Friday party

Win win?

Anything but water

• Great idea (from economists!) A Market Proposal for Saving Whales, i.e., replace a rhetorical/financial/logistical fight with a cap and trade system that allocates via price signals.
  
  
• Long life through exercise (instead of starvation): "A few anti-ageing zealots already subsist on near-starvation diets, but Dr Levine’s results suggest a similar effect might be gained in a much more agreeable way, via vigorous exercise." In related news, the mathematics and economics of vaccination (hint: foreign visitors complicate things)
  
  
• The personal network -- a "real friends" alternative to Facebook.
  
  
• India's identity scheme will empower the poor against corruption -- not serve the Antichrist.
  
  
• How much do special interests spend lobbying politicians and staffers to waste our money on crap?

H/Ts to RD and DH

Tablets deliver the digital revolution to reading

I bought a tablet computer a few weeks ago (Samsung Galaxy Tab 10.1), and I've had some time to get used to it.* FYI, I didn't buy the iPad because it had fewer features and (big for me) I was not interested in getting locked into Apple's "walled garden."

Here are a few notes:

1. There's the awkward process of figuring out how to balance your "digital life" among several devices (I have a laptop, iPhone, iPod Nano and now this tablet). Looks like I am using the tablet more for casual internet browsing and emails and -- very important -- reading (more below).
2. Android apps are definitely lagging Apple apps. I need to sideload my Economist (via Calibre, a free eBook program) and can't get the New Yorker. That said, I can't say I am really suffering from a "lack of apps."
3. Reading on a tablet is no big deal. The Kindle is lighter to hold and has a longer battery life (30 days vs 3 days?), and the tablet has some problems with glare in the sun. I'd be happier with a lighter tablet, but it's a WHOLE computer with a bigger screen, so that's a tradeoff I am willing to make.
4. Reading: I just downloaded about 30 free books.** The number of free, but good, books -- combined with "loaning" Kindle books --- means that I could probably read for free for the next few years (or decades). Ease of access (free, plus instant download) means that a lot of people are going to be reading these books.*** Writing and publication are definitely going in the same direction as music (and film). Awesome for consumers, tricky for producers.
5. Size matters! This tablet is much easier to carry around, throw on the bed, etc. I can see taking it to conference, etc. instead of a laptop.
6. I am starting to understand more about "the cloud" -- I've uploaded most of my music (via google music) from my laptop. I already use (and LOVE) Dropbox, so I can see a time when we will have most of our data stored and sync'd in the cloud. Security is not so much of a worry to me (hacked passwords are a bigger problem).

Bottom Line: Tablets are finally delivering on a "consumer-centric" digital experience that promises to give more pleasure than it takes in time, inconvenience and money.

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* Damn. The price has dropped by $28 (6 percent) in the last month.
** I bought End of Abundance to make it easier to get it again from Amazon; I am pleased to see that the hyperlinks work as advertised, although it's annoying that the format doesn't look right unless you page fwd/page back so the Kindle can catch up, but that's typical with HTMP rendering. I was annoyed to find that hyperlinks do not work with Adobe reader for the PDF version of the book; I bought EZPDF Reader so that hyperlinks work but that program -- like Acrobat does not allow me to display 2-up pages. Any ideas there?

** Yes, I am thinking more about how to market TEoA via Kindle...

Speaking at the Commonwealth Club (SF) Feb 1st

I'm speaking at noon at the Commonwealth Club in San Francisco on "California's water future," i.e.,

How should California manage its water in the future and which incentives will motivate the biggest changes in conservation and agricultural efficiency? Which water policies and practices have backfired? Join water economist David Zetland for a fresh perspective on how we can manage our most precious resource in the 21st century and what we can learn from past mistakes.

I'll talk for 30-40 minutes and then take questions.

It's $20 to get in (I don't get anything), $8 for CC members and $7 for students

I'll try to post a recording of my talk.

Externalizing the internality

Behavioral economists have a new twist on the old idea of "internalize the externality" (e.g., include the cost of pollution in the price of gasoline), i.e., "externalize the internality."

By this, they mean call attention to something important that we tend to ignore because it's hard to vizualize internally.

I will be reviewing Ariely's book on these ideas soon, but the important point is that "free" distorts our behavior: we spend too much on "free" things ("buy one, get one free") in the same way that we do not pay attention when a 100 percent price increase is from trivial to "double-trivial," e.g., when water goes from $0.001 per unit to $0.002 per unit.*

Both prices are too cheap to notice (the internality), so we fail to change (externalize) our behavior.

There are two ways around this:

1. Get people to notice how much water they use relative to their neighbors (like here).
2. Raise prices to a level that's "noticeable" (e.g., $4/gallon gas) and rebate excess revenue to customers who use less than average volumes (people really notice refund checks!).

These externalizations will change our habits in two ways. First, people will reduce their demand because they are paying attention (wait -- there's a price?). Second, they will reduce their demand if the price is higher (ohhh -- and it's higher!).

Bottom Line: Prices only work when we notice them, so make water prices (and consumption) relevant.

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* Residential water often costs $1 for 1,000 liters/250 gallons.

