Editore"s Note
Tilting at Windmills

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July 16, 2008
By: Kevin Drum

WATER, WATER, EVERYWHERE....Via Tyler Cowen, David Zetland writes in Forbes that California wouldn't have to ration water if prices responded to supply and demand instead of being fixed bureaucratically:

If water was priced to reflect scarcity, a decrease in supply would lead to an increase in price, and people would demand less....I propose a system where every person gets the first 75 gallons, or 1.5 bathtubs, per day for free but pays $5.60 for each 75 gallons after that. Under my system, the monthly bill for the average household of three would come to $95.

Details aside, maybe that's the right way to go. After all, market pricing is usually the best default method for allocating goods and services. One thing, though: this is going to be a hard sell unless agribusiness is included too. If we charged them market prices for water (a) food prices would go up a few pennies and (b) there'd be so much water left over for residential use we'd hardly know what to do with it. We'd be awash in the stuff.

Just a pipe dream, of course. Our current welter of overlapping regulatory regimes, fiat property rights, and massive lobbying efforts insures that water policy will continue to be crazy for decades to come. But someday the revolution will come.

Kevin Drum 12:04 PM Permalink | Trackbacks | Comments (55)

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Comments

You know what they say about the price of taking a bath: "If you have to ask you can't afford it."

Posted by: steve duncan on July 16, 2008 at 12:23 PM | PERMALINK

Expecting agriculture to pay market prices for water is war talk.

Posted by: Brojo on July 16, 2008 at 12:24 PM | PERMALINK

The market works! As long as you leave out corporations like big agribusiness! And big oil. And big sugar. ...

Posted by: John McCain: More of the Same on July 16, 2008 at 12:28 PM | PERMALINK

Just slipping in here to remind everyone of Marc Reisner's Cadillac Desert which introduces the western water mess in all its messiness.

Posted by: Tom Parmenter on July 16, 2008 at 12:31 PM | PERMALINK

Do those guys use drip irrigation or do they just piss the water away into the air?

And does anybody have a citation to a study on the actual degree of water savings from drip irrigation? I've seen 60% savings cited, but without authority.

Posted by: David in NY on July 16, 2008 at 12:38 PM | PERMALINK

Well, a reform of water rights ought to help with this.

California USED to have an appropriate set of laws regarding water use: the pre-statehood ones taken from Spanish riparian law. Suitable for an arid climate.

But one of the few things done by the CA government, during the few days of independence back in 1848, was to replace the Spanish law with English law.

You know, suited for a country where it rains nearly 24/7. Like England. Or Oregon.

But never mind, Jack. It's chinatown.

Posted by: Snarki, child of Loki on July 16, 2008 at 12:49 PM | PERMALINK

Yet another plee for deregulation of california "municipal" services? Didn't we learn already with power ...

Posted by: royalblue_tom on July 16, 2008 at 12:52 PM | PERMALINK

So the average family of three uses 3525 gallons of water a month - 47 bathtubs.

Posted by: flubber on July 16, 2008 at 12:55 PM | PERMALINK

I'd favor a market system, provided it's a true market. They only way to achieve that is to divide the supply by the population and credit that many gallons to every citizen.

Everyone would get way more water than an individual, live human being could use, and people would be free to sell their credits on the open market. Corporations should buy their water from the people and not the other way around.

Posted by: Aatos on July 16, 2008 at 12:57 PM | PERMALINK

Kevin,
You preach against static, government monopolies, as if all your progressive wisdom about government efficiency is coming to an end.

Posted by: Matt on July 16, 2008 at 1:02 PM | PERMALINK

Kevin,

The trick is better government. When the "water market" was created in Bolivia, there was a revolution and throughout the government that agreed to support the IMF free market water reforms.

There is no such thing as a free-market on an essential commodity.

Kevin after living through the Enron mess do you really want to be in a situation where corporations are "setting the price" of water?

Seriously.

