Tuesday, 7 April 2015

Who owns the water?

There are understandably concerns about the future of water:
Futures Forum: The Water, Energy and Food Nexus
Futures Forum: Peak oil, peak soil, peak water... peak everything

And there are models of 'how to manage' this resource:
Futures Forum: The Circular Economy ... and looking after our water at a local level

The 'water-wars' of California are the stuff of movies:

Forget Chinatown, Get the Real Story of California's Most Famous Water War | Los Angeles | Artbound | KCET
The Water Fight That Inspired 'Chinatown' - NYTimes.com
California Water Wars - Wikipedia, the free encyclopedia

As ever, the United States is at the forefront when it comes to ideas - although some might consider it ideology:

Does California Need Rain, Rationing, or Prices?

Drought doesn't have to cause shortages


California is in the midst of a crisis. Its gorgeous weather has turned against it as its fourth year of drought drags on. Looming water shortages are leading to calls for rationing and restrictions on water use. The state has one year of water left, and 35-year megadroughts ahead of it. The New York Times bleats, “Reservoirs are low. Landscapes are parched and blighted with fields of dead or dormant orange trees.”

Why is there a water shortage? Almost every news story I’ve read blames the drought.

This sounds like a reasonable assumption, but just because the supply has contracted doesn’t mean that there should be a shortage. In normal markets, when supply shrinks, the price rises and quantity demanded decreases to meet quantity supplied. People naturally use less when something costs more. They conserve and prioritize.

But if for some reason the price can’t rise, usage won't change because the price isn’t signaling facts about underlying scarcity and incentivizing different behavior. What made sense to do with a resource when it was relatively abundant — say, 40 minute showers and turning your lawn into a lake — might not make sense when it’s scarcer. When the price is held down while supply and demand are changing, you end up with shortages, rationing, and use regulations.

As Alex Tabarrok points out, California has plenty of water. What it doesn’t have are prices — or rather, market prices. Although a lot of well-meaning people insist that water is a right, I notice that my “right to water” in no way changes the fact I have to pay the government monopoly for it ($44.91 last month). So even if there is a right to water, as Tabarrok quotes Matt Kahn, there is no natural right to always pay half a cent per gallon for it, regardless of supply or demand.

The price controls and subsidies for water use also have behavioral consequences:

As David Zetland points out in an excellent interview with Russ Roberts, people in San Diego county use around 150 gallons of water a day. Meanwhile in Sydney Australia, with a roughly comparable climate and standard of living, people use about half that amount. Trust me, no one in Sydney is going thirsty.

People in San Diego have lawns and cars and pour tons of water on them — and why not? It’s cheap. But when water becomes scarcer, rather than raise prices to reflect this fact and encourage conservation, California cities resort to paternalistic rationing, issuing edicts about when you can water your lawn and how much and how clean your car can be.

“Water conservation” (by any means necessary — as long as they don’t involve prices) is also the basis for the myriad of ludicrous federal regulations that have devastated our toilets and showers, as Jeffrey Tucker chronicles.

Prices aren’t just a way to avoid shortages and use resources efficiently, as David Zetland explains in his wonderful little book Living with Water Scarcity. Markets treat consumers like free and responsible adults whose choices actually mater, rather than dictating to them what’s “important” or “essential” for their own lives.

Prices generate revenues and reduce demand, but they also give customers choices. A regulation on outdoor watering may annoy a granny with flowers. A desalination plant may annoy environmentalists. An education campaign is condescending to some and a waste of breath on others. A campaign to install low-flow toilets may install sparkling receptacles in unused second bathrooms.

Prices send a direct signal at the same time as they accommodate many responses. Customers can choose their own mix of technologies and techniques. Some will take shorter showers. Others will install drip irrigation. Some will shower at work. Others will just pay more. A higher price for water, like a higher price for any commodity, allows people to choose how much water to use. Choice is a pleasant option compared to water shortages or tickets from water cops.

Markets can solve the shortage in California even if they can’t make it rain, while water rationing won’t do anything to alleviate the real problem because it exempts the biggest consumers. All the use restrictions are all a distraction — you could eliminate all car washes, showers, and lawns and not make a dent, because urban consumers account for just a fraction of California’s water consumption. The Economist notes (emphasis mine):

The first rule for staying alive in a desert is not to pour the contents of your water flask into the sand. Yet that, bizarrely, is what the government has encouraged farmers to do in the drought-afflicted south-west. Agriculture accounts for 80% of water consumption in California, for example, but only 2% of economic activity. Farmers flood the land to grow rice, alfalfa and other thirsty crops.

