as I expect it is for many Americans that do not live in areas where water resources are scarce or likely to become so soon.

I was in Las Vegas recently and heard one loon on the local news talking about building a $75 billion dollar pipeline to the northern Rockies in Canada to provide water to the region. This man was introduced as an "expert" and was taken very seriously by the anchor. Obviously, the discourse on the issue is not very advanced yet in the zeitgeist. Anyways, the whole business smacks of the oil conversation circa 1999. Very educational thread(s). I suspect we'll all hear more and more of this as time goes on.

Posted by RoboticGhost | July 7, 2008 5:37 PM

"Manhattan isn't as sensitive to energy prices like Phoenix and Las Vegas are. Without cheap energy to power air conditioning, the southwest is uninhabitable."

Yall need to get out of your micro urban sleeping closets and check out the country. I live a hundred miles from Phoenix, w/o AC. Kind of hot in June but now that the monsoon has kicked in it's rather delicious, most of the day is in the 70s and 80s. Fact is even in Phoenix one could engineer housing that didn't cost much to keep cool, and oddly enough there are millions of very poor people living along the Nile and it's as hot or hotter there. And I suppose most here don't know (but would've if they had read Cadillac Desert) that Phoenix has a lot more available water than say Atlanta, or even, I believe, NYC->Manhattan. (10K' White Mts drainage goes directly through Phoenix). No argument about Las Vegas though, and the amount of cotton that's grown in AZ is a scandal. All that said, I think Matt is right, with the caveat that there should be a subsidy for the bottom. The way that is done out here in the west is with graduated pricing, more you use the more you pay per unit volume.

Posted by Russell L. Carter | July 7, 2008 5:37 PM

We waste water at an astounding pace. Here are a few things that would help:

- Natural marshes for filtration of treated sewage. Effluent get filtered very efficiently and can be safely restored to rivers and streams.

- Gray water systems for lawns, courses, and other non-potable usage.

- Cisterns in dry areas.

- Require drip irrigation in dry areas.

- Desalination.

If you live in a state with natural resources, your state benefits from the exploitations of those resources (e.g. Alaskan oil). Similarly, if you consume resources that you don't have, like water, your state should have to pay for them. If you don't want to live in a state with high water costs, then move.

As to crops, states will have to make those decisions. Growing alfalfa or cotton in the desert is moronic, and yet they do it. When a state faces a water crisis, they'll have to make the tough decisions.

The one thing the feds should regulate is water quality. Due to interstate impacts, no one state should be allowed to suck a river dry simply because it's upstream. Georgia's lack of planning put them in a terrible fix, yet they wanted to destroy the river to make up for their piss poor performance on the issue. That can't be allowed. I wonder if Georgia, even now, is truly preparing for future droughts.

Posted by LFC | July 7, 2008 5:39 PM

There's not a ton of fans of the idea of tradeable water rights in my comment thread, but I'm not seeing many better options.

That's because, like most people, you're ignorant of the issues involved. There's nothing wrong with not knowing stuff, but there's lots wrong with asserting your ignorance as a basis of perpetuating a really bad idea.

So, once again, farmers get to farm in the Central Valley because they OWN the water rights in the same way that they OWN the land on which they grow the crops. The fact that some municipal retailers would rather seize that water instead of improving their own systems doesn't mean that involuntary transfers are good public policy.

Second, water rights are tradeable; you just have to establish that the sale of the rights does not cause harm to junior rightsholders.

Third, the single biggest restriction on the transfer of water rights is the lack of infrastructure, especially around the Bay-Delta.

Fourth, the cheapest water out there is recycled water. But the know-nothings in San Diego and Los Angeles are terrified by the idea of toilet-to-tap even though they're already drinking Colorado River water, which already has sewer system discharges in it by the time it gets sent to Southern California. (Orange County, between the two, has established the world's largest groundwater recharge program. It was cheaper than building and getting permitted another ocean outfall for sewage discharge.)

Fifth, people who blab on about subsidies need to do their homework about the difference between State Water Project water, Central Valley Project water (and the impact of the Reclamation Reform Act), and Colorado River water, just to start with. While Reisner wrote a great book, he grossly oversimplified a very complicated issue.

Sixth, thanks for dropping the word "market". It's a buzzword that's meaningless in the context of retail potable water delivery.

