31 October 2008

GIO: Barriers and Risks

Question 18: What is the most common barrier to adoption/common risk from implementation that is ignored?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

The Experts Strike Back

Four authors from CSU Fresno, CalPoly and UC Davis, with "over 120 years combined of experience in agricultural and landscape irrigation," comment [PDF] on the Pacific Institute's paper, “More with Less: Agricultural Water Conservation and Efficiency in California."
Readers may recall that I blasted the paper as unrealistic in its treatment of farmer choices and market realities. In the comments to this follow-up post, Gleick and I debate the merits of the report. I post a give and take between Gleick and farm interests here.
Anyway, the commentary seems to support my contention, i.e., that the proposed "savings" do not give sufficient weight to economics, i.e.,
The PacInst Paper defines four major water conservation strategies, implying the availability of major water savings, while downplaying or ignoring the Paper authors’ own cautions such as “We note that a more detailed economic assessment is needed to capture the social, economic, and environmental benefits and costs of these improvements” (page 25). Without such an assessment, conclusions drawn by the authors of the Paper are difficult to support.
Bottom Line: There's no free lunch. If you want farmers to conserve water, raise prices. The best way to raise prices is by letting farmers sell their water. Those who can make more by selling will use less.

Smaller Monopolies

In prior posts, I have said that I favor neither private nor public provision of water, since malfeasance can happen in both cases.

Public water providers can shirk in their duties (leaving the office early, etc.), spend too much (gold plating), and/or underinvest in maintenance (often with the approval or under pressure from their political overseers).

Private water producers can inflate capital expenses to increase their ROI, cut back "too far" on staff or maintenance, and cherry pick for the most-profitable customers.

Of course, public providers may also misbehave as private providers do -- and vice-versa.

The solution, in both cases, is more and better community oversight. Such oversight (monitoring in principal-agent lingo) is easier when water systems are smaller, i.e., they are constructed at the community level.

What this means is that we should construct water supply and sewage services in smaller chunks [Read this and this & this, respectively]. LADWP-sized utilities are too big to understand, monitor, regulate or punish.

Bottom Line: Water monopolies will serve the community when the community controls them.

Water Markets in NM

CC brought my attention to this article:
Historically considered a free commodity, water ownership in New Mexico is determined by a first-come, first-served policy that cedes water rights to the first individual who diverts stream or river resources for a purpose such as irrigation. Those who arrive later receive junior, or secondary, rights to siphon water, provided they don’t infringe on the amount allocated for the senior owner. It’s a system that leaves farmers with junior claims vulnerable during periods of drought; their operations could fall apart within a single growing season.

One solution, says Coursey, is to persuade senior-rights holders to curb their water consumption and sell the surplus to junior owners for profit. Under current laws, community members can’t exchange or sell water rights; Coursey’s market system would change that.

[snip]

Owners may sell their water rights permanently or lease them for a fixed period, affording them season-to-season flexibility.

This “sports car–quick” model, says Coursey, requires an understanding of how water works. Because it evaporates, particularly in arid regions, real-time trades must factor in potential quantity losses during transit. Nearly 30 percent of the water flowing through the Rio Grande in northern New Mexico, for example, will evaporate by the time it reaches the Texas border more than 400 miles away. Furthermore, as a river flows downstream, groundwater—underground resources used for wells or other purposes—and surface water mix, potentially affecting other consumers not involved in the trade.

To account for such fluctuations, Coursey has teamed up with hydrologists from New Mexico’s Sandia National Laboratories who study water distribution and quality. Every time a trade occurs, a region-specific hydrological model will factor in the dynamics of local water movement, ensuring fair prices and minimizing third-party effects.
Markets that integrate those adjustments are called "smart markets" because they factor environmental and engineering constraints into trades. Here's an early paper [PDF] on them, and a more recent post by a practitioner.

Bottom Line: Scarce water should be allocated by markets, but those markets should factor in engineering and environmental constraints. (Cultural constraints cannot be quantified, but they can be reflected in prices.)

30 October 2008

GIO: Water and Models

Question 17: How can you include water in comprehensive model decisions?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Conference Feedback

Last week, I was at the annual meeting of the National Association of Water Companies (the investor-owned ones that supply 20% of residential water). I gave a presentation on cap and trade, which I think is worse than a carbon tax but better than regulation.

This week, I was at H2O: Headlands to Oceans. I gave an overview [PDF] of all-in auctions and conservation pricing.

NAWC was dominated by CEOs and regulators; H2O was dominated by scientists. Both groups were happy to hear more about economics aguanomics.

