31 Dec 2007

Happy New Years Smelt!

As threatened, a federal judge ordered reductions in pumping water from the Sacramento Delta; see previous post. Each day of reduced pumping cuts supplies by the amount of water 10,000 households use in one year. This will stay in place until enough runoff "shows up". If you are a southern California farmer, prey for rain!
Farmers, unsurprisingly, are changing to higher value crops that use less water:
"A lot of guys are saying, 'Do I hunker down and try to wait this out somehow, or do I really change what I do?' " Borba said. To be sure, Borba and other influential Valley players are pushing the state and federal governments for a Delta fix that would bring them more water in the future.

But Borba wouldn't have succeeded in the farm business without knowing how to adapt. So cotton and tomatoes, which need about 3 feet of water a year, are giving way to wheat and safflower, which get by on 18 inches. He's laid thousands of acres of drip irrigation. Three years ago, he replaced 750 acres of annual crops with almond trees, which yield enough revenue to justify even high-priced water.

Water has always been valuable to farmers. But at the prices charged for deliveries from government canals, it hasn't always been precious. So farmers could turn a profit even growing thirsty, relatively low-value crops like alfalfa hay and cotton, of which Borba grew 9,000 acres as recently as 1999. Next year, he plans just 900 acres of cotton.

Borba pays at least $80 an acre-foot for Delta water. [...] Borba's water price is subsidized. ... In water-short years – as 2008 is expected to be – Borba turns to more costly alternatives: groundwater and purchases of water from farmers who have alternate supplies or aren't subject to cutbacks.

San Joaquin Valley farmers planted 1.3 million acres of cotton in 1995, but just 455,000 this year, the least since 1946. For 2008, plantings in Fresno County are projected to drop an additional 25 percent to 40 percent. Wheat acreage, by contrast, is up at least 20 percent this winter, according to seed brokers. Part of that trend has to do with commodity prices, but the cost and availability of water plays a major role as well, said Borba and others.

In the drought years of 1990 and 1991, farmers in the giant Westlands Water District, Borba's area, pumped 600,000 acre-feet of water, about three times the region's sustainable yield. "This year, we'll probably do 700,000," Borba said.

Farmers don't have to buy groundwater from anybody, but it still isn't cheap. Pumping costs alone run $80 to $150 an acre-foot, depending on the price of electricity or diesel. Sinking a new well to the 1,800-foot depth often required here can easily cost $1 million.

He stops now at what is, in a seeming paradox, both one of his thirstiest fields and a hedge against water shortages: an orchard of almonds. Almonds need about 4 feet of irrigation a year. What's more, in this part of the Valley, they have to be irrigated with Delta water because the trees don't tolerate the naturally occurring boron in the groundwater.

After an initial investment of about $10,000 an acre to plant the trees and nurture them to bearing age, an almond orchard yields revenues of $3,000 to $5,000 an acre vs. $1,000 to $1,500 for cotton. That extraordinary return – the result of high prices maintained by steady global demand – justifies almonds' water use. Borba has planted a fifth of the 2,300 acres he owns to almonds. The rest of his 10,000 acres is either leased or farmed for other landowners. Even in a very dry year, he figures he can keep the orchard alive by concentrating the farm's full allotment of Delta water on the almond orchard. He'll use groundwater on the rest.

But heavy groundwater pumping can go on for only so long before the wells begin to fail. As shortages continue, more land is likely to go unplanted altogether. "It will accelerate the trend, which is to fewer acres and higher-value crops," said Richard Howitt, a professor of agricultural economics at UC Davis.[Hey, that's my adviser!]

Almonds and other so-called "permanent" plantings, including grapevines, fruit and nut trees, are generally the last crops to go unwatered. Trees and vines represent a huge capital investment, and farmers will pay extraordinary prices for water to keep them alive. Borba farms about 2,000 acres for landowners who have planted all their land to almonds. The Delta allocation covers only a fraction of the trees' needs, so Borba has already lined up 1,000 acre-feet for the crucial 6-inch watering after next fall's harvest. The price: $400,000. This fall, water for almonds elsewhere in Westlands was even dearer: $700 an acre-foot. "$700 is nuts," Borba said. But it also makes business sense. Without the late-season water, the trees' yield in the following year could drop by twice the value of the water.

As water has grown scarcer, and as the acreage in almonds has grown, a bustling market in these deals has developed.
Bottom Line: Farmers will survive more expensive water by using it smarter. After years of stupid-cheap water, it's a relief to see more-sensible prices -- and actions.

30 Dec 2007

Ocean of Plastic

In one of the few places on Earth where people can rarely be found, the human race has well and truly made its mark. In the middle of the Pacific Ocean lies a floating garbage patch twice the size of Britain. A place where the water is filled with six times as much plastic as plankton. This plastic-plankton soup is entering the food chain and heading for your dinner table.
Read more and then ask yourself "paper or plastic?"

Scientists versus Normals

29 Dec 2007

Hedonism

At year's end, when the nights are long, we tend to get introspective. Sitting alone in NYC (for various reasons), I have even more reason to be so. I am thinking about the choices I make in life, the goals I want to pursue, and the people I want to have nearby me. Who am I and what social environment do I want to live in? I am passing from one phase to another (finishing a PhD), and these questions are relevant to where I end up next and what I end up doing.

In the Omnivore's Dilemma, Michael Pollan points out that many of "us" have too many food choices, and we have a hard time resolving the "dilemma" of what to choose, what to eat. By "us", I mean the BoBo (Bohemian Bourgeois) types who have BOTH eclectic tastes and the means of fulfilling them. The dilemma extends beyond food to sex, drugs, friends, jobs, etc. Where do we live? What do we do? With who? So many options are open, and so few constraints are present that it's a wonder that we don't all just sit, paralyzed, unable to choose -- surfing life like we might surf channels on the TV.

Some of us get a "posse" and pursue that posse's goals, whether it be rock-climbing, PhD studying, or polyamourous, S&M experimenters. Others can fall back on a traditional culture (Christian, Korean, Office Worker, etc.) But those who are really confronted with the reality of the choice (as I see myself) need to find an internal balance in order not to fall.

A friend was surprised to hear that I was not a swinger (Dude, you blog about sex!), but his surprise made me think of the times when I have said "I am a hedonist." Now, what does that mean? To me, it means pursuing something without worrying about the consequences. It's like 120 days of Sodom, or Cheech and Chong, or the fat guy in Monty Python who eats "just a little mint, wafffer thin". In other words, if I were a hedonist writer of this blog, I would pursue sex without limit or remorse, use drugs until I couldn't take any more and eat and drink as if food were the only thing in life. (The Seven Deadly Sins are back.)

I don't do these things, and most people do not. The reason is that we have other goals to pursue: I want to do things, contribute and be productive. Hedonism is about consumption, without limit and without remorse. It's about careless sex, drug overdoses and throwing up or throwing out food that doesn't fit the palate. The worst case of all (to me) is the person who "lives for the weekend" because they hate their day jobs, they dream of a better life and they store up all that passion and frustration into a ball of energy that will get dissipated -- one way or anther, destructive or not. These people are unwilling to consider the consequences of what they do because they must do what they do to survive, to feel some control over their life, to have hope when they are sitting at their desks, frustrated and desperate.

Pulling back for a moment, let's consider the reasons behind the "mass" affliction of hedonism. In the past, hedonism was a problem of the aristocracy. What to do with all the time and money? Duals, taking baths in milk, invading countries, engaging artists to "create" -- all of these were attempts to feel alive and motivate life. The proles were out there, slaving (literally) to stay alive; they were lucky to get more than a life "nasty, brutish and short". It's well known that the post-WW2 prosperity led the hippie generation to rebel against hard work, nuclear families, etc. These kids questioned everything and caused great change. But where are we today, now that they have shown us the possibilities of "true freedom"? We are a bit at sea, wondering what to do. Some, younger people have reverted to traditional roles, many have managed to consume their way into sufficient debt that they truly have no choice but to work to pay off that debt.

For those of us lucky enough to have freedom of action, we are back to the hippie/aristocracy/BoBo dilemma: How do we choose our levels of sex, drugs, etc? As I mentioned before, pursuing these as primary goals leads to imbalance (at least to me), and thus we need to pursue them as secondary goals, subject to something more meaningful. As any mother will tell you, after the kids comes, everything goes on the back-burner. Since I am not a mom, I have economics as my primary goal -- not studying it, not writing about it, but DOING it. My plan for 2008 (and beyond) is to improve the economics of resources (water, oil, fish, timber) and underdevelopment (corruption, black markets, etc.) and to put everything else on the back burner. My goal is to save the world through better economics.