Posted by: patience on July 16, 2008 at 1:11 PM | PERMALINK

Come on, Kevin, everybody knows the good old western tradition articulated so concisely by Mark Twain: Whiskey is for drinking, and water is for fighting. Of course most people bathed in the kitchen washtub, once a week, in those days.

Posted by: jhill on July 16, 2008 at 1:14 PM | PERMALINK

Drip irrigation involves a lot of hoses for a hundred acre field. And then they have to be moved before you plow it. Would the extra costs offset the extra water? Don't really know, but a field of crops isn't the same as my backyard garden (where I really should install a drip system, so thanks for the reminder/badgering, David in NY.)

Posted by: jon on July 16, 2008 at 1:17 PM | PERMALINK

Well, here in Boulder (CO) our water bill for a household of 2 averages $55 a month. And the city is the one that spews water all over the sidewalk while sprinkling ht parks...And we will probably see a rate hike this year too....

Posted by: Carol on July 16, 2008 at 1:18 PM | PERMALINK

I meant to add that the high cost of water here (relatively) does reflect water scarcity (we are in a drought, after all).

Posted by: Carol on July 16, 2008 at 1:22 PM | PERMALINK

That's not a bad plan, Aatos. It certainly would be interesting to see people reveal their prefrences for the use of water. I'm sure there would be more than few surprises.

Posted by: Will Allen on July 16, 2008 at 1:30 PM | PERMALINK

Here is how utilities operate in Fresno County, CA.

Water is unmetered. But we pay a unified bill to the government facility for garbage, recycling and water.

We generally let the water run until there is a drought. We use about half the garbage collection, leaving the bins generally half full.

So, our wonderous "market efficiency" for county government has them chugging around spewing tons of unnecessary CO2 and letting us waste water. We do this daily, environmentalists tell us it is OK to pollute as long as you are a government operation.

But it has it upsides! Workers get huge pensions for spewing water and CO2.

Will we change? No, in fact, we intend to perform more wastage when Obama get us more emission slips.


Posted by: MattY on July 16, 2008 at 1:33 PM | PERMALINK

Do they still grow rice in California? If the rice farmers had to pay anywhere near the market value for their water, they would stop growing rice immediately, and the crisis would at least become manageable.

Posted by: -ck- on July 16, 2008 at 1:35 PM | PERMALINK

Yes, and the poor shall pay for water...exactly how?

These essential services SHOULD NOT be in the hands of private enterprise, not be subject to market conditions. We've already seen this done with electricity and heating, are we trying to make this a third world country?

Posted by: MeLoseBrain? on July 16, 2008 at 1:38 PM | PERMALINK

...the poor

Let them drink cake!

Posted by: rusrus on July 16, 2008 at 1:43 PM | PERMALINK

Something like this might be fine, but the devil is in the details, otherwise you wind up with the CA electricity mess all over again. It'd be what people want versus what agriculture wants, and yes, armies have fought for water rights.

Posted by: American Citizen on July 16, 2008 at 1:53 PM | PERMALINK

Something like 80%, or even more, of California's water goes to agricultural users, and most of them have contracts with the federal or state government that mandate that they get large amounts of water for practically free compared to what urban users pay.

Posted by: Joe Buck on July 16, 2008 at 2:01 PM | PERMALINK

Drip irrigation involves a lot of hoses for a hundred acre field. And then they have to be moved before you plow it. Would the extra costs offset the extra water? Posted by: jon

It isn't necessarily a question of changing the watering system but one of timing. It's all mechanized crawling sprinkler systems that are set to fairly sophisticated timers. You water heavier in the AM and then again in the late afternoon. You'd probably use less water overall because so much less of it is lost to evaporation and wind drift.

Posted by: Jeff II on July 16, 2008 at 2:10 PM | PERMALINK

I do live in a semi-rural area of California and our water costs just went up five-fold, and this is in an area where we have to pay a monthly fee even when we don't use a single drop (the monthly fee went up by 100% in addition to the five fold increase for any water we use). The problem is that there were lots of properties around us who weren't getting billed for any water use and they started using hundreds of thousands of gallons, putting extra strain on the system. Instead of quickly fixing that problem, they raised the rates through the roof to cover the expenses that these mega-users were causing.