At NAWC, my notes say
  • Capital market problems are leading to deferred maintenance, and reductions in operating expenses.
  • We need to educate voters/customers/politicians as we go along.
  • Report rate increases in $, not %.
  • Why won't regulators approve expenses related to education when education matters so much? (Because education is mixed in with lobbying?)
At H2O, my notes say
  • We economists are about 20 years behind the scientists on global warming, but they are about 20 years behind us on water management, i.e., command and control/regulation vs. markets.
  • Lake Mead will NOT go dry if the price of water withdrawals rises when levels drop!
  • Education only works on 10 percent of people; the other 90 percent will only respond to higher prices -- as they did to $4 gas.
These conferences also convinced me that academic economists need to get out of the office and work with other disciplines and avocations.

Bottom Line: Conferences are great places to learn and teach.

International Aquifers

via YubaNet, I found this:
UNESCO is publishing the first-ever world map of shared aquifers to coincide with the submission to the General Assembly of the United Nations on 27 October of a draft Convention on Transboundary Aquifers. Almost 96% of the planet's freshwater resources are to be found in underground aquifers, most of which straddle national boundaries.

Despite its strategic importance, no global inventory of this resource had been compiled to date. Since 2000, UNESCO's International Hydrological Programme (IHP) has been participating in the establishment of a groundwater database. It is now presenting a detailed map of transboundary aquifers - available online - showing the delineations of aquifers that are shared by at least two countries. It also provides information about the quality of their water and rate of replenishment. So far, the inventory comprises 273 shared aquifers: 68 are on the American continent, 38 in Africa, 65 in eastern Europe, 90 in western Europe and 12 in Asia.
More information on World-wide Hydrogeological Mapping and Assessment Programme and the Internationally Shared Aquifer Resources Management. Aquadoc -- who's been around -- shares his thoughts on these maps.

After looking for an half-hour (UN spaghetti), I found the 2008 transboundary map [PDF]. Here are more maps, and the web application to look at stuff.

Bottom Line: We can't manage what we don't know. It's good to see that some organizations are looking at groundwater -- because we have no idea of what's going on in California.

Renewable Energy for Bloggers

This XKCD comic still makes me laugh:

Shift Happens



Bottom Line: Don't be afraid but do put things in perspective...

hattip to DW

29 October 2008

GIO: Sustainability

Question 16: What methods can be used to achieve water sustainability?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Poll Results -- Scarce Water

Hey! There's a new poll on the right! --->

Increasing water scarcity calls for...
Selection
Votes
no response 12%6
a cap on total population 8%4
higher water prices 52%26
shooting every other person 28%14
50 votes total



Despite the popularity of shooting people, higher prices won out (whew!)

Bottom Line: If water is scarce, raise prices. When prices are high, water (like BMWs) will not be scarce.

Georgia Deserts

American Rivers issued a report advocating efficiency to avoid spending $700 million on new reservoirs in Georgia. They recommend:
making repairs to aging water delivery systems that leak up to 6 billion gallons of water per day nationwide; replacing outdated fixtures and appliances with newer, more efficient models; metering all water users to better gauge water consumption; encouraging water-efficient landscaping; and setting consumer prices to reflect the real costs of providing clean water.
I LOVE that final point, and note how higher prices can reinforce all the other means of saving water. (Oh, and I both love and hate the "meter water" point -- you mean they were NOT metering water? Georgia, and many other places, are now realizing that "too cheap to meter" is a bad policy as far as water is concerned.)

Bottom Line: Don't forget to pay attention to the demand side of water! Higher prices not only "pay for themselves," but they are easy to implement.

hattip to PM

USACE in Iraq

USACE has engaged in deception and failure in Iraq.
the project would end up costing more than $10,000 per home. But even at that price — and even if additional financing can be found to connect the houses to the sewer lines — the plant may never operate.
Sure, they blame the Iraqis (who deserve blame, I'm sure), but we're in charge.

BTW, $1.5 billion of the $2.4 billion the US spent worldwide on aid projects went to Iraq. (Multi-lateral spending on water projects world-wide was $3.9 billion, with the World Bank coming in at $2.3 billion.) Out of the $900 million left over, USAID spent $200 million of its $260 million budget on infrastructure, with $50 million of that going to Sudan. (The other $540 million was spent via the Millennium Challenge Corporation.) The remaining $60 million went for "water management." Much of the US spending goes through organizations like USACE.

Bottom Line: Bureaucrats are not very good at getting things done, on time and on budget -- and they are worse at doing so in foreign countries.

28 October 2008

GIO: Sucessful Privatization

Question 15: What privatization models have worked?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Political Endorsements

The election is next Tuesday, and I -- like all good bloggers -- need to make my views clear [prior post on my politics].

Federal Votes
President: Barrack Obama -- because he's run an excellent campaign, he is a natural leader, and the Republicans have made numerous strategic (Palin) and tactical (negative ads) mistakes. John McCain should be ashamed of himself. Bob Barr (Libertarian) is seriously inferior to Ron Paul.