My dad complains when I discount the ramblings I post off to others. Although this post is more narcissistic than normal, perhaps it can be useful to you. Where is your life going?

Bottom Line: A life of hedonism is a life unbalanced. If you are not constrained by tradition, financial slavery or other obligations (kids, family, etc.), then choose and pursue a productive goal that can give you purpose and accomplishment. Sex, drugs, water and all the other indulgences will be that much sweeter.

Dodgy Water Managers

Interesting story of lying at elections and holding unauthorized meetings to manipulate the public water supply. Corruption in low places is sad, if only because there are so many of them.

28 Dec 2007

Westlands Buys Wetlands

Westlands Waster District (opps, Freuded again!) has bought some wetlands in Northern California. As I have written, Westlands is a rich, politically-savvy waster of water in Southern California. They want to use these wetlands to offset the harm they are doing by taking water from the Delta. While better than nothing, these offsets are just as dodgy as carbon offsets.

Bottom Line: Westlands should not use water because their soil is a hazardous waste dump; paying more for the water (via offsets) isn't going to make a bad idea better, but it will be useful politically (see, we're making an effort!). Sadly, Gaia continues to weep.

Water tight? Raise prices!

Down in San Diego, tight water supplies have led politicians and planners to raise prices for new water meters. By making these more expensive, they are slowing housing growth. The article is interesting for the "growth at all costs" views of those opposed to the higher prices.

What? Stop growth?!? It's the end of the world! No -- the end of the world gets closer as water supplies get tighter. As I wrote here, SD residents are not good at conserving water voluntarily, and water managers are too wimpy to raise water prices to levels where people cut back to avoid financial pain. The only way they've come up with to restrict growth in demand is by restricting the number of people who can get access to water. Very crude and totally ineffective wrt current users but better than nothing.

Bottom Line: San Diego has a very small local water supply. Ever since WW2, SD has grown on imported water. Given others' competition for imported water, that supply is also limited. SD has to stop growing or do a lot more with the water it does have. One way is to make SD farmers pay more for water, i.e., the same as SD homeowners.

26 Dec 2007

Working Together

This story does not only apply to Christians
A holy man was having a conversation with the Lord one day and said, "Lord, I would like to know what Heaven and Hell are like."

The Lord led the holy man to two doors.

He opened one of the doors and the holy man looked in. In the middle of the room was a large round table. In the middle of the table was a large pot of stew, which smelled delicious and made the holy man's mouth water.

The people sitting around the table were thin and sickly. They appeared to be famished.

They were holding spoons with very long handles that were strapped to their arms and each found it possible to reach into the pot of stew and take a spoonful. But because the handle was longer than their arms, they could not get the spoons back into their mouths.

The holy man shuddered at the sight of their misery and suffering.

The Lord said, "You have seen Hell."

They went to the next room and opened the door. It was exactly the same as the first one.

There was the large round table with the large pot of stew which made the holy man's mouth water. The people were equipped with the same long-handled spoons, but here the people were well nourished and plump, laughing and talking. The holy man said, "I don't understand."

It is simple," said the Lord. "It requires but one skill. You see they have learned to feed each other, while the greedy think only of themselves."
Bottom Line With resources, as with soup, we can all get along better if we learn to share. How do we do this? First of all, we cannot just wait for people to be nice to each other. ("If men were angels, no government would be necessary," says James Madison.) Our job is to design governments and policies that facilitate angelic behavior, so the cooperative are encouraged and the selfish thwarted.

21 Dec 2007

Ethanol Sucks --- Again

This comes from the folks at AEI-Brookings (not exactly liberal cowards...)
Ethanol production in the United States has been steadily growing and is expected to continue growing. Many politicians see increased ethanol use as a way to promote environmental goals, such as reducing greenhouse gas emissions, and energy security goals. This paper provides the first thorough benefit-cost analysis of increasing ethanol use beyond four billion gallons a year, and finds that the costs of increased production are likely to exceed the benefits by about three billion dollars annually. It also suggests that earlier attempts aimed at promoting ethanol would have likely failed a benefit-cost test, and that Congress should consider repealing the ethanol tariff and tax credit.

20 Dec 2007

Robbing Peter's Water

A company is proposing to pump (mine is more correct) groundwater in New Mexico to put into the Rio Grande. The water would help NM meet its water obligations. It would also destroy the water supply of many, local residents.

This is a stupid idea, and I bet the NY company behind it is looking to get paid big $$ for "helping" the state. Moving water from one bucket into another takes energy and results in wastage. In this case, it will also reduce local supply without any compensation (that's an externality) and transfer $$ from NM to NY. Luckily, it looks like the residents will defeat it -- as they did with another proposal by the same company a few years back. Good.

If It Works, It's Not Dangerous

In this paper, two Harvard economists
examine the effect of safe experience on a warning’s impact by comparing warnings received after having safe personal experience with those received before people start making choices....When an early warning coincides with the beginning of a decision making process, the warning is both weighted more heavily in future decisions (the primacy effect) and induces safer behavior that becomes the status quo for future choices (the initial history effect)...The results imply that, even after being adequately warned, some people may continue to take risks simply because they incurred good outcomes from the same choice in the past.
How does this relate to sex, drugs and water? If you have unsafe sex and avoid pregnancy or STDs, you are more likely to do it again and dismiss warnings as "unfounded". If you use drugs and have a good experience, the same will happen. If you drink tap water and things are fine, you will be unlikely to switch to bottled water; if you are told by mom that bottled water is safer, you may never try tap water.

Bottom Line: We build a bias in favor of our experience, no matter that experience's probabilistic frequency. This means we may get surprised by pregnancy; OTOH, we may never experience the "downside" of drugs if the warnings made about them are unfounded. On the policy side, early warning can have a strong, positive effect. The problem is when it is unfounded. If so, the legitimacy of the whole system suffers.

18 Dec 2007

Laughing at Tom

I just read an article reviewing a judge's decision to cut water pumping from the Sacramento Delta to Southern California by 30%. The reason I am laughing is that Tom Birmingham, the oh-so-clever lawyer and leader of Westland's water district, is making apocalypse noises, like these:
"I truly believe this water crisis is going to make the power crisis pale in comparison."
Birmingham believes the double-whammy will mean a hit to the state's economy "well in excess" of $1 billion.
"We expect there will be a significant amount of land fallowed."
You know what, Tom? What's going to happen is that urban areas are going to get their water and districts like yours -- in dry places with nasty soil -- are going out of business. And that's a good thing. (Birmingham once said that Westlands produces $1 billion a year. Maybe that's what he is talking about.)

More importantly, California's economy is worth $1.7 trillion. What's $1 billion of that? less than a rounding error.

Bottom Line: Scarce water means less wasted water. The farmers who go out of business will not be the grape growers, the almond farmers, the spinach folks (or the pot farmers). The ones who go out of business should have gone out of business years ago. They are in Westlands, and I am laughing at Tom's own goal comments.

PS: Westlands will get a lot of money for their "paper" water, so don't feel sorry for them!

16 Dec 2007

Water Conservation

Last Friday, I presented some ideas from my dissertation at the meeting of member agency managers of the Metropolitan Water District of Southern California. (These are the guys who get the water to about 18 million people down there.) The managers do a good job, no doubt, and they are certainly trying to cope with tighter supplies, but I found their group-think and path-dependency to be sooo terribly frustrating. In other words, they have a hard time changing the way they do things, and one reason is that they do not want to make a move that deviates from their peers.

The reason all this matters is that supply is tight, and demand appears to be "rigid". The traditional solution to shortage is building dams and pipes to get more water -- in the long-run. In the short run, the solutions are asking people to use less (voluntary conservation) and/or rationing people to some fraction of their historic use. These solutions are not working for Southern California right now: Building new infrastructure is extremely difficult and voluntary conservation is not working.

At the meeting, I was amazed to hear a discussion in which most member agencies said they were trying voluntary conservation -- and not getting good results, e.g., "we are down 3-4% against last year but we do not know why." The inside of my head was reverberating with screams (raise prices!), and by the time I got up to present my idea -- rationing water through auctions, I was passionately convinced that these guys had to try something, anything new to break out of their reference framework.

I didn't get a standing ovation, but I did have their rapt attention. I am not sure if they will try any type of pilot project (as I suggested), since their objections and caveats appeared more readily than their enthusiasm, but at least I gave it a shot.