We raise livestock and usually supplement their dry pasture with hay, but my feed costs have gone up 70% since January, so we were thinking of actually irrigating some pasture this summer (between the lack of rain and corn-based ethanol, hay prices have doubled since last year). With the giant hike in water that was just enacted, I can't afford that. Plus the livestock market is depressed, so I haven't been able to sell as many animals as I usually would, causing a double problem- less sales mean less money for feed, plus more mouths to feed at the same time!

For the non-industrial farmer 2008 really sucks.

Posted by: Baaaa on July 16, 2008 at 2:15 PM | PERMALINK

Our water use decreased from 5500 to 5000 gallons per month, for a family of four. Kevin's allotment of 75 gal/day per person works out to about 9000 gallons a month. So we are already way under.

I agree that rice and cotton farmers in Cali should not get cheap water. But then again, insurance companies all over should not get those premiums to deliver healthcare (I mean we need single payer). Some sensible ideas just don't get implemented in real life. We can always hope, however. I might even pray (since I believe in prayer's effectiveness in all matters, and it seems about the only reasonable course of action I've got at the moment).

Posted by: Leila Abu-Saba on July 16, 2008 at 2:16 PM | PERMALINK

You know, suited for a country where it rains nearly 24/7. Like England. Or Oregon. Posted by: Snarki, child of Loki

One of the great misconceptions of the PNW, and one natives have no qualms about perpetuating, is that it rains here all the time. As a matter of fact, Chicago, NYC, Detroit and a host of other cities not thought of as being "rainy" get a lot more rain than much of Western Washington and Western Oregon. In fact Washington's climate ranges from temperate rain forests on the Pacific Coast with more than 100" of rain a year to semi-arid regions east of the Cascades that get about 10 inches a year. Seattle gets less than 35" of rain a year with most of it falling as drizzle from November to April.

Portland gets into the 90s frequently in July and August. It was 82 here yesterday, we haven't had any rain for more than two weeks, and there are at least five wild fires burning in Central and Eastern Washington right now. A typical PNW summer.

Seattle had water restrictions two summers in a row in 2005 and 2006. Thankfully, we had great snow packs last year and this year. Otherwise, we don't have any water in the summer. Not as bad as a lot of the West, but we're just a dry and/or warm winter (the snow line has risen about 1,000' here in the last couple of decades) and another 200K people in Western Washington away from tighter water restriction.

Like requiring solar energy use in all new construction in the SW, grey water cisterns should be mandatory as well.

Posted by: Jeff II on July 16, 2008 at 2:29 PM | PERMALINK

When I was living in California, residential water was going for about $300 per acre foot, while agriculture was paying about $3. Consequently, inefficient practices were leading to about 5 out of every 6 acre feet of irrigation water to end up evaporating or running off. There were easy ways to fix that, but none were as inexpensive as simply buying more and letting it run off.

So seems kinda like that'd be a good place to start, no?

Posted by: chiggins on July 16, 2008 at 3:00 PM | PERMALINK

First, Lake Mead will probably run dry in 12-15 years. That means say goodbye to the Colorado River as you know it, AND, the Colorado River Compact. No water behind Hoover Dam cuts not only SoCal and Vegas off from a fair amount of subsidized water BUT ALSO from subsidized electricity. Have fun in No. 4 city to live Irvine, Kev!

Otherwise, once again, "liberal" bandwidth wasted at WM by Kevin linking to Tyler Cowan.

The history behind California's subsidized water and Big Ag? The Newlands Act of 1902 started being broken the minute it was passed, by the century-ago version of corporate farms. And, SCOTUS, IIRC, eventually signed off on the ex post facto legality of it all. Then, today, you have farmers selling their subsidized water rights -- which they have NEVER repaid in full -- to cities, a further violation of Newlands, which clearly states that the whole purpose of federal dams under the Bureau of Reclamation was for agriculture not cities. Then, in the 1970s, Alan Cranston helped fold, spindle and mutilate what's left of Newlands. (So, really, Kevin, you should move out of California if you actually want a revolution, rather than just talking.)