Congress (9th District): Barbara Lee -- the only member of congress to vote "No" on the Authorization for Use of Military Force Against Terrorists. I remember that vote.

California Assembly -- I've no idea.

California Propositions [info. Kevin Drum's opinions]
  1. High-speed rail: No -- The State doesn't need to fund this.
  2. Animal rights: YES -- The law solves a coordination problem -- all farmers will face higher costs, but they can pass them to consumers.
  3. Children’s hospitals: No -- Better management, not more money.
  4. Abortion for minors: No -- Forcing young girls to tell their parents about abortions increases the cost of abortion, which will lead to more unwanted babies (sorry Sarah!)
  5. Drug penalties: YES -- another step towards legalizing drugs.
  6. Crime prevention/penalties: No -- Better management, not more money.
  7. Alternative fuels: No -- The idea sounds good, but the opposition (not just power companies, but also EDF and UCS) indicates that the law is flawed in some way.
  8. Eliminate gay marriage: NO -- Keep your laws off my body!
  9. Crime victims: blank -- mangled ballot arguments...
  10. Alternative fuels: No -- Don't subsidize "winner" technologies -- tax environmentally harmful actions.
  11. District boundaries: YES -- End gerrymandering!
  12. Homes for vets: No -- Vets and Kids don't need more handouts.
Bottom Line: Go Vote! Feel your power -- and then make sure your representatives do their jobs!

If you don't vote, there could be consequences [pro-Obama but funny]:


Addendum: You can customize this video here.

Regulatory Choking

I was astonished to read this:
the California Public Utilities Commission turned down a Pacific Gas and Electric Co. application to buy power from a small pilot project to test wave buoy technology developed by Canadian company Finavera Renewables. The commission determined that the project isn't viable, that Finavera's bid doesn't compare to others in PG&E's renewable energy portfolio and that the contract price for the power isn't reasonable.
Are you freakin' kidding me? Since when has any bureaucracy been able to determine the viability of ANYTHING?

I know that CPUC is concerned that PG&E will pay "too much" for the power generated.* That fear can be addressed by capping the price PG&E pays/rate increases.

Denying PG&E -- perhaps the only company that can afford to buy the power -- the option of acting as purchaser is far worse.

Sammy at CPUC sent me the public decision [PDF] on the project. It says what I suspected:
PG&E wants to assist in accelerating the commercialization of this technology. The Commission supports PG&E’s efforts to commercialize new technologies; however, considering that this particular technology is in such an early stage, we find that approving this PPA at this time is not the best way to move this wave technology toward commercialization.

[snip]

PG&E argues that the contract price is reasonable because the project size is small and the technology is in a development stage... The Community Environmental Council argues that the Finavera PPA should be approved despite the relatively high cost because the project is small, and it may have a large impact on the North American wave power industry.

PG&E also argues that rejecting the PPA could negatively affect wave development in California, that ratepayers will not be harmed if the project is not viable, and that funding wave technology development through ERRP should not exclude private investment.

The Commission rejects these comments seeking reversal of the draft Resolution.
I agree with the protest comments: Even if per unit prices are "too high" the total cost is trivial compared to the demonstration value of the wave project.

Bottom Line: Want energy innovation? The CPUC says go elsewhere.

* The CPUC regulates prices of investor-owned utilities -- not municipal utilities.

Market Makers

A cowboy named Bud was overseeing his herd in a remote mountainous pasture in Montana when suddenly a brand-new BMW advanced out of a dust cloud towards him.

The driver, a young man in a Brioni suit, Gucci shoes, RayBan sunglasses and YSL tie, leans out the window and asks the cowboy, "If I tell you exactly how many cows and calves you have in your herd, Will you give me a calf?"

Bud looks at the man, obviously a yuppie, then looks at his peacefully grazing herd and calmly answers, "Sure, Why not?"

The yuppie parks his car, whips out his Dell notebook computer, connects it to his Cingular RAZOR V3 cell phone, and surfs to a NASA page on the Internet, where he calls up a GPS satellite to get an exact fix on his location which he then feeds to another NASA satellite that scans the area in an ultra-high-resolution photo.

The young man then opens the digital photo in Adobe Photoshop and exports it to an image processing facility in Hamburg, Germany. Within seconds, he receives an email on his Palm Pilot that the image has been processed and the data stored. He then accesses a MS-SQL database through an ODBC connected Excel spreadsheet with email on his Blackberry and, after a few minutes, receives a response.

Finally, he prints out a full-color, 150-page report on his hi-tech, miniaturized HP LaserJet printer and finally turns to the cowboy and says, "You have exactly 1,586 cows and calves."