And while it may be sad that some of California’s farms are struggling, there is no logical reason why the rest of the state needs to suffer to subsidize crops (and inefficient irrigation techniques) that wouldn’t make economic sense if the farmers had to pay markets rates for water.

Tabarrok calculates that if farms used just 12.5% less water, Californians could theoretically increase the amount available for all industrial and residential uses by half.

Does that arrangement make sense? Probably not, but no planner or regulator could possibly decide how to weigh the demands of millions of people for water or any scarce resource. All we know is that we do not have enough water to satisfy every possible use for it.

Only the price system is able to coordinate those countless actors, factors, plans, interests, and industries. Maybe when California regulators turn on the tap and find it empty they’ll realize this.

FEE was of course way ahead of the game on water markets, as seen in the 1955 Freeman article “The Ownership And Control Of Water” and Murray Rothbard’s response “Who Owns Water?”

Does California Need Rain, Rationing, or Prices? : Blog : Foundation for Economic Education

Here is an alternative take on the same story from this week:

Jerry Brown’s Phony Conservation Plan is Real Corporate Welfare

Kevin Carson | April 4th, 2015

California Governor Jerry Brown’s April 1 decree (Executive Order B-29-15) for rationing water has gotten lots of undeserved positive coverage on the center-left. If you read the fine print, it doesn’t actually reduce the state’s total usage by 25% (although that’s the impression you’d probably get just reading the headlines). It only applies to “potable urban water usage” within municipal water systems.

Municipal water authorities are empowered to impose regulatory measures — like drip irrigation for lawns and gardens in newly built housing units — and alter rate schedules to encourage conservation.

Notably missing from the order is any measure, whether usage caps or rate increases, materially affecting heavily subsidized irrigation water for California’s giant agribusiness operations. When you consider that agribusiness accounts for about 80% of California’s total water usage, that 25% cut in urban consumption is pretty weak sauce.

According to Mother Jones (“California’s Almonds Suck As Much Water Annually As Los Angeles Uses in Three Years,” Jan. 12), subsidized almond irrigation uses almost three times as much water as San Francisco and Los Angeles combined. Export production of pistachios consumes over twice as much water as San Francisco. And export walnut crops soak up more water than Los Angeles.

California has doubled its nut production in the last decade, in an area that would be a near-desert if it relied on local rainwater. And it has been enabled to grow, and to consume water on a grossly unsustainable basis, because it gets water from the mountains artificially cheap with the help of the state and its engineering projects (like, you know, those giant dams MSNBC’s Rachel Maddow stands in front of when she talks about government doing “big things”). In addition to the ecological destruction involved in creating artificial lakes and diverting water, agribusiness also pumps ground water faster than it can be replenished. That’s water that, rightfully speaking, is the common property of everyone in the region it underlies. California agribusiness is enclosing the water commons and draining aquifers at the expense of future generations.

California, by the way, is a textbook example of the so-called “Green Revolution,” falsely presented as a way to “feed the world.” It’s an agricultural model ideally suited to those operating on stolen land (many of the largest operations were originally Mexican haciendas, themselves property of a neo-feudal landed oligarchy), with heavy reliance on subsidized inputs.

Meanwhile, urban residents are paying higher rates and rationing just to enable this wholesale corporate looting. To compound the outrage, the rationing applies to residential vegetable gardens and edible landscaping, which — you can bet the farm — use water far more efficiently than Big Agri. And they reduce household dependence on the output of factory farms as well. Conflict of interest, maybe?

That’s not to say urban water rates aren’t artificially low, or waste isn’t subsidized. Water prices should be sufficient to limit consumption to sustainable levels. But that should be true everywhere — not just of the 20% of water consumed by urban residents. And efficient pricing shouldn’t be a temporary emergency measure, taken by the state to offset its own dole of corporate welfare water to powerful business interests.

When the state preempts regulation of the commons, it inevitably treats them as the private property of the economic interests that control the state. It’s time for us all to realize that water is a natural resource commons that belongs to the people — not the state — and should be directly regulated by the users themselves.

Center for a Stateless Society » Jerry Brown’s Phony Conservation Plan is Real Corporate Welfare

See also:
Center for a Stateless Society » Capitalism’s Running Out Of Water — And Everything Else

And for beyond California:
Center for a Stateless Society » Mutualizing Water Services and Detroit
Center for a Stateless Society » Detroit, Disaster Capitalism and the Enclosure of the Water Commons

And for the 'Green Revolution':
Futures Forum: Norman Borlaug and the “Green Revolution”: a centenary
Futures Forum: Sustainable intensification of agriculture: an oxymoron?

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