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...)
>> 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."


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.
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!