"That's right. Well, I guess you can take one of my calves," says Bud. He watches the young man select one of the animals and looks on amused as the young man stuffs it into the trunk of his car.

Then the Bud says to the young man, "Hey, if I can tell you exactly what your business is, will you give me back my calf?"

The young man thinks about it for a second and then says, "Okay, why not?"

"You"re a Congressman for the U.S. Government", says Bud.

"Wow! That's correct," says the yuppie, "but how did you guess that?"

"No guessing required." answered the cowboy. "You showed up here even though nobody called you; you want to get paid for an answer I already knew, to a question I never asked. You tried to show me how much smarter than me you are; and you don't know a thing about cows... this is a herd of sheep.

Now give me back my dog.

via JWT, who adds "He could have been an Economist except for the clothes."

27 October 2008

GIO: Fixing the Westen US

Question 14: What is a realistic, comprehensive plan to deal with water problems in the western US?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Higher Prices, Lower Use

Global Water Intelligence runs an annual survey of international water/wastewater prices.

According to the 2007 survey [XLS], Ashgabat (Turkmenistan), Baghdad, Belfast, and Cork & Dublin provided both for free. At the high end, Stuttgart & Frankfurt, Glasgow, and Aarhus & Copenhagen all charged over $7 per cubic meter (1,000 liters). US prices ranged from a low of $0.58/m3 in Memphis, TN to a high of $3.91 in Richmond, VA.

Prices in the 2008 Report [PDF] are similar (Baghdad raised prices to $0.02/M3, and prices in Denmark rose about $8/m3), but the report also has use data.

Domestic use per capita per day ranges from 114 liters in Denmark, 151 l in Germany, and 139 l in the UK to over 600 l in the US and Australia.

Canadian use is the highest: 778 l/capita/day. I wonder if Ms. Barlow -- now that she is going to be the UN's global water czarina -- understands that the rest of the world, lacking her countries' endowment of water, cannot afford her "free water for all" notions. She's got six honorary PhDs, so I hope so -- for the sake of the poor.

China and India use 95 and 139 l at prices of $0.39 and $0.12/m3, respectively.

The US has the highest "extraction" (m3/head/year) -- 1,730 m3.

Among 14 "developed" countries, the correlation between price and use is -0.62. For you non-statisticians, that means that higher prices are fairly strongly associated with lower use (or vice-versa, for you fans of average-cost pricing).

Note that higher European prices do not only result in lower use and "adequate" infrastructure upkeep -- they also provide surplus funds that are directed to other social spending.

Bottom Line: Higher prices reduce water use.

hattip to an anonymous reader for the awesome data!

International Water

My favorite economic reporter, Tom Keene, interviews Colin Chartres, director general the International Water Management Institute in this podcast [mp3]. Chartres discusses global water shortages, irrigation policies, and possible solutions to water-supply problems.

Unfortunately, he spends far more time on technical solutions to water problems (e.g., "more crop per drop") and less time on pricing problems.* Chartres has a PhD in soil sciences.

It's a good podcast, and I have two comments:
  1. The environment is suffering as shortages worsen. I was talking to someone the other day about the impact of drought on the Colorado River. One major impact is that flows into Mexico (1.5 MAF by treaty with the US) no longer rise above 1.5 MAF. They used to be higher, when there was less stress on the system. (This story discusses the $170 million "reservoir" that will trap "excess" water before it gets "lost" to Mexico.)

    Further, the quality of water crossing the border is falling -- more salt, agricultural pollution and urban toxins. The result is that the Colorado Delta is toxifying on top of drying out. That's terribly sad when it used to be one of the best wetlands in western North America [Prior posts].

  2. Around 14 minutes into the interview, Chartres says (paraphrasing) that physical water scarcity occurs in developed countries where most of the available water has been used up and there's no more, and economic water scarcity... occurs in developing countries, where there is water but inadequate investment in infrastructure means that it cannot be captured and used.

    While both of these definitions make sense in a way, I disagree with the characterization of "economic scarcity." To me, water that is too cheap wil be scarce because demand exceeds supply, and such "scarcity" exists in ALL countries. That's why I say there's no water shortage -- there's only mispriced water.
Bottom Line: Two of them: Water issues need to be addressed at watershed -- not political -- resolution. Proper water pricing is critical to proper water management.

* He does say that water is too cheap -- at $1/1,000 liters -- and that desalination -- at $1-2/1,000 liters -- is too expensive for agriculture.
Addendum: Mr. Chartres had this reply to the post above:
My view is that there are two clear issues to deal with in water: increasing efficiency and productivity and secondly, improving governance. The latter includes a raft of issues associated with pricing that start with availability, allocation policies etc.

The economic scarcity that I referred to relates to the lack of investment in water supply for all purposes predominantly but not exclusively in sub-Saharan Africa.