On the Big Ag side, hell, if you'll read Cadillac Desert, it's not even corporate farms. Back in the 1940s, for example, Standard Oil owned 80,000 acres in the Central Valley.

Posted by: SocraticGadfly on July 16, 2008 at 3:00 PM | PERMALINK

Something like 80%, or even more, of California's water goes to agricultural users, and most of them have contracts with the federal or state government that mandate that they get large amounts of water for practically free compared to what urban users pay. Posted by: Joe Buck

Last time a related subject came up, I suggested Kevin read Joan Didion's Where I Was From. It provides great background on Caifornia's idiotic development and water policies, particularly around the Sacramento area where most of the rice is grown - a crop otherwise grown in humid and/or sub tropical regions of the world with seasonal rains.

Or, as someone up thread suggested, you could just rent Chinatown.

Posted by: Jeff II on July 16, 2008 at 3:01 PM | PERMALINK

@ John McCain: And King Cotton... California is a major supplier of cotton. Cotton is subsidized by the USG. And it gets price supports. And many types of cotton are illegal to sell in this country. And cotton uses a huge amount of water. Oh and, agribusiness got a sweetheart deal on water many years ago, so it is really cheap for them.

@ David in NY: In fact, in California's Central Valley cotton is flood-irrigated for several weeks in the beginning of its growing season. Of course the day time temperatures in that part of the state are already well into the 100s, so those thousands of acres of flooded cotton fields evaporate off a lot of water. In the northern Central Valley they grow rice, thousands of acres of it. This also is flood irrigated.

@ patience: That market system was actually sale of the national water system to a US-based global engineering firm which then set prices on the water. That isn't a market system, it is a monopoly. The prices were far above what the people could pay, but the management (in their high rises in the US) didn't care.

@ Joe Buck: Water is so cheap for big agribusiness in the Central Valley that often it is more profitable for the farmers to not plow and plant, but simply to sell their water to municipal water departments. So they don't own it or even have possession of it, but they get to sell it at a big profit to the city people.

Posted by: AC on July 16, 2008 at 3:04 PM | PERMALINK

Kevin: market pricing is usually the best default method for allocating goods and services.

Exempting medical care, of course.

And the market in food hasn't ensured that everyone has enough food.

And the market in energy, because environmental costs are not considered in market price, has screwed the environment like a john screws a hooker, with no remorse and as small a fee as possible.

And the market in housing may be a good allocator of resources in the long term, but short term it's fucked us up royally. Yes, I understand that it was deregulation that did it, not anything intrinsic in the housing marker. It's an example of too much market and too little regulation, so it's intrinsic in any market.

Posted by: anandine on July 16, 2008 at 3:13 PM | PERMALINK

Although I'm a native San Franciscan, this is one of the reasons my wife and I decided to settle in "rainy" Seattle....never have to worry about the water supply.

Posted by: mfw13 on July 16, 2008 at 3:52 PM | PERMALINK

Everyone requires a baseline amount of water in order to live. Treating water as if it were a discretionary expense, to be handled solely/primarily through "the Market" occludes that reality and, IMO, poses serious dangers and precedents.

Posted by: Cathexis on July 16, 2008 at 4:25 PM | PERMALINK

Everyone requires a baseline amount of water in order to live. Treating water as if it were a discretionary expense, to be handled solely/primarily through "the Market" occludes that reality and, IMO, poses serious dangers and precedents. Posted by: Cathexis

I don't think anyone is disputing this. The problem is not valuing water enough in order to price it so that it isn't wasted, which has been the case in the western U.S., particularly in agriculture, for decades.

Water, like electrical power, is a public good. However, neither needs to be subsidized. In fact, over subsidization of water is why you have cotton and rice being grown in semi-arid parts of California and lettuce in the Arizona desert. Subsidized electricity is why about 75% of all housing built in Washington, Oregon and Idaho since WWII was all electric, and why we ended up with aluminum smelters in Washington, which are now pretty much done for since their heavily subsidized electricity rates were allowed to rise somewhere closer to residential rates.

