31 July 2014

Speed blogging

  1. I made four videos about Living with Water Scarcity (tap water, irrigation, bottled water and climate change). Check 'em out

  2. Colorado river math: Flows - rights < 0 means trouble

  3. Water prices are at "record levels" for California farmers. Good. Maybe they will protect their groundwater and use more markets

  4. California bureaucrats want $500 fines for water "waste." The idea is stupid compared to raising prices and allowing people to find ways to use less, but it's tragic for excluding irrigation of lawns and fields. FAIL

  5. The Santa Cruz declaration says the global water crisis is caused by injustice and inequality. Aquadoc has good reasons to disagree, but corruption does matter -- as I explain here
H/T to RM

30 July 2014

Markets for the win!

(via AW) This is a fantastic way to match supply and demand, using advertising AND lower prices...

My reddit AMA went pretty well!

Hmm... 13 percent of Redditors don't drink water?
I did an "ask me anything" on Reddit a few weeks ago. It was a great success, with 600+ upvotes and 500+ comments (250 from me).

My top-ranked comment -- in response to "What aggravates/upsets you the most in terms of water being wasted in the Western US? Also what is your #1 tip for a person in the 1st world to conserve water?" -- was:
I REALLY dislike cheap water, as people feel fine using a lot of it. Water in Las Vegas is 20% of the price of water in Amsterdam (and lower than the price in most US cities), so we shouldn't be surprised that Las Vegans use it all over the place. It's not really their fault, since we're in the habit of using as much as we want when we pay (for gasoline, food, etc.)
Tip: Don't have a lawn. If you're SERIOUS, then don't eat meat. If you're ridiculous, then don't have kids.
That response -- and many others -- are probably not surprising to long-time readers of this blog (or my books), but most of the people had not heard of either, so I had the opportunity to answer a lot of questions I've considered over the years as well as a few new ones.

Here are some of the stereotypes I tried to dissuade people from holding:
  • Just take water from farmers! Me: Not possible, given water rights
  • Split California into 6 states! Me: Six times the lawyers and bureaucracy?Ack!
  • Desalination everywhere! Me: Maybe for cities, but it won't fix broken management
  • Farmers pay way less than cities! Me: Not if you consider rights, quality, etc.
  • Ship water from Canada! Me: Legally difficult, but desal would be cheaper.
  • Take water from the atmosphere! Me: Nope. Desal/recycling cheaper.
  • Free water as a human right! Me: Not if you want sustainable services
  • Mandate efficiency! Me: Incentives are better than command & control
  • Waste at City Hall! Me: Charge departments for water use
...and then there were some interesting, new ideas:
  • Use drought tolerant grass that doesn't need to be watered!
  • Replace surface water with desalination to restore environmental flows
  • Communities that exhaust their groundwater will need to move
  • A house should come with TCO (total cost of ownership) certificate for the annual cost for energy, water, etc. (given its fixtures, lawn, etc.) so buyers or renters can see all costs
A big thanks to Paul Wyrwoll for helping set up the AMA. I'll be doing another in the fall :)

Bottom Line: "Q: I know we can all do our part but who is really the problem here?" Me: Water managers who declare a shortage should be fired. Politicians who direct "public" water to private use (e.g., from environment to irrigation) should be jailed.

29 July 2014

Anything but water

  1. The Great Philosophers: Epicurus recommended friends/work/calm over sex/money/luxury. Hegel discussed the messy nature of "progress"

  2. Tim Haab goes nuts on Australia's carbon tax repeal "...because it raised prices." Tim: "That's the freakin point!" and I totally agree. Related: California approaches its moment of truth (higher energy prices) and how little we know -- or have thought about -- the impacts of climate change

  3. The seven habits of highly mediocre people will help you to succeed -- or maybe relax

  4. A fascinating update on e-publishing shows (1) more popularity than paper and (2) ALL authors are better off self-publishing e-books

  5. Many macroeconomists mistakenly recommend population growth as a means of growing the economy or paying for pensions (example), but population growth is NOT necessary for economic growth

