20 November 2008

Cutting Fat or Muscle?

A guest post from JWT...

Let's start with Pacific Institute's report. It says we could save 3.4 million AF by installing drip irrigation. At $1,000 AF, that would cost something like $9 billion.

The governor has demanded a 20% reduction in urban water use. Currently, all urban water use is about 9 million AF, so a goal of 1.8 million AF is being set.

So far, most everybody agrees with these numbers. But how much is it going to cost to realize those 1.8 MAF of water savings? No reasonable person can argue that those savings are going to come from taking a shower with a friend. The savings are going to have to come from changing the use of water in the house, and that means mechanical changes.

Here are what I judge as typical costs, not counting installation, for making those changes. These are rough estimates after reviewing prices at Lowe's, Home Depot, Sears and Best Buy.

























Low flush toilets2 @ $385 each $770
Low flow shower heads 2 @ $ 15 each $30
Water saving dishwasher
$1,000
Water saving washer
$1,200
Landscaping
$2,000
Total
$5,000/household
The state says that there are 12,100,000 households in California today. If every household made the changes suggested above in order to reach the 20% saving the governor is requiring, the cost would be something like $60 billion!

You can slice, dice and quarrel with these numbers just about any way you wish and the answer will still make drip irrigation look like the bargain of a life time!

By the way, on an acre-foot basis, drip irrigation has an initial cost of about $2,600/AF while urban conservation costs about $33,000/AF. (The good news is that both numbers are one time costs as opposed to desal which costs $2,000 to $3,000/AF every year.)

[JWT's] Bottom Line: No matter how you slice it, urban conservation achieved by expenditure of money is a really bad deal.

Addendum: The LA Times reports that drip may not reduce overall water use (plants absorb more, less "waste" means less groundwater recharge), something I pointed out 4 months ago -- after it was pointed out to me, of course :)

11 comments:

  1. I agree with you that it would be easier to cut agricultural water use than household water use. However, this recent NY Times story gives me pause: Drip Irrigation May Not Save Water, Analysis Finds.

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  2. Converting most of California agriculture to drip irrigation would also require a staggering increase in electricity demand. Don't get me wrong, drip has a great many advantages, but it's not the answer for everyone everywhere at all times.
    Proper market incentives for water owners (I prefer that term to "users") will result in the most flexible and efficient resource allocations, whether that is installing drip systems, changing crops, retiring farm land or who knows? Likewise, providing price signals to urban users (tradeable credits for water saved, higher prices for water over a determined base line) will result in plethora of responses by individuals, and won't cost taxpayers anything.

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  3. Anonymous is on the right track. Several studies appear to indicate that improvements in water use efficiency do not lead to overall water savings and can often lead to even higher rates of water use. In order to decrease the amount of water used by farmers switching to drip, you would have to reduce the quantity of their water rights to reflect that reduced water need. The farmer would then need to be compensated for that reduction. But, a farmer who invests in a more efficient irrigation system is going to want to increase his yields in order to recover the cost of his investment - that means irrigating more land or extending the planting season with another cutting of alfalfa, etc. The greater consumptive use associated with the new system results in more water being used overall, not less.

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  4. This is odd logic: >>In order to decrease the amount of water used by farmers switching to drip, you would have to reduce the quantity of their water rights to reflect that reduced water need. The farmer would then need to be compensated for that reduction.<<
    Why not just let the farmer market the water saved, thus making the user, rather than the taxpayer, reimburse him for the property right he is giving up?

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  5. What is your source for $2,000 to $3,000 per acre foot for desalination? Desal is touted at $800 to $1,100 per acre foot, i.e. the proposed Carlsbad plant. The Israelis quote $0.55/m3 (although I think they are only quoting the operating costs). They deny this. Your readers might really be interested in an honest economic analysis on the cost of desalination, especially because there are so many variables involved.

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  6. @CJ -- I agree with Philip's answer to your query. Let the farmers sell their rights.

    @Anon -- I think the $2k number is a bit high. Taking capital costs into account, I'd estimate that Carlsbad (and other plants now under construction) cost about $1,200-$1,500/AF. Energy prices are critical, and new technology (nano filters) can change the economics significantly.

    JWT's original point is correct, IMO, because the ag sector uses so much more water.

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  7. Response to Philip & DZ - that works great if transaction costs are low; but if not the farmer may be able to profit more by using that saved water. And anyway, if the farmer is transferring the right to the saved water to another farmer who will use it in the same way, it's no different than if the first farmer used the water. In order to effectuate a transfer of the water to higher-value M&I uses, you generally need a situation where many users within an irrigation district are implementing efficiency improvements and the district is marketing the saved water on behalf of the farmers. That way you have enough water to justify the transaction costs involved.

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  8. I don't disagree that transfers must take place on a district-to-district level, for a lot of good reasons including lowering transaction costs and allocating third party impacts fairly. But *within* a district, different land owners have different risk profiles, overhead, leverage, and crop flexibility. For instance, an orchard grower has little choice but to irrigate his crop every year, but an alfalfa grower can irrigate one or twice or not at all, depending on the relative value of either the crop or the water in any given summer month. A semi-retired farmer may be happy as a clam to take the summer off, and enjoy an annuity from water sales, whereas an operator with many long term employees may decide to forgo short term income if he believes the long term prospects for the business are sound. Neither one is wrong, they just have different objectives. Thus an auction system within the district, either a Dutch or "all-in" system will result in the district obtaining the water for the lowest cost, from those most willing to sell.
    And if the farmer can profit more by using the saved water than selling it, are you suggesting it should be seized from him anyway, just because?

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  9. low flush toilet costs 30 $
    you have to change the niagara alone

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  10. Philip - to the contrary, I'm saying it can't be seized from the farmer, which is one reason why increased efficiency does not lead to decreased water use. But, this conclusion could be changed if the doctrine of "waste" were rigorously applied to water rights - i.e. use that is not as efficient as it should be is deemed waste and the user forfeits a portion of his/her right beyond the efficient amount. Unfortunately, it's not done that way.

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  11. CJ, all water is used, even the water that is used by wildlife. Conservation as a per se goal is as silly as those little signs on the napkin boxes saying napkins=trees (they should also say croissants=wheat). Supply is dictated by climate and weather. (Massive de-sal is a long way off). Dams and canals can move the supply, but not change it. It is up to us to say how much of that supply is used for wildlife, food, recreation, industry, etc. Many people, me included, believe market forces can do an excellent job of this, since markets are an objective measure of how much a large population values different things.
    Under your scheme, what all-seeing Being would determine which uses are "not as efficient as they should be"? How could the rulings of this Vizir be challenged?

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