Posted by Francis | July 7, 2008 5:40 PM

If you have two business enterprises, and one can create VERY MUCH value out of a gallon of water and another can create JUST A BIT of value out of a gallon of water,

The thing that makes people nervous about this kind of thinking is that, the way things are accounted for in our economy, "keeping a poor person alive" would count as JUST A BIT of value, whereas "cooling a machine that produces advanced military weaponry," or whatever, would count as VERY MUCH value. To be fair, I imagine Matt understands this, but he doesn't say so, and I think that's what's animating a lot of the criticism.

Posted by OhioBoy | July 7, 2008 5:41 PM

your reputation is starting to take a hit with me Matt, you really need to start educating yourself on issues, or you are going to become a lot more like those lazy mainstream journalists. some version of tradable water rights is possible, but it will have to have lots of limits, because there a re key environmental uses (i.e. Sacramento Delta fish runs) that demand a certain level of water that is going to vary season by season. Also, water used in some areas infiltrates the soil and is available for future pumping or supplies baseflow for streams and rivers.

Any transfer of water rights is going to be quite complex and need a sophisticated administrative body that can weigh geologic and environmental factors.

Posted by CalDem | July 7, 2008 5:49 PM

Francis,

I very much appreciate your comments on this subject, both here and at OW. Since it seems like ignorance abounds on this topic, I was wondering: are there any books you could recommend that whose authors did a better job than Reisner? Also, would you be willing to write a longer treatment of these issues? I suspect that TAP or some peer publication might be interested in publishing it; I'd certainly be interested in reading it, even if it was only published on the internet.

It seems that water issues are going to become increasingly frequent topics of our national discourse and I am really not looking forward to even more ignorance than usual.

Posted by Turbulence | July 7, 2008 5:51 PM

Caldem, why the value of the sacramento delta fish runs, is key and cannot be traded off against competing values?

Posted by charles | July 7, 2008 6:02 PM

I should add that the apparent difference in my observations and what some other commenters have noted derives from the fact that the pricing of water for historical reasons has been assigned by very different methods according to use. Agricultural water use has traditionally been assigned prices that are much much lower than residential water use. And then, as others have noted there's the other living things, like fish, and their checks are hard to cash, so the eevil government has stepped in and given the lucky duckies a lot of water for free. As they should. The "From The Archives" blog has a lot of good coverage of the resulting allocation complexity in the face of finite supply in the er archives.

So to be more precise, I agree with Matt on *residential* water use.

Posted by Russell L. Carter | July 7, 2008 6:02 PM

Nthing the Cadillac Desert recommendations - although you'll probably have to dig deeper than just one book before you start making informed policy recommendations, it will at least get you within the clue ballpark. Not to mention that it's a rather engaging read.

And with it under your belt, you'll most likely get a couple of good bits of writing by applying that sort of thinking to China (22% of the world's population, 8% of its water) and the geopolitical hazards of modernization there.

Posted by Craig M. | July 7, 2008 6:04 PM

Millions of people live on Manhattan Island in a sustainable way, in a way that allowed a million people to live there a 100 years ago. There is no way that a million people could possibly lived in Las Vegas or Phoenix a hundred years ago.

Well, thank goodness it's now 2008 and not 1908, then.

Without cheap energy to power air conditioning, the southwest is uninhabitable.

Without cheap energy to power A/C in the summer and heating in the winter, Manhattan is also "uninhabitable."

But you've missed the point, anyway. Follette's laughable complaint wasn't that living in the desert requires a lot of energy, but that it "ain't natural." As if living anywhere else is.

Posted by Mixner | July 7, 2008 6:11 PM

Francis, while you clearly are familiar with water issues related to central and southern california, how do any of your points rebut Greenstone's recommendation to reduce transaction costs, clarify rights and facilitate transfers between users/states?

You claim that water rights are already tradeable in your second point, so what exactly are you disagreeing with? I'm not sure why you disagree with the "buzzword" term market, given that one exists, at least within parts of California. Are you arguing that large price differentials between different uses and different states is entirely driven by transportation costs (i.e. the market exists, but price differentials exist because it's extremely costly to move water from point A to point B)?

Given the byzantine patchwork of water laws across the West, it seems unlikely that transaction costs don't play some role in limiting water transfers. Why is Matt "ignorant" for arguing that it would be beneficial to remove some of those transaction costs?