I do agree with you that water needs to be priced appropriately to minimise wasteful and inefficient uses and to reflect true costs of supply. Personally, I believe that in the west, water pricing and water markets and water trading may go a long way to ensure water goes to highest value uses. Experience in Australia means that such practices can also be beneficial to the environment. However in the developing world we do need to ensure provuision of basic allocations for domestic purposes to ensure that the poor are not disadvantaged further
Readers will of course know that I advocate that everyone should get some water for free but pay for additional water. (I don't bother to discriminate between rich or poor, since "some for free" can be seen as a human right.)

Running Dry -- The Review

I just saw the one-hour documentary, The American Southwest: Are We Running Dry [reviews at Aquadoc and the LA Times].

The film has little new to readers of this blog, but it does a good job of reviewing the basics (water and people in different places, unsustainable groundwater withdrawals, adverse impacts on the environment, we need to conserve, etc.) with a host of important political, bureaucratic and policy people.

The one thing they fail to mention is how "too cheap" water has lead to "too much" demand.* That's perhaps correct in a film directed at the average person whose only option is to turn off the faucet when brushing her teeth, but it misses the bigger point that many of our perverse outcomes are the result of too cheap water.

I hope that Jim Thebaut makes a 30 second PSA for politicians called "Raise Prices!"

Bottom Line: We are plenty aware that there's a "shortage" of water in the Southwest. Now, can we change the terrible policies that have got us into this mess?

* The press kit notes that Senator Paul Simon advocated charging the "full cost of delivery" for water, but that's even a far cry from charging the "full cost of scarcity."

26 October 2008

Oil in Iraq

VA asks "Would oil in Iraq qualify as aguanomics?"

I am going to interpret VA's question from an economic and political perspective.

On the economic side, let's ignore oil -- its price is set in international markets -- and look at gas.

Is Iraqi gas (petrol) priced in a way that will reflect true costs and/or balance supply and demand? No -- gas is subsidized to a price of $1.36/gallon (up from 5 cents/gallon in 2004!). That price change is in the right direction, but gas will be misallocated while prices are "too cheap". (Interestingly, the first link points out that US troops pay $3.36/gallon for gas.)

On the political side, we get to the rights over oil. As many will know, control over oil drilling and oil revenue is VERY political, and most notable in the Kurdish part of the country. A neutral oil regime would allocate drilling rights to the highest bidder and oil royalties to citizens on a per-capita basis -- either immediately (as in Alaska) or in trust (as in Norway).

From what I understand, neither drilling not revenues are allocated in such a neutral way -- read more from the Congressional Research Service [PDF] and Revenue Watch Institute, and political fights over the spoils have driven much of the "ethnic" and "sectoral" fighting.

Since the 2003 US invasion, about 95,000 Iraqi people have died in violence.

Bottom Line: Iraq needs more aguanomics

GIO: Information Diffusion

Question 13: What is the best way to share technologies and learning?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Prices Anyone?

Southern California is in a drought that's set to get worse before it gets better, yet water managers continue to avoid the P word, as in...

Prices, higher Prices.

That's a pity, since higher prices will complement other policies (conservation, desalination, recycling, and fixing the Delta).

Bottom Line: Price is not the ONLY answer, but it's got to be part of the solution.

hattip to DW

Rainwater Harvesting Update

This article highlights the stupidity of current laws and water rights:
Conservation advocates, including many utilities, have embraced the idea of using water collected from roofs, and stored in cisterns or rain barrels, to reduce reliance on dwindling surface water or groundwater supplies. Yet in Utah, Colorado and Washington, it's illegal to do so unless you go through the difficult -- and often impossible -- process of gaining a state water right.

[snip]

Kris Holstrom, who runs an organic farm outside Telluride, Colo... asked the Colorado Division of Water Resources for a permit to collect runoff from building roofs -- and was denied.

"They felt that the water belonged to someone else once it hit my roof," she says. "They claimed that the water was tributary to the San Miguel River" -- which runs some three miles from her place and is fully allocated to other users downstream.
Shades of Cochabamba, eh?

Bottom Line: Although I support water rights, I do not support stupid water laws. Rainwater used in situ reduces demand for piped supply and all the costs (to people, society and the environment) of delivering that supply.

hattip to RI

25 October 2008

GIO: Food-Energy-Water

Question 12: How do we understand the food-energy-water nexus? (Water is used to produce energy, energy to produce fresh water, both are used to produce food, and all three are used to produce biofuels.)

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Housekeeping...

Has anyone ever had trouble finding this blog at http://www.aguanomics.com/?

http://aguanomics.com/ -- no www -- works.

The www URL doesn't work because of a configuration error, but fixing it will screw up the RSS feed, which may be a bigger problem.