Some reading material

From hydrology.nl/:

Principles of good governance at different water governance levels

The right to water and water rights in a changing world

Complex and Dynamic Implementation Processes: new book on water governance (in the Regge River of the Netherlands)

Transforming Landscapes – Transforming Lives: the business of sustainable water buffer management

Traditional irrigation systems and methods of water harvesting in Yemen

Dynamics in groundwater and surface water quality – From field-scale processes to catchment-scale models

Present & Future – Visualising ideas of water infrastructure design

Business, water and risk

This article is typical in its discussion of water risk in company supply chains. It includes analysts complaining about risk, companies claiming they hedge risk, consultants offering to study the risks, and various "statistical" methods of understanding those risks.

What it fails to include is "regulatory uncertainty," i.e., a political decision that changes water allocation in an instant.*

Bottom Line: The biggest water risk to businesses is not risk, it's political uncertainty. That's why reliable and predictable rules are the key to business prosperity (jobs, profits and happy consumers).

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* Recall that risks can be modeled with probability (how many heads in 1,000 coin flips?) while uncertainty cannot: is the politician going to flip a coin, eat a sandwich or answer the phone? The article mentions how Coca Cola "factors in" local government leaders, but it fails to discuss their dominant role.**

** As a good example of government's inability to understand risk (or ability to ignore it), consider this government agency that "stated what it wanted to do, paid people to say that it is safe, and will complete the circle by declaring it to be a good thing." What's it? Mining groundwater from under the Mohave Desert for export to Southern California lawns. And that, my friends, is how government incompetence (or laziness) can combine with private greed to destroy the environment.

Monday funnies

I often feel this way when reading consultant reports prepared for conferences...

Price water like gas -- and go home

CB sent this article, in which a politician opposed the use of increasing block rate pricing (the more you use, the more you pay per unit of water):

"This bill is directed towards a practice of conservation rates that I think are obscene and predatory," Hays said. "And I don't want to have any of my constituents subjected to such a rip-off. It is my plan to stop it."

This politician must be thinking either:

1. The water company is ripping people off. Prices should not rise above the cost of service, or
2. Heavy water users should pay the same per unit as light water users.

(1) implies that the monopoly is making profits, which is usually not allowed. (2) implies that heavy use should not be additionally discouraged (through higher rates per unit). A volumetric price is a good enough incentive to use less (and method of covering costs).

But, wait, there's a third explanation:

Hays said the state should fine people if they're wasting water rather than let companies generate revenue by charging higher rates based on consumption.

This is not just a terrible idea (like paying a fine for driving an SUV AND paying the price at the pump), but also extremely inefficient -- how many extra people -- and time -- will be needed to administer a system of "fair" fines.

Once again, I am amazed at a politician's lack of foresight.

The debate from the other side ("we need higher prices to penalize heavy users") is not much different.

Bottom Line: Stop squabbling over "moral" tariff structures and fines. Charge a single price for water that's high enough to prevent shortages (like a price for gasoline). That price -- presumably -- will cover costs. Excess revenue can be rebated to customers at the end of the year (per meter).

Flashback: 17 -- 23 Jan 2011

A year later and still worth a read...

Apparently, it was all about philosophy last year...

The bright side of depression and failure -- a good post that's similar to this graphic (click to enlarge):

In related news, advice from a 40 year old man to the 20 year olds and we are social animals.

Friday party!

Or, more properly, giving of thanks...



Bottom Line: We need to pay attention to actual causal forces -- not the ones that make us feel good. This applies to many situations, religion being only one of them.

Save the people

One of my favorite "deep reforms" for the liberation of individuals from their cruel overlords is quite simple: Give every person on the planet a second passport.*

Such a system will make it easier for people to vote with their feet, abandoning odious regimes (e.g., North Korea, Cuba, Iran, Somalia) for a different life.**

The Economist favors a version of this idea, but mine is based on some simple facts:

• People with more choices will be able to improve their lives.
• Odious regimes that lose slaves are more likely to reform (Ireland! Poland!).
• Movement and communication across countries will make it easier to see good and bad ideas.
• Mere awareness of one's "other country" will weaken nationalism and improve trans-national cooperation. (I've held for years that the Peace Corps is the best foreign policy program the US could have ever hoped for.)

Some people object to this idea because they fear an invasion of "foreigners trying to take our jobs and wreck our culture."

That fear is interesting when it comes from members of the "lucky sperm club" who did nothing to earn their rights. It's also easy to counter by, e.g., requiring that ALL citizens pay into welfare before they take advantage of it or by requiring all citizen-residents demonstrate a minimum level of cultural and linguistic knowledge.

OTOH, that fear is also based on a typical problem: how much are we willing to share to help others? And what if those others are not "like us"?

Based on my experience, people are not, in fact, very generous in welcoming strangers, but that's no reason to abandon an idea that could do a lot to improve the lives of so many people. Note that residents of rich countries benefit from new blood and new ideas, as anyone who's studied US history knows.

Bottom Line: The worst monopolies are government monopolies; we need a way of escaping them.

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* FYI, I have two -- US and UK. I am VERY happy that I can live and work in any of 28 countries. Passports would be issued to others in proportion to the welcoming country's population
** I am also happy to be outside the US. I may be out for a long time, or not, but there are some things about my "home country" that drive me nuts.