Posted by TheF79 | July 7, 2008 6:20 PM

Posted by too many steves | July 7, 2008 4:37 PM

Bruce, there's also a certain amount of food per person that is a basic need, but that's not a good argument for food rationing. The amount of water that you need to survive is just ridiculously cheap -- a few dollars a month. If you can afford a roof over your head, you can afford the water.

Obviously how much water you need to meet basic needs ... consumption, cooking, hygiene ... is fairly small compared to the per capita consumption. Also, how large the quantity is depends on technology ... high pressure shower heads and dual flush composting toilets would cut the basic need quantity by a substantial amount.

It is, however, bizarre that a comment that:

evidently, charging water rates to households that allow them to water lawns in areas like the Los Angeles basin that import water from out of state on the basis of their basic need for water is just a rationalization.

... is read as involving a call for a quantity water ration.

However, even if bizarre, the reaction does bring something to mind, since the policy settled on to cope with the fact that food is a basic need was not food rationing, but food stamps (at least in the US). And while it has obviously the subject of attacks by those committed to rolling back the New Deal and Fair Deal, it certainly has survived better and provided better protection of basic needs for nutrition than a food rationing system every would have done.

A functional equivalent may be the common Australian system of a basic water rate and a substantial surcharge for consumption over a set amount per period.

Posted by BruceMcF | July 7, 2008 6:22 PM

Charles: In California, the snow falls in the north and east, but the people and farms are in the center and the south. In between is the Bay/Delta (an enormous marsh that is east of San Francisco Bay and west of Sacramento), the confluence of all the rivers that go out through the Golden Gate. Pumping enormous quantities of water out of the south of the Delta causes incredible biological harm to the species that call the Delta home, including a wide range of salmonid species that spawn in the Delta and in the great rivers (Feather, San Joaquin for example) that feed into the Delta. (Notably, these fish have tremendous economic value. So commercial fishermen frequently find themselves aligning with the environmentalists who want increased flows dedicated to instream uses.)

One proposal is a Peripheral Canal that will go around the heart of the Delta, thereby restoring the essential east-west tidal flows in the Delta. It will only cost several billion and take decades to permit and build. Oh, and open up a lot of water rights issues that mostly are buried for right now.

But there's really no alternative.

Posted by Francis | July 7, 2008 6:26 PM

Market pricing would, among other things, encourage more reuse of waste water, which is one of the solutions of chronic and growing water shortages in the southwest.
See
http://www.unesco.org.uy/phi/libros/efficient_water/wlazarus.html

Another solution would be to ban traditional green golf courses (or use astroturf) in drought areas. If people can golf on snow and ice -- they do, really, in a few places -- why not on sand and scrub?

Posted by bobskis | July 7, 2008 6:27 PM

How about this: I'll stop watering my (Denver) lawn when the residents of DC stop using AC in the summertime, or the residents of Chicago stop using so much heat in the winter.

Look, most places require "unnatural" intervention to be habitable. Sometimes that takes a disproportionate about of water. Sometimes it's nuclear waste (to power the AC generator). Sometimes it's natural gas (heat in Chicago).

Posted by Joe | July 7, 2008 6:38 PM

This is a huge issue in the southwest and as many commenters have noted is mostly caused by the government allocating water rights during manifest destiny. Because of this in many areas of the Southwest it is ILLEGAL to use grey water tanks or other detention techniques. The result is that people are legally required to use potable water for every conceivable use whether they like it or not.

Posted by CM | July 7, 2008 6:54 PM

On Greenstone's article:

He requests that water be tradeable across state lines. Response: Users of Colorado River water long fought over the idea that a senior user could sell to a third party, on the grounds that if the senior user didn't need it, the water belonged to the next junior user.

This is a classic statement of the law of appropriation, which holds that first-in-time is first-in-right, up to the amount needed for beneficial use. If the senior user had water left over to sell, that water as a matter of law didn't belong to the senior user.

He requests that transfers not be reviewed by bureaucrats. Besides threatening to put me out of work (not really), Greenstone shows he really doesn't have a clue. If a junior user doesn't have an administrative forum to review the impact of the transfer, he'll do it in court. The purpose of bureaucratic review is to have experts do the analysis instead of judges.

He requests that property rights be "clarified". Anyone who owns anything of value, whether real, personal or intellectual property, should get a shiver down their spine when an economist talks about clarifying property values. In California, water rights are established by common law pre-dating the creation of the State and the California Constitution. How the federal government is going to force California voters to change their constitution is, apparently, left as an exercise to the reader.