Economists have suggested higher prices as a solution to shortage for years. We see the effects of price on supply and demand everyday, across millions of products and services. Yet, somehow, water managers do not seem able to put price on the table as a tool to solve their problems. As long as water costs $0.01 for 5 gallons, people are just not going to pay attention to how much they use. "Convincing them that conservation is important" (as some suggested on Friday) will do nothing if it is not backed up with a simple signal that water is valuable.

Bottom Line: Water is a commodity like any other. Give people the first x gallons (as a lifeline entitlement) and then make them pay to water the yard, wash the car, grow alfalfa in the desert, etc. Only when price signals scarcity will people treat water as the precious good it is.

13 Dec 2007

Gray (market) water

Homeowners in the Southeast are reacting to drought by reusing their gray water (from the kitchen sink) to water their yards. That sounds reasonable, but this caught my eye:
It's not clean enough to drink, but it contains less nitrogen and fewer pathogens than "black water" or toilet waste.

Still, it is capable of carrying enough bacteria to trigger typhoid fever, dysentery, hepatitis and other gastrointestinal or viral problems. Laura Leonard, a spokeswoman for the North Carolina Division of Environmental Health, said gray water can have about the same amount of fecal coliform bacteria as whole wastewater.
I call BS! How do you get fecal coliform from kitchen sink water? Is the Department protecting its jurisdiction?

Bottom Line: We need flexible thinking when water is in short supply. The government needs the most flexibility.

Global Warming Upside

12 Dec 2007

Water exports: Bottle the Delta

Up in way, dark Northern California, they are debating whether to allow a water bottling plant to tap the local aquifer. This one, proposed by Nestle Waters North America, will "create" hundreds jobs and $23 million of additional revenue. Putting aside these useless projections (jobs move, $ revenue is gross, not net...), the most interesting characteristic is $26.40/acre foot of water that Nestle would pay for water.

That's less than one penny per hundred gallons. Can you guess why these companies love the bottled water business? Let's also note that Nestle's "mining" of the aquifer is unlikely to benefit local water users.

Meanwhile, this story reports that state water contractors commissioned a "secret" cost estimate to build the Peripheral Canal. (A good idea, as I argue here.) The sad part is that they need to study a major public works project ("giant straw to steal NorCal's water") in secret when everyone agrees -- given the choice to export water -- that a canal is better for the Delta. I hope the debate gets more mature than this!

Bottom Line: Water exports can be good for locals sellers and distant buyers, but they need to share the gains from trade fairly evenly. Nestle is ripping the locals off. The peripheral canal will help the locals by making the Delta more stable.

11 Dec 2007

Cowardly Water Agencies

Today's news reports that San Diego residents are using more, not less water -- despite calls for water conservation. The problem extends to all of Southern California, where water use is growing. Water managers claim that people are "paying attention" to conservation messages, but that other factors may be responsible for higher use. I call bull. If you need people to use less water and they are not, you are not succeeding in reducing water use. Managers plan to spend $ on advertising, public awareness, etc.

When will they get a clue? As I said just days ago, people will not use less water if it's cheap. (I guess I need a bigger audience :)

Bottom Line: Treat water like gasoline -- when the price goes up, people will use less of it.

9 Dec 2007

Water Wars -- East and West

It comes as no surprise that the American Southeast, known more for its swamps and kudzu, is now having water problems. The reason is this: A past of "too much" water has hidden the Bureau of Reclamation's bad water policies. Now that there is not (fight between farmers and cities, deja vu all over again), the inadequacy of Bureau (and other agency) policies is clear.

Speaking of that, The Economist has a good update of Water in the West. Here's the relevant bit:
Farmers use the great majority of the West's water, which they get at bargain rates. Even in California, by far the most populous state in the region, four times as much water is poured onto farmland as runs out of taps or is sprinkled over lawns. Farmers in the Imperial irrigation district, east of San Diego, pay $17 per acre-foot of water (that is, enough to flood an acre of land a foot deep, equivalent to 1.2m litres). In San Diego a household that used the same amount in a year would pay $1,311.

Bottom Line: Few places in the world do a good job at managing their water. The most common cause is treating water as a "common-pool" good (take what you want, we can all share) when it is really a "private" good (the water I get is the water you do not). Poor management under common pool guidelines eventually results in shortage. When this happens, institutions that previously "worked" cannot cope, and people fight. Look for the pattern -- you'll see it everywhere.

8 Dec 2007

Water Politics

This editorial predicts that politicians will add so many bits of lard to the water bills under consideration in the California legislature that voters will veto all of them (in referenda). This happened before -- when the Peripheral Canal died under the assault of partisan bickering.

Bottom Line: Political "solutions" to water problems often end up including a lot of unnecessary pork put there in the hope that the need for "water security" will carry them through. When the load gets too heavy, voters revolt; if they do not, we still get a lot of crap. (See also "national security" legislation.)

7 Dec 2007

Bureaucrats Inaction

In this sad story, we see how multiple agencies managed to avoid saving endangered fish they were charged with protecting. (They did, in fact, take actions that killed the fish.) This is important, because fish kills in the Sacramento Delta are the reason a judge ordered the pumps that send water to Southern California to be turned off. Looks like these bureaucrats just endangered SoCal's water supply too. Brilliant.

Women Responsible for Drooping?

According to this blog (must be true!), estrogen in the water supply is responsible for growing impotence (or is it infertility?) in men. I can see a day where men will take Viagra as a daily supplement to "maintain the body's natural balance."

This is actually a real problem. I heard someone say a few years ago that men who drink water from the Sacramento Delta have low sperm counts. (According to this, it's because of pesticides; much better.) If there is anything that will get (male) politicians to pay attention to water quality, this is likely to be the issue.

Bottom Line: We drink water all the time. We test for some contaminants, and others make themselves known, eg, giardia. The problem is all that other stuff that gets into our water and is either undetected or impossible to remove (economically). Does this make the case for bottled water? Hmmm....

6 Dec 2007

Local Warming and California Snow

A recent symposium reviewed the current status and anticipated problems from local warming in the Sierra Nevada. Lake Tahoe has already had a 0.5F temperature increase, which has allowed invasive fish to take hold.

Even if we take radical action now, we are committed to a 2-4F increase in temperature.

The biggest effect (already being felt) is a reduction in snow "stored" at high elevations. This is bad for skiing but really bad for water storage -- if water is not stored as snow, it runs into streams and overwhelms dams. The "more dams" solution is popular, but I am suspicious that they will just be expensive handouts to farmers who should get used to less water. (Cities use 1/4 the water farmers use; they will be fine.)

Bottom Line: Forget global warming, think local warming. We're already in it, and it's time to change some old, bad habits.

5 Dec 2007

Water supply falls. Do prices rise?

California had a drought last year, and this year looks no better. As water gets scarcer, agencies are looking for new supplies, and these suppliers are looking to get paid. Just as you would expect with any other commodity (gas, wine, tickets), the price goes up when demand is greater than supply. That brings us to this great headline, "Southern California plans to buy farmers' water; RATES TO GO UP IN SHORTAGE" [CAPS in original] from this Associated Press story, which goes on to inform us that:
The water sale is being brokered by the state Department of Water Resources, which will look to farmers to voluntarily offer parts of their water supply for sale...

It was unknown how many farmers would sign onto the deal and how much money they would ask for the portions of their supply... Water district officials also did not know how much water user rates would increase as a result of the purchase...

Even if the MWD secures the additional water from farmers, it may still have to ration water supplies among the local agencies that it serves if the shortages persist, agency officials said.
In other, shocking news, water agencies are trying to buy water from willing sellers, but are unable to limit buying by raising prices. Instead, they are resorting to across-the-board limits (one dollhouse per customer, please) to make sure that everyone gets their fair share. [end sarcasm]

But wait, I speak too soon. What is it about farmers selling water? I thought they need it to make food? Not so fast, observes one columnist:
MWD will purchase additional water from Yuba County, in the Sacramento River Valley, and from the Central Valley. Yuba lists among its attributes "thriving farmland." The Central Valley boasts of supplying "fully one-quarter of the food America eats." Nevertheless, the MWD says, both areas are willing sellers. Selling water, after all, can be less dicey and more profitable than growing crops.
Down in San Diego, they really have things figured out. According to this piece, if the price rises, people will use less water. Wow, I love this:
If we truly want people to conserve water, especially during times of lean supply, then local water agencies should let market forces dictate the price of water. Doing so would be both efficient and effective. As water supplies dwindle, its price will go up and people will use less, thereby eliminating the need for expensive and largely ignored public education campaigns urging people to save a precious resource.

It is as common-sense a solution as exists: If folks want to have lush, green lawns as opposed to the xeriscaping more appropriate to a semi-desert, they should pay the real cost of the water needed to accomplish it. The same goes for farmers who want to plant cotton or rice in an arid region rather than crops more appropriate to our climate.