Posted by: Jeff II on July 16, 2008 at 4:47 PM | PERMALINK

This reminds me of "Sam's first proposal on the environment".

How about we stop subsidizing environmentally harmful stuff, like growing rice, cotton, and alfalfa in deserts, and living in the coastal/riparian floodplains?

Posted by: SamChevre on July 16, 2008 at 5:04 PM | PERMALINK

The free market always works so well.

Posted by: lynn on July 16, 2008 at 5:22 PM | PERMALINK

California water lawyer here, and I just went through this over at Casa Yglesias.

Short version: None of you have any idea what you're talking about.

Longer version: Point 1: Many farmers OWN the rights to their water. The cost they pay is the price necessary to move it to them.

Point 2: There's no such thing as a market for urban water. Do you really want two water mains running down your street? It is the purest of natural monopolies.

Point 3: Urban water is highly regulated, from the reservoir storage to the constituents in the water.

Point 4: Voters in California have, largely, chosen to have water delivered by local government instead of for-profit institutions. Where water is delivered by corporate entities, voters again have chosen to have rates regulated by the Public Utilities Commission.

Point 5: On what possible basis do any of you get to decide what a farmer grows on his land with his water? That's like telling Kevin what he has to write.

Point 6: Conveyance facilities aren't cheap. They're so expensive, in fact, that none of the major ones are privately owned. Who, precisely, is going to ship the water from the rice farmer to Kevin, and how are they going to get it there? It's a long way from Sacramento to Irvine.

So, government is intimately involved in all aspects of the California water business. There is essentially no aspect of the business which has the characteristics of a marketplace, even a regulated one.

Mostly what's going on is that urban interests are eyeing ag. water and wondering how to take it from the farmers at the lowest possible cost.

Posted by: Francis on July 16, 2008 at 5:29 PM | PERMALINK
David Zetland writes in Forbes that California wouldn't have to ration water if prices responded to supply and demand instead of being fixed bureaucratically:

Hence the reason meters are being pushed out to more and more jurisdictions in California. Of course, you can't pay by consumption (a prerequisite for any supply/demand-based pricing) without first metering consumption, and a large portion of the state has flate rates and no meters.


Of course Zetland's proposal and any other pricing scheme is still going to amount to prices being fixed bureaucratically, since its hardly as if there is going to be competition for water delivery, either at the local level or at the level of, say, the California Water Project.

What Zetland seems to be proposing is just consumption-based pricing, which is exactly what many California jurisdictions are moving to, once they get the capital in place.

Posted by: cmdicely on July 16, 2008 at 5:47 PM | PERMALINK

The problem with these market based schemes is they just don't work in real life. Industry will demand (and get) lower rates than consumers. And not all consumers are equal; double the water bill for a family living on food stamps and it hurts, increase Bill Gates' water bill by an order of magnitude and he doesn't even notice.

A better system would put water rates on a sliding scale, with (for example) the first 1000 gallons costing $40, the second 1000 gallons costing $60, and so on. Ideally, rate would be indexed to income, but I doubt anyone would be willing to put up with the required bureaucracy. However, at a minimum there ought to be severe penalties for homeowner using more than, say, 120% of the median for households.

Most importantly, (and most difficultly) it's time to put up the "No Vacancy" sign. Most of the West is already over taxing its natural resources, and limiting the number of new water taps is a very natural way of limiting population growth in the West.

Posted by: Dave Brown on July 16, 2008 at 5:57 PM | PERMALINK

Treating water as if it were a discretionary expense, to be handled solely/primarily through "the Market"...

Wait until air is handled by the Market.

Posted by: Brojo on July 16, 2008 at 6:07 PM | PERMALINK

Wait until air is handled by the Market.

Posted by: Brojo

And then what, people will run out and get nostril reductions? I can see a new PAC forming amongst plastic surgeons.