Please leave comments/advice.

Depression and the Environment

Many sites have commented that the economic turmoil in the US (and world) is likely to weaken efforts to tackle climate change, but there are other effects...

Env-Econ points out that an economic slowdown will reduce carbon emissions, thus reducing pressure on the environment and climate.

Grist points out that "action" on the environment will happen when something dramatic occurs -- just as the Wall Street meltdown led to $700 billion in spending (and a lot of pork), and Katrina led to abundant levee repairs. (IMO, neither of these efforts will be or have been effective.)

I was speaking to a climate scientist recently. She said that action on climate change will probably not happen until there's a big disaster. I hope that one comes alone and soon, rather than with a bunch of other disasters.

Bottom Line: Politicians run on two-year cycles, but climate change runs on 100+ year cycles. Policy needs to bridge that gap.

Federal Inflation

On March 24, 1928, Mr. Leatherwood (R - Utah) of the Committee on Irrigation and Reclamation, submitted the following opinion on HR 5773, The Boulder Canyon Project Act:
In my minority report of last year on this bill I emphasized the fact that it is a scheme to secure construction by the Federal Government of a power project under the guise of a flood control and irrigation measure... A comparatively simple engineering job of flood control and river regulation, which should not cost not more than ten to fifteen million dollars, is here made the excuse for an unprecedented engineering experiment costing not less than $125,000,000 and risking at least 200 million more.

Under this bill the federal government is not to stop when it has finished the job of river regulation and flood control, but is to provide a hydroelectric power supply adequate for more than half the present population of California, a domestic water supply for 10,000,000 hoped-for but nonexistent inhabitants of southern California cities, and irrigation canals for hundreds of thousands of acres of new alfalfa, cotton and corn land in the United States and the water for hundreds of thousands of additional acres in Mexico. Political pressure, and not genuine necessity; buncombe, spread by propaganda, and not facts; log rolling trades, but not merit -- all employed over a period of six years -- have placed the bill on the calendars of the Congress.
HR 5773 was approved on December 21, 1928, and the Boulder Canyon Dam (renamed Hoover Dam) went on to become the most-successful dam ever built by the Federal Government.

Or was it?

Mr. Leatherwood makes two good points:
  1. Why should the Federal Government deliver cheap hydropower and water to one region?
  2. Why should a project be built for "nonexistent inhabitants"?
Ironically, the Hoover Dam was a little too successful: Southern California's population boom (and sprawl) was fueled by cheap power (from Hoover Dam) and water (from the Colorado River Aqueduct) from the Boulder Canyon Project.*

At a minimum, Southern California should have paid for a project that was to its benefit. At a maximum, the project would not have been built without federal subsidies -- and southern California would have been a very different place today.

As you all will know, Mr. Leatherman was perhaps the last of his generation -- a congressman in a small federal government -- and we are perhaps seeing his nightmare today: A republican-led government that's larger (and more invasive) than any US Government that ever existed. Perhaps he was lucky to pass away in 1929, at only 56 years old.

Bottom Line: Federal subsidies were a big driver of population growth in Southern California.

* In Chapter 3 of my dissertation (and this newspaper article), I describe how MWDSC had to subsidize the sale of "too much" water from the Colorado River between 1941 and 1955 (and perhaps even now) -- artificially lowering the cost of living in a desert. Today, "too many" people in that desert continue to expect cheap water.

24 October 2008

GIO: Supply Chain Competition

Question 11: What benefits might society accrue if the water supply chain was opened to competition?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Let Them Drink Bottled Water!

The Competitive Enterprise Institute has set up a website called Enjoy Bottled Water!. It's devoted to the defense of the right to drink bottled water, free from government regulation. You can sign a petition supporting that idea, and I did.

The folks over at Alternet are apoplectic that such a "shill" website exists. They see conspiracy, but I don't. I left this comment:
I know the CEI folks. They are ideologically committed to free markets and stopping government intervention. They are donor supported (and WILL take donations from bottled water companies), but that doesn't mean they are not running the site as part of their main mission.

Your conspiracies are unfounded, IMO. They are just as ideological as the anti-bottled water people.
Bottom Line: Let people drink water from the tap or the bottle. Eliminating either source reduces competition and thus the incentive for the remaining source to improve its product.

Public Trust Toss-up

I got this from Mr Cruzing:

"There is a very thought-provoking piece in this month's California Water Law & Policy Reporter entitled "Twenty-Five Years Later, What If The Public Trust Requires That We Kill Fish?" [PDF]. In it, the author explores the idea that the public trust, as defined by the California Supreme Court in the seminal National Audubon case, is informed critically (and flexibly) by "the public interest". As such, the Endangered Species Act, as recently applied by Judge Wanger in the delta smelt case to limit the operation of the Delta pumps to the direct detriment of 23 million Californians, may eventually face a day of reckoning.