Admittedly, a market-based approach to water rates will require a radical restructuring of the way this state distributes and prices water. But until consumers feel the pain of water shortage where it hurts most ---- their pocketbooks ---- don't expect them to take calls for water conservation seriously.
Bottom Line: Water, in shortage, must be allocated by some kind of price/auction mechanism. We must break the unholy vow to never raise prices for water. Rationing schemes are more complicated and put the water where it shouldn't be. Note that I am in favor of setting aside a basic quantity of water per capita FIRST and then allocating the rest by (market) pricing.

29 Nov 2007

Water Cops 2: Toilet to Tap

Here are two updates on topics I've covered recently:

A LA Times columnist rips on drought cops. Unfortunately, he calls for neighborhood snitches and shame as a way of reducing use -- my ideas are better, but he's got righteousness down:
Let's do the math: Six enforcers, nearly 500 square miles of city -- it'd take a miracle of loaves-and-fishes proportions to make this much more than a gesture. Which brings me to the second thing that's wrong with Drought Busters.

They're toothless. They're nice-guy, if-you-please enforcers who can't enforce regulations that are on the books but carry no penalties, like hosing off driveways or watering lawns during the heat of the day.

So what's left in our water-war arsenal? Shame. Public humiliation. Some cities publish the names of johns arrested for soliciting sex. Why not headline the names of flagrant water wasters?
I've got a simple solution: raise prices. Who cares if a rich guy pays to water his sidewalk? Most people will use less, and that's what we care about -- not making people into martyrs and victims.

Toilet to tap is also in the news. (Here is my earlier, pro opinion):
About 500,000 acre-feet of wastewater is recycled each year in California, enough to flood more than half of San Joaquin County one foot deep.[snip]

While everyone seems to think recycling water is important, officials are working on standards to make sure contaminants remaining in treated wastewater don't cause more harm than good.[snip]

Manteca for years has used recycled water to irrigate alfalfa crops grown around its sewage treatment plant, as does the city of Lodi. The crops have been used for cattle feed and not for human consumption.
Recent upgrades at the Manteca plant now allow the city to do more. It plans soon to deliver recycled water to the city's golf course, which gulps down up to a million gallons of water a day during the summer, said Phil Govea, deputy director of Public Works.[snip]

"Recycling water is a great thing," Madison said. "There will for a long time still be customer perceptions (about using treated wastewater) that will have to be overcome."
Bottom Line: Water is an emotional (or newsworthy) topic and there's considerable disagreement on the best solution. Try them all!

Global Warming podcast...

Russ Roberts interviews Daniel Botkin (ecology professor emeritus, UCSB) on global warming and all that. He may sound like an apologist for global warming, but he's been in the business since the late 60s. He points out that those who question the harm-projections from global warming (e.g., 30% species extinction by 2100) are being treated as outcasts. (Not good for science, not good for us.) Even without global warming, he also says that we need the right policies on fossil fuels, habitat preservation, water(!), etc. Right on!

26 Nov 2007

Vodka IS Water

"Vodka" originates as the diminutive of the Russian word for water ("voda" or вода in the proper Cyrillic). According to wikipedia, the word is first used in the Middle Ages in association with medicine and "bread wine" (as opposed to grape wine). More interestingly, vodka also carries "burning" names (e.g., brennevin) -- appropriate for high proof (>80) versions. Use this knowledge wisely to win bar bets!

24 Nov 2007

Black Friday, 9/11 and Your Kids

After 9/11, Bush made a speech laying out his thoughts about the attacks and anticipated responses. A number of things have not gone well since then (He mentions Iraq only to say that the War on Terror will not be as easy as the war in Iraq in 1991. Missed something there...), but one thing that was conspicuous in its presence was the famous "go back to the malls" image. He did not say that, literally. What he said was:
Americans are asking: What is expected of us? I ask you to live your lives, and hug your children. I know many citizens have fears tonight, and I ask you to be calm and resolute, even in the face of a continuing threat. [snip] I ask your continued participation and confidence in the American economy. Terrorists attacked a symbol of American prosperity. They did not touch its source. America is successful because of the hard work, and creativity, and enterprise of our people. These were the true strengths of our economy before September 11th, and they are our strengths today. [snip] We will come together to take active steps that strengthen America's economy, and put our people back to work.
There are many ways to interpret these words; many people interpreted them as "live as usual, have faith and let the government handle things". This idea, combined with our national obsession with economic growth, being the world's largest economy, etc. results in something quite sad, autistic even, in the face of what happened in 9/11.

Let's recap: Terrorists hijack planes, destroy the Twin Towers and kill thousands of people. We are to live life as usual -- because the government will take care of things.

Clearly we were wrong: The Government has not done a good job, and -- despite all evidence of failure and disapproval -- the Government continues to pursue that path. (A part of me wonders not just about Bush's sanity but also of the sanity of those who appear to think that the right faith is an adequate substitute for competence.)

It's time to reconsider our reactions. Some people have decided to challenge the Government's stupid idea about national security. Others have entered politics, deciding the business-as-usual was not adequate. Today, I am thinking of shaking the foundations of America even further: I am challenging our President's advice to "participate and strengthen America's economy." Let's understand what that means to us, and why it's more subversive to the Government than any protest, electoral challenge, etc.

What does it mean to us? Making and spending money keeps the economy going. If you spend, I have a job; if I spend you do. More importantly, the more productive I am with my time, the more stuff I can sell to you and yours. But what is the composition of the stuff that I produce and you buy? Do I make apple pies, big screen TVs, SUVs or abstract art? Big corporations make big, complicated things like TV shows, cars and gasoline. They depend on millions of consumers for sales and profits. Small, mom and pop operations make pies, art shows and live music. If we want to experience our neighbors, local creativity and the human spirit, I suggest that we buy from small operations.

On the production side, ask yourself where you put your time: do you work for a big widget company or yourself? Do you barter or do you pay taxes on a fat salary? Do you work 60-plus hours per week, or do you work 30 and spend more time with your family and friends? It's hard to move jobs, but I want to point out that there are different ways to earn and spend money.

More importantly, the exchange rate between money and time also differs. If I wash my car instead of taking it to a car-wash, I do not support the economy, because I do not buy the services of others with cash. If I take care of my kids instead of putting them into daycare, it's the same thing.

Economists note that economic production advances far more rapidly when I specialize in making widgets and use the money I earn to buy goods and services I no longer have time to do myself (car washing or baby care). This is true, but there are two other features to note: if I do it myself, I get a different quality outcome; second, if I do it myself, I do not contribute to the economy -- and that transaction is not taxed.

This is where it gets subversive: If we produce for ourselves or barter with others in the informal economy, we reduce the tax base for the government. Holding tax schedules equal, that reduces government revenue. If the government does not have money, it cannot waste it on the war on terror. ($1 trillion and counting...)

The reason the President asks "I ask your continued participation and confidence in the American economy" is because he needs tax revenue to pursue his plans. If we agree with his plans, that's fine. If we do not, we should change the way we participate in the American economy.

Those who lost faith in Government's ability to manage a post 9/11 world entered politics; they did not go on with business as usual. Those of us who cannot enter politics should change the way we participate in the economy, as both consumers and producers.

Black Friday usually means the day that companies pass from losses ("in the red") to profits ("in the black"). We should change the meaning of Black Friday to the day in which we decided to exit business as usual -- the day that we decided to move our economic power into actions that support ourselves, our families and our neighbors:

Instead of buying a big-screen TV, buy tickets to the local theatre company.
Instead of driving to the Mall, bake cookies with your kids.
Instead of subscribing to cable TV, read a (used) book or write one yourself.
Instead of working 60 hours, work 2/3s time and enjoy a simpler life.
Instead of buying a new suit, try to wear one out.

In short, we need to join the Church of Stop Shopping.

I realize that this sounds like the scribbles of a hippie graduate student with plenty of time and no obligations (and you're right). But ask yourself: What can I do today that makes my life better as a human? Where have I failed to enjoy myself, because I was busy being "calm and resolute"? It's only in the face of failure that we re-examine our choices, expectations and goals. It's clear to me that we, as Americans, have failed in our reaction to 9/11. Since you and I are not the government, and we are not politicians, the only thing we can do is change our lives.

Bottom Line: Concentrate on being humans, not consumers (or production machines). By doing so, we send an explicit message of priorities; the implicit penalty (smaller tax revenues) will strengthen that message by forcing politicians to fight over allocating a smaller pie. Stupid ideas will be the first to go.