  6. Tipping in the US does NOT reward good service. It's a subsidy from customers to restaurant owners ($2.13 per hour? WTF?)
H/T to RM

28 July 2014

Monday funnies

(via RM) What happens when you mix two religions? [click to enlarge]

Your groundwater accountant is calling

Six months ago, I suggested a few ways to deal with the drought in the western US. Besides raising prices to reduce demand -- my first suggestion, always -- I mentioned that California needed to end unsustainable groundwater pumping ("overdrafting") by farmers.*

I and others have called for better controls on groundwater since at least 2009. In that same year, Tim Quinn (head of ACWA, which represents big water agencies and many irrigation organizations) estimated that overdrafting would increase from the "normal" rate of 2 million acre feet (California gets 40MAF per year) to 4 MAF, so we're talking from bad to worse.

How are farmers responding to this existential threat? In 2008, the California Farm Bureau said:**
We encourage landowners in critically overdrafted areas to continue to devise and implement, under local control, groundwater management plans. We believe that local control over groundwater management is best accomplished through existing water entities or new water entities formed by local landowners for the purpose of groundwater management.
That policy position, as I predicted in a 2009 post ("Chronicle of a Death Foretold") has failed, as we see from this recent update:
A new study by University of California, Irvine and NASA scientists finds more than 75 percent of the water loss in the drought-stricken Colorado River Basin since late 2004 came from underground resources. The extent of groundwater loss may pose a greater threat to the water supply of the western United States than previously thought.
This story is based on the GRACE project led by Jay Famgletti at UC Irvine,*** which continues to reveal how deep a hole we've dug for ourselves. farmers have dug for themselves. GRACE data say that 75 percent of the 51MAF overconsumption of water has come from groundwater, i.e., 41 MAF in the last ten years.

Those numbers refer to the southern Colorado River Basin, not California. They are probably representative and may even be better less worse than California's numbers.

Why do we care? Groundwater helps in drought because we can draw on multiple years of storage when surface water flows and storage are below trend. That "dry-day fund" has allowed many people to ignore the current drought and helped farmers make money without surface water deliveries, but it's going fast and it's VERY HARD to replace.

Bottom Line: Groundwater depletion is a precondition for environmental collapse, economic disruption and outbound migration. Plan accordingly.

* I repeated that advice two weeks ago at my Reddit AMA.
** I'm quoting from the blog post, but the source -- CFBF's "policy guide" -- is NOT posted online
*** Read this great interview with Jay. Then pack your bags to leave California.

H/Ts to DPG and RM

26 July 2014

Flashback: 21-27 July 2013

A year later and still worth reading...

25 July 2014

Friday party!

Party hard, but don't die from stupidity.

(For extra safety you may want to check out these airline announcements... by Sports Illustrated models)

The Starfish and the Spider -- a (mini) review

Over-controlling CEO or empowering Catalyst?
CH sent me this book by Brafman and Beckstrom, which I started -- and stopped -- this morning.*

I stopped because the prose was far too excited for the authors' point, which is that a starfish has a decentralized "leadership" that allows individual arms (even polyps) to "decide" what to do, without consulting any center. A spider, OTOH, needs to keep the entire web in order if it's going to eat. The obvious figure at right "explains."

This analogy is meant to apply to organizations (hence all the CEO endorsements) that want to balance between centralized and delegated control.

I get it. You get it. The main question, then, is HOW to find that balance.

When it comes to water, for example, we can leave a farmer with a well or reservoir to decide how much of his private water to use. He knows how much there is and how much he wants to use, and his decisions do not affect the water of others.

Change that scenario to a bunch of farmers sharing the same aquifer or reservoir, and there's a need to coordinate their use. This can happen by allowing each the same quantity of water, auctioning rights to the "sustainable" yield, etc. A "spider" needs to keep track of aggregate use, but there's no need to track the "why" of use (trees, row crops, pools, etc.) because we can assume the farmers know what they're doing.