He notes, in passing, that government involvement would be needed to create the infrastructure to allow for the clearing of trades. Gee, ya think? Now, what kind of impact will government ownership of the necessary infrastructure have on the establishment of a "market"? Question left unanswered.

He requests that states get involved in establishing clearinghouses and information standards. Wait, I thought that bureaucrats were supposed to get out of the way.

In sum, it's the same kind of tired recitation of dumbass talking points that I read on a regular basis. It ignores 200+ years of law, billions of dollars on investment in infrastructure, the environment and local, regional, state and federal politics.

Posted by Francis | July 7, 2008 6:55 PM

This is a huge issue in the southwest and as many commenters have noted is mostly caused by the government allocating water rights during manifest destiny. Because of this in many areas of the Southwest it is ILLEGAL to use grey water tanks or other detention techniques. The result is that people are legally required to use potable water for every conceivable use whether they like it or not.

Posted by CM | July 7, 2008 6:56 PM

Hey thanks, Russell.

Dude, you're doing hero's work, Francis.

On subsidized agriculture in California.

The way we allocate water now isn't optimal, or maybe even good. But it is the way that everyone based their expectations around. Those expectations are pretty concrete these days and lots of people would be very hurt to have those abruptly upset. (This includes everyone who has gotten used to the idea that food is cheap.) Having grand ideas about better ways to do things isn't very interesting unless you're willing to talk about how the transition would be managed. And you can only talk meaningfully about the transition if you know the system well.

Posted by Megan | July 7, 2008 7:16 PM

Those expectations are pretty concrete these days and lots of people would be very hurt to have those abruptly upset. (This includes everyone who has gotten used to the idea that food is cheap.) Having grand ideas about better ways to do things isn't very interesting unless you're willing to talk about how the transition would be managed. And you can only talk meaningfully about the transition if you know the system well.

This is a very important point ... transitions that work quite smoothly in the modeling of traditional marginalist economists (note) often are a lot rockier with a lot more unintended consequences in the real world. That is one reason for the general preference for less institutional disruption rather than more, since the greater the institutional change, the greater the scope for unforseen and unforseeable consequences.

(note: they're pretty easy to spot ... they're the ones who think its only economics if it follows the established traditions of marginalist economics)

Posted by BruceMcF | July 7, 2008 7:27 PM

There is a lot of really valuable input in this comment thread about water conservation techniques that can have a huge impact on the need to fight/bargain over water rights in the first place. (cisterns, gray water, less ridiculous landscaping, etc.) One idea that hasn't been mentioned is large-scale civil engineering projects that could be revised for current needs. For example, the L.A. River system, though much maligned because it's basically a concrete sewer, was in its time a brilliant scheme to protect the city against rare but devastating flooding by diverting rain-water through storm drains to the river and out to sea. Now, as a result of 80 years of sprawl, it has become a brilliant way to waste a huge proportion of our rainwater. Alternative systems that allow this water to sink back into the ground and from there to aquifers could actually make L.A. self-sufficient in water. Something like this would of course require major government action and simply would not occur if we allow the genius of the marketplace to sort everything out.

Posted by bobbo | July 7, 2008 7:50 PM

(okay, it's a slow day and these water posts bugged me.)

On pricing: How should water be priced in California? And, just as importantly, who should decide?

One economist, who posts at aguanomics.com believes that municipal water should be priced in a way as to effect behavior. Base use should be essentially free, and anything above base use should be sharply more expensive.

That's actually not a bad approach for residential use. Unfortunately, people in the middle and upper class who have yards and pools tend to outvote the poor, so water managers -- who largely are governmental employees and like their jobs -- respond to the voting bloc by pricing in a way that hits hard only those whose use is grossly disproportionate.

Economically inefficient? Probably, although I hold a JD not a Econ. Phd. so I'm guessing. Politically feasible? Yup.

Are there alternatives that are both politically feasible and more efficient? Now you're asking the question as to who decides. Water pricing in California is local and I really doubt there's any political appetite to have anyone else get involved in setting prices. So if someone out there wants to get water priced more "efficiently", all I can say is get out there in local communities and make it happen. DC-based posturing won't get it done.

As to ag pricing, this is enormously complex and very fact-specific. For example, in Imperial Valley (between San Diego and the Colorado River), the Imperial Irrigation District (a local government agency led by an elected board) holds in trust for the farmers their rights to about 2.8 million acre-feet of Colorado River water. My preference is for government agencies not to run a profit on the services they provide to their constituents. The voters within IID apparently agree. So IID charges just a few dollars per acre foot (about $12, I think) because that's all it costs to get the water there. (It's more complicated than that, but the essentials are accurate.)