Posted by: optical weenie on July 16, 2008 at 6:12 PM | PERMALINK

California water lawyer here, and I just went through this over at Casa Yglesias.

Short version: None of you have any idea what you're talking about.

Fuck you very much.

Being a "water lawyer" doesn't mean anything and your comments show that like many lawyers, the degree did not confer common sense, and that just because something is the law doesn't mean it's right.

Longer version: Point 1: Many farmers OWN the rights to their water.

Actually, no they don't. All river and streams and many lakes are public resources. Farmer may have water "rights," but they don't "own" the water. It still belongs to the public and it can be taken away from them in a highest and best use situation, and the "right" is not always transferable upon sale of the land.

Point 2: There's no such thing as a market for urban water. Do you really want two water mains running down your street? It is the purest of natural monopolies.

I think it was primarily GOP trolls making this point.

Point 3: Urban water is highly regulated, from the reservoir storage to the constituents in the water.

Meaning?

Point 5: On what possible basis do any of you get to decide what a farmer grows on his land with his water? That's like telling Kevin what he has to write.

The same right that allows governments to establish eminent domain and to determine what kind of businesses are permitted and how they are regulated for the benefit of the public. In most cases, bad government policy encouraged the wrong crops, better government policy can help change this. Not a hell of lot different from the government buying fishing licenses/boats to help preserve stocks and help support the remaining fishermen.

Point 6: Conveyance facilities aren't cheap. They're so expensive, in fact, that none of the major ones are privately owned.

This isn't even an issue as the "conveyance facilities" already exist and are publicly owned. Again, none of the more thoughtful posters was making this point so far as I can see.

Who, precisely, is going to ship the water from the rice farmer to Kevin, and how are they going to get it there? It's a long way from Sacramento to Irvine.

It's even father from the snow fields of the Northern and Central Rockies that supply the water for the Colorado River, which provides most of the water for everything in Southern California, including millions of acres of crops inappropriate to the SW and possible only because of federally subsidized water for agriculture.

Mostly what's going on is that urban interests are eyeing ag. water and wondering how to take it from the farmers at the lowest possible cost.
Posted by: Francis

"Lighten up, Francis."

The point about water throughout the West is that however you want to characterize how it is paid for, a lot of it is wasted with agriculture waste being easiest to control. And, most important, the overwhelming non-agricultural majority of the population subsidizing agricultural water has a say in how it is managed.

I would say pretty much everyone here understands that agriculture requires water, but the U.S. protects farmers who grow various crops that we have no comparative or absolute advantage in, sugar and cotton being two prime examples, and these crops add little to the GDP or help in food self-sufficiency. I mean, if they quit growing iceberg lettuce in Arizona tomorrow, would it really change America's diet or put a significant constraint on the economy?

Posted by: Jeff II on July 16, 2008 at 6:13 PM | PERMALINK

Water Lawyer: You're full of crap on points 1 and 5.

Given that taxpayers paid for Reclamation projects at the fed level, or CWP at the state level, and farmers still haven't paid that off/back, taxpayers should have plenty of right to say what farmers can and can't grow. And, of course, that means farmers don't "own" their water anyway.

You, too, need to read "Cadillac Desert."

In most interior West states, a State Engineer is the GOD/CZAR of water. You want to drill a well? Gotta get a permit. Public hearings and all.

Posted by: SocraticGadfly on July 16, 2008 at 6:29 PM | PERMALINK

And don't forget:
power plants
meat packing
car washes
amusement parks (all those water slides)
wet T-shirt contests

Posted by: DNS on July 16, 2008 at 7:10 PM | PERMALINK

MMMMMM Owns An interesting concept. Follow the chain of Ownership back far enough and you find that either god gave it to me or I stole it from a weaker party. Now we have laws that throw a small road block in front of a stronger party who wants to take it away from me. In the end the stronger party gets it. The law is only a delaying action.