IID strikes again!

Imperial Irrigation District (IID) is a constant source of amusement to all rational, thinking people. This story reports their recent vote to spend $600,000 on water rationing software.

The problem they face is how to ration water among IID farmers. There are economic ways (auctions or rights with right to buy/sell), there are "just" ways (equal allocation with no right to sell) and there are engineering ways (fancy software to tell you the optimal distribution).

Not only do the IID directors vote to spend their customers' money on the engineering solution, but they reject the $free version offered by some members (no details supplied).

I guess they think that price = value. They are wrong about that idea, for it only holds in a competitive marketplace with substitutes. A custom system is about getting as much money as possible from the customer's ignorance. As a former database designer, I think they just committed $600k for an elaborate spreadsheet (look Ma: macros!) Sign that this is true? The Director who says "This is the best there is." That's a taste of failure and cost overruns to come.

The vendor, TruePoint software and consulting services does these deals with water districts everywhere. Seems like a typical market power = fat profits scenario. (Even more so, given that most water people are engineers who worship software "solutions".) Of $400k for software, $130k is the cost of customizing. Even at $250/hr, that's 520 hours of work. Damn, I hope they get something with NICE push-buttons!

"Now they’re saying there could be unforeseen costs. I’m not sure what we bought today," Abatti said. "I don’t know if staff knows how much this is going to cost."

Bottom Line: You cannot program your way out of water shortage. You cannot manage you way out of it. You need to let people make their own, idiosyncratic decisions on how much water to buy and how much to pay. Since IID controls 3.1MAF of water (70 percent of the water CA gets from the Colorado River, and over 5 times as much as all of urban Southern California gets from the river -- IID's foul-ups affect all of us.)

22 Nov 2007

Job Applications and Risk

Originally posted Oct 17: I am applying for jobs (on the assumption that I will finish my PhD soon). As usual, job postings ask for your CV, etc., but I have noticed that not all postings follow best practice, i.e., send materials via internet (email or webform) by date:time. How do they differ?

The first bad idea is asking for postal mail submission. This wastes resources (fuel and time) and is less reliable. I can see only one reason why this is requested, and that's to save the hiring institution the time from printing on their end. (Paper is cheap, so I ignore it.) If you agree that total printing time is the same, then where the materials are printed is socially irrelevant. Since the hiring department has power, they can shift the work onto the applicant.

The second, far worse idea is having a "must be received by" date for postal submissions. Job applicants are risk averse and want their materials to arrive on time. They have two responses: Send waayyy early (and hope the mail arrives!) or use express mail. Given that the USPS says cross country mail takes 3-10 days, this is not a fun thing to consider. Given that an envelope to Canada costs $1.50 for regular and $22 for express mail, this can get expensive.

But the most crazy irony of all is that I am applying for positions in resource economics. You know, time and money and energy and water? How crazy is it for places seeking resource economists to give "must be received by" postal deadlines?!? Do they want me to feel good that they need my services? Or is it a signal of how out-of-touch they are? We are not talking Podunk U here, these are top research universities!

My only conclusion is that places asking for posted materials by a certain deadline do not care a whit about applicants, social welfare, etc. They have the power to make life as simple as possible for themselves -- thereby causing disproportionate losses on others -- and they use it.

Bottom Line: It's pretty sad when the "guardians of our future" (as they say in the fundraising documents) have such little regard to the best practices and/or social welfare of the present.

Continue below the fold to more discussion



18 Nov Addendum from Economic Job Market:
We are committed to delivering the best possible software to make your life as a candidate as easy as possible, since we can appreciate you do not need any additional stress in your life right now. We now believe that most of the key bugs are resolved and we are comfortable starting to advertise EJM to more recruiters and have more job ads posted to make it easier for you to apply. One way you can help us out is to suggest to your own organization's recruiting director to sign up to post FREE job ads on EJM. This will allow them to get applications electronically and will make their job easier and it will make your life easier too, since you will have the assurance that your application was transmitted electronically and instantaneously, and is not lost somewhere in the (U.S.) mail service.
...and this from an admin where I am applying (after they accepted PDF files in an email):

We received hundreds of applications and would take a full time
person to do nothing but print applications.

>No problem. I'll send hard copies.
>
>But, may I ask, why can't you print them there? As you will have to
>make photocopies for the committee anyway, there seems to be no point
>of taking the time and risking the USPS...
>
>(You guys are not the only ones with these policies...)
>
>David
>
>> In my haste to respond to your email I did not
>> advise you that in order for your application to
>> receive full consideration we request that you
>> send a hard copy of your documents. The
>> committee does not have access to your email and
>> have requested that all applications be received
>> in hard copy format.
One person writes here:
I don't think the cost of printing is what matters for the 'big research departments' when they request paper applications. More likely they don't want to be flooded with 1500 submissions for one position when the marginal cost of applying is close to zero (not identical to zero if you factor in time). So yes, they may care about saving the Earth, but they may also have a slightly different objective, like to allocate optimally their scarce application-processing resources...
to which, I reply:
by your logic, departments shoudl create higher barriers to ensure that only the most determined (=most qualified?) apply. How about blood tests, courier delivery, etc? Sorry -- I am not going to go for that. There's a clear power relation here and social welfare falls.

20 Nov 2007

Oil Tanker Comedy

This clip is hysterical.

I'm not kidding.

Really. Watch it.

Penis-envy Infrastructure

Original posted Nov 9: The Economist has an update on China's Three Gorges Dam. Some predictions of environmental problems are coming true (landslides leading to mini-tsunamis), locals are still getting displaced by government fiat, and everyone is afraid to talk.

Like other "penis-envy" infrastructure projects, political will overruled economic rationale in the decision to build the dam. These "physical, very expensive, and public" megaprojects are bad news. Aswan High Dam, for example, was a mistake built with Soviet money and Egyptian nationalism. (It's a mistake because land fertility below the dam has fallen, and dam water is being diverted for "resettlement" projects in the desert.) In another case, the Peripheral Canal was not built because of a political battle between northern and southern California. We would not have as many water management problems if the Canal existed.

Bottom Line: Political decisions on infrastructure often ignore economic and ecologic factors. The less-free the politics, the more harmful the decisions.

Nov 19 Update: A local water manager has suggested that the Peripheral Canal is a solution.

18 Nov 2007

Getting Rid of Poop

This article discusses composting toilets as a solution to places that lack sewerage. They are easy to install, use less water, cost less and produce compost and cooking gas. Good idea.

Toad Tunnels

Davis is (in)famous for having some toad tunnels so that toads can cross under the roads instead of over them (and getting squished). From the wiki entry comes this gem:

The toads live in a fenced-in wetlands "with foreboding signs implying that if you climb over the fence, you will cause hundreds of species to die and make Gaia weep."

Classic.

15 Nov 2007

Bust Some Farmers!

In LA, droughtbusters are going to give people tickets for watering their lawns, etc. They intend to put 5-10 people on that job. This program will cost between $500,000 to $1 million for salaries alone and generate very low ticket revenue. It's value lies in propaganda ("look, water cops") designed to get people to cut back on their water use.

There are three problems with this idea: First, it creates an adversarial relation between LADWP and customers; second, most water use is outdoor, in the summer. Although LA is a hot place, they should have done this 6 months ago for the summer. Third, this is a misallocation of personnel: LA should send 5-10 people out into agricultural areas to get FARMERS TO STOP WASTING WATER!

The fact is that farmers use 80 percent of the water in the State. (I don't agree with claims that they only use 40 percent, after accounting for 40 percent used by the "environment".) Farmers use a lot because they have rights to a quantity of water; if they don't use that quantity, they lose their rights (not good). So -- they use flood irrigation and grow thirsty crops (grasses, cotton, etc.) If LA water cops showed up, the farmers would be "guilty", but tickets won't solve the problem. The farmers must be allowed to sell (or rent) the water they save.

Bottom Line: Urban water conservation ignores the elephant in the room: agricultural water use. Fix that problem first.

Yellow Ribbons Don't Help!

This funny post points out how yellow ribbons on SUVs will not save the troops. 'Nuff said.

14 Nov 2007

Toilet to Tap? Yes Please!

Southern California (and many regions of the world) suffer from water "shortages". Without exploring the economics of that expression (there are no shortages, just prices that are too low...), I want to put in a plug for recycled water, or what others call "toilet to tap" (i.e., cleaning waste water so that it can be used, again, for drinking water.)