By contrast, the actual cost of desalinating the Pacific Ocean runs about $2,000 per acre foot. Not surprisingly, the City of Las Vegas would much rather pay IID farmers not to farm, and keep that Colorado River water in Lake Mead than it would building a desal plant in California and swapping the desal water for Colorado River water.

If IID farmers want to do so, they can hire a bunch of lawyers and redo the Law of the River (as they did when San Diego bought some of their Colorado River rights).

But getting the federal government to tell the Imperial Valley farmers that they must give up their Colorado River water rights to Las Vegas because Las Vegas is willing to pay more really bugs me. The Kelo decision was bad enough and that was internal to the State of Connecticut. I have no desire to see the federal government allowing the State of Nevada seize the property of residents of California.

Posted by Francis | July 7, 2008 8:05 PM

I think there's something in the cheap, Federally subsizized water that turns Arizonans conservative. The first thing we do is go into complete denial how dependent we are on government dams, reservoirs and canals. The second thing is to treat public assets like our own private property, and bam! Next thing you know, we're electing Senators John Kyl and McCain.

Now obviously, I think my own swimming pool is more important than some golf course, dancing fountains or desert rice paddy. The way I would sort it out is to give an equal number of water rations to individual human beings, and let the casinos buy my leftover water for their fountain, if I feel like selling it.

Posted by Aatos | July 7, 2008 8:33 PM

The Peripheral Canal would be an environmental debacle, and has rightly been rejected by voters of the state of California at least once, if not multiple times. It's a third rail of state politics.

It would essentially make it easier to suck water from Northern California to Southern California, allowing for even greater water diversions from Northern California rivers, many of which are already tapped for interbasin transfers. The Natural Resources Defense Council estimates it would allow for diversions to be increased by 2 million acre feet a year.

There is no such thing as "excess water" in California anymore - water utilities in the Bay Area are in serious drought mode. East Bay Municipal Utility District has already imposed mandatory rationing. For this, and environmental reasons, Northern California communities are essentially universally opposed - when it came up on the ballot in the 1980s, some Bay Area counties rejected it by a rather astonishing 95-5 margin.

I'm also amused at the idea that there are any "water rights" to these barren, semi-desert Central Valley areas. The only reason they have any "water rights" at all is because of the massive federal and state funded infrastructure which provides water to fill empty streambeds. If it wasn't for the network of aqueducts, those water rights would be tapping dried-up arroyos and washes.

The Central Valley has relied on irrigation for its entire existence. First, it was groundwater... until they pumped the state's largest aquifer dry in a matter of decades. Land subsided up to 30 feet in some places. Then they started pumping water from the local rivers. Then that wasn't enough, so they started pumping water from rivers 200 miles away... all subsidized by the friendly Bureau of Reclamation.

Water rights? Try water responsibility.

Posted by Travis Mason-Bushman | July 7, 2008 11:48 PM

Note that I'm not arguing that we should go out tomorrow and blow up the Owens River Aqueduct.

But there's certainly room for massive increases in agricultural water efficiency, before anyone starts to talk about making it easier to dump Feather River water into the Friant-Kern Canal. The Peripheral Canal is a non-starter. Didn't even make it out of committee in the state Assembly.

In fairness, there is certainly room for massive increases in urban water efficiency, as well. We need to get over the greywater "ick" factor.

Posted by Travis Mason-Bushman | July 7, 2008 11:56 PM

Note that I'm not arguing that we should go out tomorrow and blow up the Owens River Aqueduct.

But there's certainly room for massive increases in agricultural water efficiency, before anyone starts to talk about making it easier to dump Feather River water into the Friant-Kern Canal. The Peripheral Canal is a non-starter. Didn't even make it out of committee in the state Assembly.

In fairness, there is certainly room for massive increases in urban water efficiency, as well. We need to get over the greywater "ick" factor. I mean, at some level, everything we drink is greywater. Certainly anyone in LA taking a drink from a tap is sipping the same molecules of water that someone in Green River, Utah flushed down the toilet.

Posted by Travis Mason-Bushman | July 7, 2008 11:58 PM

Apologies for the double-post.