Posted by: dilbert dogbert on July 16, 2008 at 7:18 PM | PERMALINK

hotel swimming pools

Posted by: DNS on July 16, 2008 at 7:22 PM | PERMALINK

Oh goody, the idiots are out.

Jeff: Read Kevin's post again, especially the following: market pricing is usually the best default method for allocating goods and services.

The point of my comment is that there's NO SUCH THING as market pricing for urban water. Urban water is priced by us, the electorate, for the reasons discussed in my comment.

On "public resources": yup, you don't know what you're talking about. The public trust doctrine has been used in limited circumstances to maintain flows in rivers for preservation of natural resources. Water rights, as set forth in the California Constitution, are by definition use rights, ie, the right to put a reasonable flow of water to beneficial use. That use right can perfectly well interfere with public's asserted right to keep water in stream. It wouldn't be much of a right otherwise.

On eminent domain: many water rights are held in trust by limited purpose public agencies, like the Imperial Irrigation District or the Kern County Water Agency. It's not clear that an attempt by another agency to condemn those water rights would succeed. Presumably the State could do it if it wanted to spend the money. So far the State has shown little interest in getting involved in reallocating rights.

On crop use: As far as I'm concerned, if a farmer has his own water right, or can pay for his allocation from an agency that has its own water right, the matter pretty much ends there. I have my own small patch of front lawn. I'm very reluctant for the State to have any say in how I use the water I receive. (Discharges are, of course, a completely different matter.)

On conveyance facilities: How much spare capacity is there in the California Aqueduct? Rivers bring water from the mountains to the Bay-Delta; the Aqueduct brings it south.

On pricing: Ag water pricing is really complex. For the federal Central Valley Project, you need to understand the Reclamation Act, the Central Valley Project Improvement Act, the Reclamation Reform Act, the Endangered Species Act and thousands of pages of regulations. For the State Water Project, start with the various State Water Project Contracts and the Monterey Amendments. For the Imperial Valley, there's an entire massive body of law regarding the Colorado River known generally as the "Law of the River".

Getting up to speed takes about a decade. See you in 2010.

Posted by: Francis on July 16, 2008 at 8:00 PM | PERMALINK

>market pricing is usually the best default method for allocating goods and services.

Hahahahaha. No it's not.

"Controlled" markets work better. Now all you have to do is define "controlled".

(P.S. Free Markets are in themselves controlling by nature. I love irony.)

Posted by: James on July 16, 2008 at 8:18 PM | PERMALINK

Francis, you're still full of crap on points 1 and 5. I'll see YOU when Lake Mead runs dry.

Posted by: SocraticGadfly on July 16, 2008 at 9:46 PM | PERMALINK

Am I full of crap on what the law is, or what the law ought to be?

IID holds some of the most senior rights on the Colorado River. This really isn't the forum to start debating the finer points of Shortage Criteria under the Law of the River, but the simple version is that under the law as currently written Las Vegas is going to suffer sooner than the farmers of Imperial County.

The federal government could seize those IID rights, and pay just compensation under the 5th Amendment. The voters of the State of California could change state water law rights. Or Las Vegas could try to buy its way to higher priority. Other suggestions for solving the problems of over-allocated rivers are always welcome. (See, also, San Joaquin, Klamath.)

Posted by: Francis on July 16, 2008 at 10:32 PM | PERMALINK

California water lawyer, who's diligently defending his big business clients here, is fundamentally full of shit.

California tax payers have paid for the water projects. They own the water.

Rice and cotton are two of the worst possible crops to grow in California, which is, after all, a desert. IN an amazingly stupid turn of events, they were introduced into the state due to California's fertile soil and a strong farm lobby.

There are no water meters in the San Joaquin Valley, home of agribusiness. As has been noted, coastal Californians pay far more for water than do those in the central valley.

Given market changes, agriculture has declined in importance in the California economy. Hollywood, Silicon Valley, financial services and many other industries are more important. Couple the declining importance of agriculture with border issues and mistreatment of migrant farmworkers, and a lot of Californians would just as soon get their produce elsewhere.