In San Diego, the mayor has taken a stupid stand against toilet to tap. Why the "toilet" word? Because people who dislike the idea (Do they work for the bottled water folks?) want you to think the water is "dirty". Here are my thoughts:

1) People in San Diego already drink toilet water. The water they get (from the Colorado River) has already passed through a dozen municipal waste water systems. (seventeen percent of Colorado River water is discharge) Recycling is a cheaper way of extending water supplies.

2) All water supplies are being contaminated by hormones, chemical residues, etc. Recycled water is no different. Bottled water "from municipal sources" (as most is) is also not different.

3) In Prescott, AZ they sold the rights for 2,700 acre-feet of treated waste-water for $67 million. That's about $25,000/acre-foot! (These are annual flows, like a water annuity.)

Bottom Line: We've got to take what we can get as far as water is concerned. We already drink toilet water, and there's no sense in turning away from cheap, local supplies.

13 Nov 2007

Water = Medicine?

This blog post extols the virtues of water for skin, weight loss, etc.

One comment that caught my eye is "maybe if water was more expensive, people would pay more attention to drink enough of it on a daily basis." Although this sounds wrong in the first instance, there are reasons to think that people give greater value to things with higher prices, especially when they are experience goods. (Water is an experience good? Yes.) Think Fiji water. Nothing special + very expensive = high demand.

Bottom Line: Drink water! Even cheap water!

8 Nov 2007

Trust but Verify

...as Ronald Reagan famously said is a good watchword for experience goods like sex, drugs and water. We need to trust the seller of any of these items that they will be as good as promised. If we hand over our money (and trust and health, etc.) mistakenly, we are ripped off at a minimum; our disappointment and/or endangerment increases as our trust is betrayed. The more cheating there is, the less beneficial interactions there are. (We have evolved to catch cheaters because only a few can damage the interactions of many.)

This issue falls into the bigger category of asymmetric information, i.e., the notion that I know more than you about a certain thing. If we both know the same amount about it, we can negotiate merely over prices. If we do not, and do not even know the degree of asymmetry, the negotiation becomes far more strategic. ("What do you do for a living" is one way to elicit willingness-to-pay.)

In all of these areas, we establish a trust relationship with our water, drug or sex vendor. If the good works out, we are loathe to abandon him, for fear of getting a "surprise" from the next vendor. (I guess this holds for jobs, relationships, etc. as well...) The vendor knows this and can take advantage of it by raising prices or making other demands that tax our fear of change. Real pros don't take advantage; they let their reputation work as a salesman and never have to search for new clients. Scare-mongers are the opposite; they repeatedly mention the "big bad wolf" and tell you that you should "stick together", even it costs a little more.

Bottom Line: Trust matters, and we need good ways to maintain it.

Cheat (or Carbon) Neutral?

In another, excellent example of creative markets, Cheat Neutral offers to offset your cheating (on your partner). If you cheat, pay $5 to a faithful couple, and the net amount of cheating in the world is held equal. Great idea.

What is Cheat Offsetting? When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere. Cheatneutral offsets your cheating by funding someone else to be faithful and NOT cheat. This neutralises the pain and unhappy emotion and leaves you with a clear conscience.

Can I offset all my cheating? First you should look at ways of reducing your cheating. Once you've done this you can use Cheatneutral to offset the remaining, unavoidable cheating.

Bottom Line: There are stupid ideas everywhere. Carbon Cheat-neutrality is one of them. Go and cheat without guilt! You can buy your way out of it!

7 Nov 2007

Water Wars (Again)

The Western U.S. is chronically short of water, and the situation is getting worse with global warming and population growth. Although this situation is good for resource economists like me, it is bad for all the people who suffer from the bad water management policies of a century ago still in use today.

Here are a few pieces to help you understand the situation. The get the best overview and economic explanation of what's going on (unless you can buy me a coffee), listen to a 15 minute podcast with Henry Vaux, an economist who's been in the business for 35 years.

The New York Times has a good overview of the situation -- with the annoying exception of bad bad bad economics when the discussion turns to Vegas. Go figure.

In the Los Angeles Times, an editorial says that everyone should pay the same price for water but then defends the decision to have cheaper power prices for hotter areas. This second idea is not just stupid because it subsidizes people who decide to live in hot places (and run the AC) but also because water and electricity prices reflect each other, i.e., it takes water to cool electrical plants (say 5% of total use) and takes power to move water (20% of power in California).

In the San Francisco Chronicle, a column reviews the NYT piece and points out the supply and demand imbalance (good economics!): There are probably going to be water wars. Water is going to be stolen and defended, just as it was 150 years ago. And wait until Mexico starts spending its oil money on water. You won't be able to build a wall tall enough. The time to start thinking about this stuff was yesterday. No one says the Sahara is in a drought.

These problems are not limited to the West. They extend to the South (that's right, the humid, dripping South) and most of the world (China and Australia facing notoriously severe problems; China is not handing theirs very well. Did I mention the Middle East? Big problems...) The only places not facing water problems of some sort may be the Pacific Northwest, Canada and the Scandinavian countries.

Bottom Line: Water supplies are stressed by population growth and bad policies. We can do something about the latter. The first (maybe only) thing to do is start charging for the scarcity value of water. We do that with oil, gold, super models and good bread, and those markets work. Bring sensible economics to water -- before it's too late.

1 Nov 2007

Salton Sea Update

As you may know, the Salton Sea is a mess. Imperial Valley is at the south end of the sea and home to some of the most obscene abusers of water in the West. Here are some recent stories:

In the first, a group of dissidents are trying to stop various water agreements until they are relieved of liability from the dust that's accumulating as the Salton Sea dries out. (The drying is because of reduced waste from IV; the dust is toxic because of the agricultural chemicals that pollute the "Sea".) As they say, "It's our belief until the Imperial Valley gets total protection from the Salton Sea, we can’t be transferring water because it's our only leverage." Translated, that means they will not sell water until they are relieved of the liability from their pollution. Nice.

In a second story, the Salton Sea Authority tries to justify its existence when the government fails to fund it. They are trying to scrape up $85,000 to keep the shoestring operation going.

Another story has some different details:
It's not yet known exactly what this will mean for the troubled Salton Sea. Despite a reduced staff, board members say they're still committed to trying to save the lake, which left untouched will dry up into a dust bowl, causing environmental problems for the region.
[snip]
State officials will meet next month to nail down a conservancy or locally based state agency they hope will breathe life into a nearly $9 billion restoration plan that's stalled in the Legislature.
It seems that the local governments have dropped support because they expect the state to step in. The article says that the SSA costs $50,000 a month to run, and that they will try to trim expenses to a more reasonable $30,000/month. Presumably, it take a lot of good money to fill in a bad-money hole.

Note that their favored project will cost $9 BILLION. Unless we are talking about Iraq, that's real money!

And finally, IID is getting a little less crazy:
The district’s proposed plan to balance the supply and demand in 2008 was unveiled Tuesday, the first time in recent history water usage will be limited.

The district is struggling to stay within its designated 3.1 million acre-feet of water from the Colorado River, part of the 2003 Quantification Settlement Agreement.

Those in the agriculture industry are concerned, Nicole Rothfleisch said, as limiting the water supply to farmers immediately “would cause severe hardships.”

Rothfleisch, the executive director of the Imperial County Farm Bureau, said farmers whose crops and soil types require more than the proposed 5.13 acre-feet would be impacted the most.

Duh. IID farmers have been wasting water for years, and 3.1MAF creates little value down there. If that water were used in cities, it would solve -- for at least 30 years -- all of Southern California's water problems. Those who abuse resources should lose them. I hope that some politicians are brave enough to take on the farmers and help the other 90 percent of Californians!

Bottom Line: Imperial Valley and the Salton Sea is a twilight zone that reality ignores. Bring them back to Earth!

29 Oct 2007

Carbon Neutral is the New Black

There's not a day that goes by without some company or celebrity announcing that they are "going carbon neutral". Very trendy, I think, and -- like most trends -- based less on science and more on social norms and image.

In one, recent example, a water desalination plant announced its CN-policy. Given that the plant is not operating, and is, in fact, seeking permission to operate, the announcement is probably more about PR than a careful economic or scientific conclusion.

For those of you who don't know, desalinating water is very energy intensive. What they do is push sea-water though a long filter to remove the salt. (This is more efficient than distilling the water though evaporation.) That pushing means that the cost of desalinated water is mostly the cost of energy.

The reason that these guys are going CN is that desalination uses far more energy than pumping groundwater or delivering water via aqueducts. People are nervous about the amount of energy used and the "waste" that implies. Unfortunately, the logical sources of water (farmers) don't sell it, as I have said here, here and here. (The solution is to improve the market for water.)

Desalination is popular because it provides reliable water without waiting for the farmers. Too bad it's so bad for the earth.