It's an interesting thought. Heretofore, the public trust doctrine has been thought of as a holy grail for environmentalists: it protects the environment, at such a supreme level that even the takings clause cannot reach it. And lately, there has been much interest in an extension of the public trust doctrine to fix the Delta, and possibly re-allocate some of California's water resources - see, e.g., the Delta Vision report.

But in the context explored in this article, the public trust cuts the other way. And some have begun to argue that there is a public trust value in other public interests served by California water - for example, a locally-grown food supply. So now it gets interesting, and it does seem self-evident that some of the other public interests protected by the public trust can't be completely excluded by service of environmental interests - for example, water for people to consume, water for people to grow their food supply, and so forth. The posture of the Wanger litigation in the Delta certainly begs that question.

The argument hinges principally on the idea that the ESA must yield to the public trust, where there is a conflict. Some believe that the ESA's commands trump any notion of human costs, and there is support for that in the US Supreme Court's holding in TVA v. Hill. However, there is also a longstanding policy of the federal government's deference to state law in allocation of water, except where explicitly otherwise, and the federal government has not made explicit in the ESA that it is intended to displace the operation of state-law concepts in the allocation of water.

A related concept in California water law, also subject to federal deference, is the idea that all uses of water are constrained by the requirement of "reasonableness". That's found in Article X, section 2 of the California Constitution. Is the use of water to protect delta smelt - required by the ESA, as Judge Wanger has held - "reasonable" insofar as it goes to destroy other uses?

Expect the public trust doctrine, and the reasonable use doctrine, to be litigated in an unexpected direction as California's water picture gets worse and worse!"

[DZ's] Bottom Line: It's hard to predict what's in the public interest, but those who profess to defend it shouldn't expect that it will always match their individual opinions.

Geo-Engineering Update

Geo-engineering is the idea that we can change climate by "engineering" giant space-reflectors, etc., and I oppose it.

Carbon Capture and Sequestration (CCS) is a way of grabbing and burying carbon so that total CO2 doesn't rise when we burn, say, coal. The US GAO -- an excellent organization AND part of government (!) -- has issued an overview that points out the numerous problems with CCS.

I realize that CCS is just another form of geo-engineering -- and similarly doomed to fail fall short of promise.

Bottom Line: The way to stop global warming is to stop doing the stuff causing global warming. Damn.

23 October 2008

GIO: Energy and Treatment

Question 10: How do we make water treatment more energy efficient?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

The Political Economy of Cap and Trade

I just did a presentation [PDF] on carbon cap and trade. In it, I spoke in favor of carbon taxes and against cap and trade (for fear of the political manipulations that are all-too-likely).*

In particular, I highlighted the importance of taxing carbon as close to the source as possible, the necessity of rebating ALL tax revenue (or auction revenue, should C&T be enacted) to citizens, and the importance of allowing price signals (HIGHER PRICES) to work.

I did the presentation at the annual meeting of the National Association of [Investor-Owned] Water Companies [site]. NAWC is worried that carbon taxes/C&T will increase the cost of delivering water -- as it should -- and that revenue from taxes/C&T will be rebated to "favored" industries (e.g., municipally-owned water companies) -- as it should NOT.

When preparing the talk, I was surprised to learn that the EPA's SO2 auctions (the famously-successful ones that have been running since 1995) account for less than 3% of total SO2 permit activity. 97% of permits are given to industry -- and then traded.

Bottom Line: We should tax carbon like we tax gasoline: Taxes are simple, transparent and hard to manipulate. We should then rebate the the $billions (trillions?) in tax revenue to citizens, not "favored" industries.

* For more debate, see this

Water, Faith and War

I thought I'd seen it all, but then I got this:
Date: Wed, 22 Oct 2008 21:39:10 -0700
From: "winston lorenzy"
To: dzetland@gmail.com
Subject: Orderring bottle of water

Hello , I'm Rev, Mark Smith from church of Christ. our Church is having an 50th anniversary and in a missing offering to to the poor,and the orphanage home i would like to order for 200 bottle of water from your company and i will like you to give me the size and cost price each bottles of water and email me with it and i will like to know is you have them in stock and i am will be able to get them...........

And i will like to know which sizes do you have in stock and also i am in Bronx , Ny, that where i am but i am ordering them to one of my brunch in (Accra )Ghana and i would like you to give me the total cost of the 200 bottle and let me know the total cost of that and the type of payment you take for the order and that i have contact a shipping company and they will be in to your end as soon the have been place and paid so let me know when it will be ready and i will need them this week , i hope hear from you soon......stay blessed ........