Note that the water lawyer didn't address the disgraceful treatment of migrant workers by his clients. The water lawyer also didn't say anything about the political divide in California, so-called home of the libs, but also home to some of the most right-wing folks you'd ever want to meet, right out there in that San Joaquin Valley. That valley looks like Kansas for a reason.

Posted by: Nixon Did It on July 16, 2008 at 10:39 PM | PERMALINK

Hi Folks -- I've the author of the piece. Unfortunately, I got here 24 hrs late :)

For many of my views on water, see my blog http://aguanomics.com/.

I'm going to respond to the stuff I disagree with:

@Brojo 12:24 PM: Ag holds most water rights. I want them to be able to sell those rights. If they want to forgo the $$, they have that right as well (opportunity cost).

@ John McCain: More of the Same at 12:28 PM: I didn't leave out corporations. The piece is about RESIDENTIAL water. I propose that ALL water (sustainable yield) be allocated in wholesale auction markets -- after an environmental reservation

@ David at 12:38 PM -- see drip in my blog

@ royalblue_tom at 12:52 PM -- I did NOT say deregulate. Read the piece.

@ Aatos at 12:57 PM -- good idea. a little cumbersome.

@ patience at 1:11 P -- nobody said corporations, but your point on oversight/governance is right on.

@ -ck- at 1:35 PM -- rice farmers pump groundwater and havee senior surface rights. They are VERY sharp about selling that water. See my blog.

@ MeLoseBrain? at 1:38 P -- read the piece. The poor get free water.

@Joe Buck at 2:01 PM -- again, the piece is not about ag water (but you're right). see my comment above.

@ Baaaa at 2:15 PM -- is that because everyone pays a flat fee? You all should get meters!

@ chiggins at 3:00 PM -- now ag pays $18/af and urban pay about $1,000 :) I agree that ag has to be addressed (see above). My piece was on urban.

Posted by: David Zetland on July 17, 2008 at 10:50 AM | PERMALINK

@AC at 3:04 PM -- good comments, but the farmers DO own the water rights. It's good when they are allowed to sell to cities (beats desal)

@Cathexis at 4:25 PM -- I propose just that -- read the piece (hell, read the excerpt!)

@Francis (hey!) -- I agree most strongly with your points on farmers. As you know, I don't want to take their rights. OTOH, there are other ways to do markets (not two sets of pipes, but common carriage -- see my blog) -- when I say "market pricing", I mean using market forces to allocate; it's not necessary to have prices set in a market to get "market" results, i.e.., supply=demand.

@Dave Brown at 5:57 PM -- My proposal, exactly :)

@Jeff II at 6:13 PM and Nixon Did It at 10:39 PM -- good replies :)

Posted by: David Zetland on July 17, 2008 at 11:00 AM | PERMALINK

AC -- thank you. Those facts (flood irrigation, etc) are fascinating.

Posted by: David in nY on July 17, 2008 at 11:01 AM | PERMALINK

Thing is, tinkering with municipal water supplies and costing while letting ag water move on as though it's some sort of sacred cow virtually sidesteps any possibility of addressing what will become a chronic western water supply shortfall.

But, in California the CVP contracts are coming up for renewal--a perfect time to sell the water at market value or at LEAST the cost of delivery.

http://www.pacinst.org/publications/essays_and_opinion/cvp_op-ed.htm

I don't know where the SWP is in their contract cycle, but imagine it offers similar opportunities when these guys have to rebid.

http://www.publicaffairs.water.ca.gov/swp/contractors.cfm

A long while ago Rep. George Miller's office compiled a list of California's federal water contractors and the price to deliver the water versus the price paid. In many cases it was literally pennies on the dollar, which of course comprises just one of a marketbasket of ag subsidies that live on no matter what.

p.s. re. Sacramento Valley rice farming. The flooded fields offer a secondary resource--replacing drained marshland critical to the Pacific Flyway. Also a fantastic source of mosquitoes.

Posted by: trollhattan on July 17, 2008 at 3:28 PM | PERMALINK
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