Bottom Line: Carbon Neutrality, like lipstick on a pig, does not make a bad policy good. We need to address the real, underlying problems. Don't go CN -- turn off the light!

27 Oct 2007

Meters for Water? You Crazy?

For many years, people paid a flat fee for water -- essentially an all-you-can-eat plan. Just as you would expect (and do observe at all-you-can-eat restaurants), people used lots and lots of water.

That worked fine while there was "too much" but when demand began to exceed supply, the obvious flaw in the system became apparent. While it was not "price effective" to meter people's water use in the past, it is now a more-pressing idea: First, because we want people who use more to pay more and second, because we want people to consider how much they are using -- having to pay for it helps them decide.

These sensible ideas face opposition in many communities where water has never been metered. This article tells the story of the "challenge" of metering Woodland -- just 10 miles from Davis. The big problem appears to be that some homes will be metered and others will not, which is "unfair". Their solution is to install -- but not use -- meters until all homes are connected. Woodland plans to meter 25% of homes by 2010. According to state law, they have to have all homes metered by 2025.

This time schedule seems rather leisurely.

Bottom Line: If it's important, it gets measured. Water is getting pretty damn important, so I hope the water agencies move a little faster in the measurement department!

25 Oct 2007

State-Sponsored Fools

A column in our local paper gives details of plans to reform land use in areas subject to flooding. The issue -- as always -- is government support or insurance of people who build "underwater". Land in floodplains tends to be cheaper than at higher altitudes (Think New Orleans), and those lower prices reflected flood risk.
Our tendency has been to ignore the potential perils and build homes, even entire towns, wherever it suits our fancy, with little thought to the potential consequences. When calamity strikes, as it does periodically, we clean up the mess and, with insurance settlements and government funds, rebuild and await the next episode.
The troubles began when "big hearted" (or developer-bribed) politicians began building "defenses" around housing in low-elevation areas or providing subsidized insurance to those areas. Those actions pleased developers (return on investment) and created a political constituency for more protection. The vicious circle spins further.

There is hope that changes in laws will re-balance incentives:
Among other things, the legislation would create new maps of flood-prone regions, bar local governments from approving development not enjoying 200-year flood protection and make them liable for damage if they unreasonably approve developments later stricken by flooding. Fittingly, a day after Schwarzenegger acted, the Federal Emergency Management Agency cracked down on development of North Natomas.
Apparently these laws have been enacted. Let's see if people react by behaving sensibly instead of going to politicians for more favors.

Bottom Line: Politicians have been using other people's money for years to subsidize unsustainable land development. As these subsidies become more costly and harmful, we need to stop them.

20 Oct 2007

Davis has water trouble

The City of Davis (where I live) is planning to spend $150 million on water treatment and new supplies. For a town of 60,000 people, that's a lot of money. Unfortunately, they seem to be pursuing the standard engineering requirements model of water and waste management ("projections indicate we should build this capacity...")

Bottom Line: Even one of the nation's smartest towns has no imagination of how to improve water management. Spend more on demand management and market forces and less on hardware.

18 Oct 2007

Westlands Rips off the People -- again!

In the midst of California's most-recent "crisis", let's not forget that Westlands Water District is in the middle of another asset grab. This time, the Bureau of Reclamation is giving Westlands more water in exchange for Westlands' promise to clean up its own toxic runoff. (Westlands' past judo moves put the burden on the Feds.)

The feds want to get rid of a problem, and they can claim Westlands will take care of it. In a few years, when Westlands fails to do so, the problem will end up back in taxpayers' laps. Meanwhile, Westlands will still have that extra, nice-and-valuable water. Just another day of water policy in the West.

It's all in an excellent column by Bill Stahl at the Los Angeles Times.

17 Oct 2007

Sex, Gender, and The Public Toilet

Just when you thought academics were getting respectable... or is it "Only in New York"? Coming soon: 3 November 2007
OUTING THE WATER CLOSET: SEX, GENDER, AND THE PUBLIC TOILET

Presented by New York University & The Center for Architecture

Panel I: The Social Construction of the Bathroom
Presenters: Beatriz Colomina (Professor, History and Theory Princeton University School of Architecture), Clara Greed (Professor of Inclusive Urban Planning, Planning and Architecture, University of the West of England), Ruth Barcan (Lecturer, Department of Gender and Cultural Studies, University of Sydney, Australia)

Panelists: Barbara Penner (Director of Architectural Studies and Lecturer Bartlett School of Architecture, University College London), Deborah Taylor (AIA LEED AP, Executive Director for Special Programs and Materials and Equipment Acceptance, New York City Department of Buildings), Matthew Sapolin (Executive Director of the New York City Mayor's Office for People with Disabilities), and Bronwen Pardes (Sexual Health Educator, HIV Counselor, St. Luke's-Roosevelt Hospital)

Panel II: Building Gender / Building Toilets
Presenters: Joel Sanders (AIA, Principal, Joel Sanders Architect; Associate Professor, Yale University School of Architecture), Andrew Whalley (AA Dipl AIA RIBA, Partner-in-Charge, New York Office, Grimshaw)

Panelists: Mark Tsurumaki (AIA, Partner, LTL Architects), Charles McKinney (Chief of Design, New York City Department of Parks and Recreation), Pauline Park (Transgender activist), and Lori Pavese Mazor (AIA, Associate Vice President for Planning and Design NYU

Mopping Up [WTF?]: Harvey Molotch (Acting Director, Program in Metropolitan Studies; Professor, Department of Social and Cultural Analysis; Professor, Department of Sociology, NYU)
Bottom Line: The toilet is an emotional place for some people. Ignore them at your peril!

12 Oct 2007

Charge more for water in San Diego

In one sensible editorial, the NC Times staff points out that more money (on dams) is not going to solve Southern California's water problem. Instead, they call for "conservation" and "market-based alternatives that would provide the most effective incentives for responsible water use." BRAVO! In fact, they sound so sensible (like me, it seems), that I prefer to quote them at further length:
For instance, a program that increased the cost of water once a household hit a monthly or yearly limit would do more to curb water waste than any public relations campaign. Households that had water left over could sell it back to the water district for use by someone else or for storage.
Bottom Line: The solution is in front of our eyes. Why does the governor and legislature insist on building more dams? Are construction firms such big political contributors?

11 Oct 2007

Unite or Die

Water districts have a hard time dividing water among themselves, but the least they should do is unite as a common front when negotiating with other water users. According to a recent article, the members of Imperial Irrigation District cannot even make this first step. As a result, they have lost the interest of a potential consultant and look weaker politically.

The consultant is a big wheel at MWD, an urban water district that some claim to be a rival to IID. While this is technically true, MWD is more likely to BUY water from IID than take it. From this perspective, therefore, IID could use a little help, which they have decided not to take. The losers will be farmers who should convert their water into cash and leisure. Too bad.

Bottom Line: If water user groups do not keep their own houses clean and united, others will help them rip those houses down.

8 Oct 2007

Politics of water

Politicians are used to promising everything to everyone, but a fixed quantity must be split some way. Water in the West is getting tighter, but pols appear not to believe it.

In one story, San Diego politicians demand that the California Coastal Commission give a permit for a new desalination. That plant worries environmentalists, but the pols claim it's now necessary.

Meanwhile, Arizona politicians want to eat their cake and have it. "We worked hard to try to put together this agreement, and the only thing Arizona asked is that it did not harm Arizona water users," said Herb Guenther, director of the state Department of Water Resources.

That's silly, because any form of price or administrative rationing is going to "harm" water users. The point of markets is that they minimize that harm.

Bottom Line: Politicians are reacting to screaming lobbies. The real solutions to these problems requires that people face the fact that water supplies are limited.

4 Oct 2007

Coping with Shortage the Hard Way

California is running into water shortages after summer usage has drawn down water stored from the 2005-6 winter (last winter was too dry). Urban areas are doing their bit to reduce demand and increase supply, but -- as usual -- they are leaving market forces (price) off the menu of management options.

In San Diego, farmers are being told to use less NOW or pay more LATER. The regional water agency (SDCWA) is negotiating to buy some (not very much) water from farmers.

While these ideas are reasonable, they are not nearly as effective as raising prices to decrease the quantity demanded. (Poor people will be protected if higher prices exempt the first block of personal use.) If water were priced like gasoline (or bottled water!), we would use a lot more -- both in the short (don't flush!) and the long run (rip out the lawn).

Bottom Line: The supply and demand for water can only balance if price signals are added.