Take it one step further, to water prices in cities. Water managers can try to tell people how much to use, when and for what. Or they can move towards a starfish type of management by setting a price that will keep total consumption within an acceptable range. The managers will not know who uses how much water for what (except when sending bills), but their ignorance does not matter. They don't know who should use how much water, and they should not try to understand. They only need to keep aggregates in balance.

If you like airport business books, then check out Starfish. If you want better perspectives on these ideas, then read Two Cheers for Anarchism or the founding papers on these topics: Hayek's 1945 "Use of Knowledge in Society" [PDF] or Coase's 1937 "Nature of the Firm" [PDF]

Bottom Line: I give this book TWO STARS for lacking anything sticky to hold me.

* This is a mini-review because I didn't read the whole book. I may have missed a masterpiece (correct me, please), but I cannot spend too much time looking when one may not be there.

24 July 2014

Ronald Coase, institutions and water

A LONG time ago, TS sent this:
Ronald Coase died this past week at age 102. I think many people continue to misinterpret/misuse his core ideas and theories, i.e., the hard core right using his stuff to support the argument that any government regulation or intervention is bad. As you know, he advocated for property rights (which government would facilitate) to help us efficiently manage our environmental challenges, among other things.

I think you've applied some of his insights to your writing on water, e.g., setting up water rights for people so they could sell some of their unused allocation to people who need water (example, farmers to urbanites).

I'd love to see a post applying Coase's ideas to water management.
I'll leave the summaries of Coase's work to Wikipedia, the Nobel Committee, Encyclopedia of Economics, this podcast, and this application of Coase to environmental issues. Go read more if you want a better view of one of the more original minds in economics.

Now why was Coase original? First, because his formal education only extended to his BSc in Commerce. Second, because he insisted on looking into the "real world" for problems and solutions. Third, because he brought a clean ("outside the box") perspective to economics.

Coase was an accidental iconoclast who used common sense to make a difference.

So, how can we apply his ideas to water?

Let's begin by defining the words that he used to establish entirely new dimensions of economics:

"Transaction costs" occur in the course of finding a trading partner, making and completing a deal. Economists who assume "zero transaction costs" have never bought a used car or gone on a date. Matching takes time; information is buried or obscured; some deals cannot be pursued to their conclusion.

"Property rights" don't just define who owns what in terms of private goods. Their absence or mis-specification affects club, public and common pool goods. Many problems, Coase would argue, arise from poorly-specified property rights.

"Institutions" are the informal norms and formal rules that affect our interactions. Good institutions clarify property rights and lower transaction costs. Outdated or missing institutions mean that property is mismanaged (inducing anything from litter to war) and transaction costs are high -- often leading to "missed opportunities."

I use Coase's ideas everyday. Sometimes, I decide it's not worth "spending" more time to get slightly cheaper fruit (maybe). Sometimes, I leave my bike unlocked because I am among property-respecting types (or community-minded types that will catch out thieves). Sometimes, I wonder why my roommates leave dirty dishes in the sink.

I can also apply Coase's ideas to water. You cannot have a water market without clear rights, low transaction costs, and an "institutional" acceptance of trading commodity water.

You cannot police water pollution without assigning the right to pollute (or be free of pollution). Even with those rights, you cannot enforce them when the transaction costs of finding the polluter or measuring pollution are too high. These will be even higher if there's no authority in charge of measuring pollution, since an individual may not have the incentive (costs>benefits) of measuring pollution that affects other people. Coase, thus, codified "the logic of collective action."

Taking Coase from a different angle, you might oppose over-complex water tariffs that require lots of measurements (transaction costs), violate property rights (lawns versus people), or fail to integrate with systems handing water before or after it's diverted into taps.

All of these examples have the same things in common. They bring a pragmatic, problem-solving perspective to issues that cannot be "solved" with the same global algorithm. Coase always began with the foundation of how things really worked (or failed) -- not an academic "simplification" that threw out the baby with the bathwater.

Bottom Line:It doesn't matter what Coase said. It matters that you apply his pragmatic perspective to identifying and removing the barriers to outcomes you want.