15 April 2008

Water in California

The LA Times ran five opinion pieces by Lester Snow (Department of Water Resources) and Mindy McIntyre (Planning and Conservation League). In their last article, Snow and McIntyre debate water conservation. Amazingly, they fail to even mention, let alone emphasize higher prices. Instead, Snow discusses spending money on conservation programs, and McIntyre says that new construction should will be energy efficient. (How? A law will require it. Duh.) Here's what I said:
Michael is right*, but higher prices are often presented as "unfair" to the poor. Here's how to structure prices: (1) use meters, (2) use increasing block rates (the more you use, the more you pay per unit used), (3) raise prices by 50-400% (people will start paying attention), (4) refund revenue in excess of costs on a per-capita basis. Although rich and poor will both get money back, the water "wasters" will get 10% of their bill refunded and water misers will get 200% of their bill refunded -- a reward for conservation (More).

*"No method is more effective at reducing water usage than raising prices." Michael Ejercito
Bottom Line: Prices are an effective way to ration water. They do not require command and control bureaucracies to implement projects, plans or goals, everyone understands them, and they are more-effective, in more ways, than any one person can understand. Want to save water? Raise prices!

1 comment:

  1. Tiered pricing is a good idea, sort of like how you can buy two packs of Pepsi and get two free at Food4Less, but the fifth pack is at the regular price.

    Funny how no one is discussing a shortage of Pepsi. Perhaps Pepsico is asking for a price it believes will maximize profit?

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