Posted by Travis Mason-Bushman | July 8, 2008 12:00 AM

"People who live in the desert southwest need to realize they are living in a fucking desert and move."

Funny thing, that. Back in May I went down to Mesa Verde and Chaco Canyon, home of the Anasazi. They lived quite comfortably in the desert for 400 years long before Columbus was a gleam in his great-grandfather's eye.

If they had been a little smarter in how they allocated resources...they wouldn't have had to move.

Posted by Herb | July 8, 2008 12:54 AM

The question, though, would have to be what policy goal is being advanced by adopting a non-market scheme -- environmental concerns, public health, what?

This is why water rights seem so odd now. The point of our water allocation system was to settle the west, put families on each 160 acres of it. It did a pretty good job of it.

One side effect that people depend on now is that it makes food artificially cheap. Other side effects that people dislike now are the environmental costs and the inefficiencies.

Going with a market system (assuming you could get over the conveyance barriers, which are substantial) would cure inefficiencies. I am on record as not being impressed much with efficiency for the sake of efficiency. I'd be a lot more impressed with an overhaul if it were oriented around some deliberately and publicly selected goal (environmental health, sustain cities, provide food security -not the same thing as cheap food- for a discrete population) and then designed for those purposes.

Posted by Megan | July 8, 2008 1:48 AM

The broader problem is that "water rights" assume entitlement to something that nobody can be sure will actually exist.

Particularly in the West, water flows are highly variable year-to-year, and their variability over the long term exceeds our ability to compensate with short-term storage facilities. Both of America's largest reservoirs, Powell and Mead (both of which are on the Colorado River) are substantially below capacity and have been generally emptying for the past decade or so.

These storage facilities, of course, come with extreme environmental cost (the destruction of canyons) and are immensely wasteful. The amount of water that evaporates off Lake Powell annually represents 6% of the Colorado's total flow, and is equal to the amount of water that the entire city of Los Angeles consumes annually.

I'm not sure the solution is a market system either. But I think part of the solution is something that nobody wants to address: recognizing the fact that the Western United States is running into nature's hard limit on its available resources. Pie-in-the-sky "pipeline to Canada" kookery aside, the water that's in the West now is all we got to use. That's going to require some hard choices and sacrifices all round, if we want to sustain modern civilization in what is generally a high desert studded with mountains.

Posted by Travis Mason-Bushman | July 8, 2008 2:03 AM

Clearer assignment of property rights in water, coupled with ending government subsidies and freer competition in water delivery, would lead to significant gains in efficiency of water use and investments that are urgently needed in the face of a drying West.

I've collected a number of links in the first few posts here: http://mises.org/Community/blogs/tokyotom/search.aspx?q=water+rights

Posted by TokyoTom | July 11, 2008 5:08 AM

Hey -- nice post. I see a few familiar names here (Hi Francis, Megan) and I'm glad that Francis mentioned my idea for residential pricing (first bit of water free, then you have to pay a LOT for it).

I want to add a few more ideas:
1) I'm a fan of auctions to allocate wholesale water among cities, ag and environment -- AFTER minimal stream flows are excluded.

2) I don't agree with Francis that residential rates are cheap because middle/upper class voters want it that way. Water has been provided at *cost* for years (even worse, average cost) and cost-based prices are just TOO LOW to get people to pay attention to use. That's why a 14% increase means $3/family/month and why I advocate 200+ percent prices increases on the margin.

You can get a LOT more background on these ideas at my blog, aguanomics.com

Posted by David Zetland | July 11, 2008 2:01 PM

Hey -- nice post. I see a few familiar names here (Hi Francis, Megan) and I'm glad that Francis mentioned my idea for residential pricing (first bit of water free, then you have to pay a LOT for it).

I want to add a few more ideas:
1) I'm a fan of auctions to allocate wholesale water among cities, ag and environment -- AFTER minimal stream flows are excluded.

2) I don't agree with Francis that residential rates are cheap because middle/upper class voters want it that way. Water has been provided at *cost* for years (even worse, average cost) and cost-based prices are just TOO LOW to get people to pay attention to use. That's why a 14% increase means $3/family/month and why I advocate 200+ percent prices increases on the margin.

You can get a LOT more background on these ideas at my blog, aguanomics.com

Posted by David Zetland | July 11, 2008 2:03 PM

The Personal and the Political

Comments (59)

Search

Books by Matthew Yglesias

Recent Comments

Recent Posts

Weekly Archives

Categories