1 Oct 2007

Farmers get hit for water

California is already in water shortage, if the reductions in deliveries to farmers (the canaries in the mine) are indicative of what's coming down the pike.

Farmers, predictably, are reacting with indignation and fear:

Mike Wade, Executive Director, of the California Farm Water Coalition claims that farmers use "only" 41 percent of California's water (not 80 percent, as I and others claim) because environmental flows get 48 percent of the "controlled" water. His claim is silly, as environmental flows are not just required by law, but required to keep our ecology intact. Cotton and alfalfa -- crops he claims "are in demand in the marketplace" -- are water hogs that should not enjoy special protection. This guy clearly misunderstands supply and demand: Everything is in demand in the marketplace -- the only question is the price, and cotton and alfalfa would not be in demand if their prices reflected the true costs of water.

More relevant is the quandary that avocado farmers face in San Diego county: Because they get subsidized water prices, they face cuts of 30 percent in their deliveries when water is short. It's short now, and they face the prospect of low yields and/or dead orchards. If given the chance, a number would probably want to buy water to get a better harvest and/or protect their investment.

Bottom Line: Farmers pay too little for water they claim to "use wisely", but they cannot get water when they actually are willing to pay for it. Water needs to be allocated in markets -- regardless of the final use.

27 Sep 2007

Weather-driven policy

It's sunny outside, but I am leaving for rain Brussels tomorrow. When I do, I am sure to change my opinion about water supply and water policy. Humans have a simple psychological bias: We pay attention to the weather at hand -- not the weather on average. This bias leads to policies that, literally, ebb and flow with the seasons and trends. When Katrina hit New Orleans, California politicians woke up to the parallel levee weaknesses in the Sacramento Delta. They rushed through laws, bills and bonds to pay for repairs, upgrades and changes. Now that Katrina has receded in our memory, the drought and endangered fishes are driving water policy in California.

This type of policy-making is just as short sighted as the policies made after 9/11 (USA Patriot Act), the Enron debacle (Sarbanes Oxley), or the recent cut in the short-term federal-funds rate to "save" the US economy. When people are in a hurry to make a decision and "get things done", those who stand to benefit the most drive their hard bargains and get "deals of a lifetime" slipped into sloppy, rushed legislation (cf. public choice theory). Look for the same with respect to water policy as the imbalance between supply and demand worsens in California, the Western US and the rest of the world.

Bottom Line: Water policy, like all policy, should be made for the long-term to address long-term problems. Policy should ignore short-term fluctuations to allow people to muddle through in sensible ways.

BTW, Keynes complaint that "in the long-run, we are all dead" does not refute this analysis or recommendation. Keynes was right that psychology matters, but he was wrong to assume it could be manipulated by Brilliants such as he.

26 Sep 2007

Water water nowhere...

California's water supply is getting tight. The Colorado River is still in drought, precipitation was very low last year (and doesn't look good this year) and redistribution of water from the North to the South is threatened by court rulings that such exports threaten endangered species.

Gov Terminator has proposed spending oodles of $$ on dams and a (don't say it!) Peripheral canal to deal with, respectively, storage and distribution issues. These ideas are not very good, or at least not the first place to make change:

Water needs Tradible Rights! Water needs a Price!

It's amazing to me that politicians and bureaucrats think that the only solution is to "increase" supply facilities. (Note that these facilities will not necessarily increase supply.)

They are ignoring two other "sources" of water, redistribution from higher to lower-value uses (via markets) and changes in demand (via prices).
Why spend $8 billion over 5 years when markets can be created through permission and recognition of rights in less than a year?

Follow the money? Ok, maybe the expensive solution is popular with contractors and engineers (make jobs!) and unpopular with folks who will lose water if they have to pay the full price (farmers). Yeah, that's about right.

Bottom Line: California is still stuck in the dark ages of water management. Drastic conditions call for drastic action, but markets are even easier than that!

18 Sep 2007

Treating Water Like It's Worth Something

California is in a drought. If the rain is below average this year, the shit's gonna hit the fan. Farmers -- who use 80 percent of the water in CA -- are worried their water will be cut, and they are dragging out patriotism:

"Farmers across the state know this will be very tough and not pleasant," says Dave Kranz, spokesman for the California Farm Bureau Federation. "To the extent that you take farmland out of production for whatever reason, it increases another problem, which is providing enough American-grown food to serve the US population as well as demand from other countries." -- from an article that also has some useful perspectives.

American-grown food? What are these guys on? What about American-made TVs, SUVs or videos on MTV? America trades with other countries because it makes us better-off.

Farmers are not happy about that -- they would rather have a captive pool of consumers to overcharge. Those who worry about dangerous "foreign food" (e.g., China), should remember the recent contamination of Salinas Valley (CA!) spinach with e-coli. Phyto-sanitary standards for food can be maintained while we import food (rather, water) from countries that have it.

Bottom Line: Farmers evoke national security when they really mean income security.

13 Sep 2007

Do rich people deserve cheap water?

In a recent article, Fresno County officials say they are not going to give a loan to a golf-club community that has run out of funds for its water supply. (Residents are already using "four times as much water as they're allotted") The officials say that people in $1million homes can find the money themselves: "They've been leading a luxurious life way too long, and it's coming to an end."

Bravo for these folks in Fresno! Water is a human right in small quantities but not where golf courses are concerned. The ethos of "have as much as you like -- for free" has got to change if California is going to continue to prosper.

Cheap and free water has encouraged waste (You never see people pouring gasoline on the sidewalk, do you?), and people will manage their water wisely if they have to pay a steep price for waste. ("Water education" is a poor substitute for prices; you don't see "gasoline education", do you?)

Bottom Line: Water is a commodity and should be treated as such. When people pay for it, they will "waste" less.

4 Sep 2007

Water at Burning Man

I just got back from Burning Man, a one-week desert festival of arts and music (and sex and drugs). In the beginning, Burning Man was about blowing things up. As the police do not take kindly to that behavior, BM moved into the desert -- the Black Rock Desert, which is about 100 miles north of Reno, NV. In the desert, blowing things up is easy, but living is hard. Without food, water or shelter, everyone had to be "radically self-reliant", i.e., bring those items.

Since this beginning (early 1990s), a few things have changed: many more people are there (48,000 this year); cleaning up the mess has become more important ("respect the Playa"); and surviving has gotten easier (in two ways: some people have more money, so can bring larger vehicles that others can use, and BM sells ice on the Playa.)

The use and disposal of water at BM is interesting -- first because everyone brings many bottles of it and second because they are supposed to evaporate or carry out the gray water from showers, etc -- not drop it on the Playa, which is an evaporated lake but apparently "vulnerable" to water (or perhaps dirty water).

The irony is that shlepping in water and taking out all those containers are not exactly ecological activities. (The theme this year was "Green Man", so this is relevant.) Further, gray water handling is terrible (evaporation doesn't work very well), inconvenient and makes people guilty when they fail to "do the right thing".

This topic hits right on the ecological/sustainable element of BM. Although people are supposed to be sustainable and zero-emission on the Playa, the considerable energy they put into preparation, supplies, etc. far outweighs the energy they use on the playa. If BM were analyzed on an annual (not one-week) basis, it's ecological footprint would be huge. (One of the bigger exhibits (the Oil Derrick) used 20,000 gallons of gas, for example)

Bottom Line: A city of nearly 50,000 people in the desert is not the best place to look for sustainability. Burners know that and don't care: they want to party. The real sustainable action would be to shut BM down and plant trees, but that sustainable life is hardly worth living, is it?

27 Aug 2007

Tap vs. Bottle -- Energy

It continues to amaze me that people buy bottled water. Not just because they can get perfectly good tap water for "free" (about $1/100 gallons) but because bottled water comes in bottles that are used once and thrown away. Even if you use those 5 gallon, returnable bottles, the energy cost of moving those bottles is extraordinary. (Remember that one lt of water weighs 1 kg. One gallon is about 8 pounds!)

The New York Times editorial page recently said the energy used in bottling alone could power 100,000 cars for a year. The Pacific Institute says the NYT figure is off by a factor of ten: "more than 17 million barrels of oil were used to make the billions of plastic water bottles American's consumed in 2006. That figure that does not include the energy used to fill, transport, chill and dispose of the bottles. Much of that water was tap water, refiltered and packaged for purchase."

Why do people do it? My answer is brainwashing (It's worth the money, its safer, it's clean, I care about my baby, etc.) Few bottled water manufacturers mention that tap water is subject to more safety regulation than bottled water. (Although I believe that markets can be better police than regulators, people worry more about water and want to know a regulator is there...)

Bottom Line: Bottled water is a scam -- and a wasteful one at that!