Thank you ,

Rev, Mark Smith
What's the angle on this? Is it a scam, or does the Reverend really want to buy water from me (in CA) to send to Ghana?

Addendum: Google delivers -- the Rev. Smith is apparently a REAL person and HAS blessed bottled water -- to make it holy. It's then sold online, and sinners beware:
If you are a sinner or evil in nature, this product may cause burning, intense heat, sweating, skin irritations, rashes, itchiness, vomiting, bloodshot and watery eyes, pale skin color and oral irritations.
(...and I thought it was just typical, contaminated bottled water.)

BTW, I just saw Religulous, Bill Maher's attack on people's certainty that their faith is right -- and even more of an attack on those who would take advantage of that faith: The comparison of preachers and pimps is awesome. It's VERY funny and VERY sad.

I am all for people having faith (I'm agnostic), but I am very much opposed to those who think their faith gives them the RIGHT to tell me that I am wrong and/or do violence to me. The montage of religious fanatics and violence at the end of the film -- including GW Bush's claims that he is right to invade countries because of his god and the 9/11 attacks -- is truly revolting. See it.

Bottom Line: There's some weird stuff going on in this world, and much of it is inflicted by men claiming to have divine support.

WHO is Westlands?

A concerned reader sent me this:
I think the public would be well served if you folks in academia delved into the ownership patterns in the Westlands Water District. While Westlands claims (it has never published a list), variously, 600 growers, or 700 growers, the reality is many of those 700 are members of the same family or related through marriages. An example is tomato giant Jack Woolf, with six children and 24 grandchildren, all claiming to be individual farmers but all participating in one gigantic 25,000 acre operation. It has been my contention for more than two decades that there are only three or four dozen families who control the vast bulk of land in the 617,000 acres in the district, similar to the oligarchical family ownership patterns in South America.

When I was writing about Kesterson issues nearly a quarter of a century ago, there were 240 "farmers" in the Westlands and 40 of them controlled over half the land. When the 49,000 acres in Westlands that drained their toxic waste waters into Kesterson were threatened with shutdown and closure, in 1985, the Assembly Office of Research looked into who owned what in those 49,000 acres. Westlands attempted to portray them as small family farmers (wearing overalls no doubt) but the Assembly study revealed, in fact, there were only a handful of millionaires, including the Wolfsen Family (which later received $40 million in an Interior sellout over a drainage-damage lawsuit) and the family of former California Secretary of State and U.S. Senate candidateBill Jones (who is John McCain's California campaign manager and, if McCain is elected, will probably become the next Secretary of Interior and make sure that Westlands gets the sweetest water delivery contract in American history).

How about you folks in academia stepping up to the plate (perhaps with some aid from grad students) and find out who owns what in Westlands?
According to Westland's website, "The District serves approximately 600 family-owned farms that average 900 acres in size." Although "600 family-owned farms" is NOT the same as "farms owned by 600 families," WWD's 2005-6 annual report says that WWD has "700 family farmers."

I looked at the 2000-1 and 2005-6 annual reports (none more recent) and found that 5 of 9 directors were the same in both years. Although it's well-known that water organizations tend to be controlled by the same people over long periods of time, I suggest that these folks probably have more power and knowledge than most.

So, start with Frank Coelho, Jr., Donald Devine, Daniel Errotabere, Kendall Gardner, and Ted Sheely. (Coelho, Jr., Devine and Shelly have since been reelected for additional 4-year terms. That means at least three consecutive terms.) Note that "Each landowner in the District is allowed one vote for each dollar's worth of land to which he/she holds title." According to Wikipedia, "11% of the owners owned 84% of the land in 1968."

Note that these names do not match those of the founders, i.e., "among the prime movers in the organizational effort were Jack O'Neill, Russell Giffen, Frank Diener, Harry Baker and Louis Robinson. Following an election by the landowners involved, the Board of Supervisors declared Westlands Water District formed on September 8, 1952." OTOH, I've seen organizations "led" by people who were not in charge, e.g., MWDSC.

I looked for academic research and found (in Brozovic et al. [PDF]) that Westlands has a three-tier structure: 800 farms are organized into 350 "trading networks" that contain 1 to 29 farms in each. Each of these trading networks has "internal trades" that are NOT arms-length but reflect, instead, movement of water from one internal accounting entity to another.

But how many "families" (a la mafia) control these trading networks? It's hard to find evidence -- academic or civilian -- that shows how individuals might control multiple trading networks. If the notions mentioned above are true, 10-20 families control those 350 trading networks.

If you have information on the names, controlling interests, corporate structure or other levers of control at Westlands, comment here, email me, or comment anonymously at whistle-safe.org -- a website I founded.

Bottom Line: It's all-too-common for big, powerful companies to pose as the "little guy" to get help meant to help the little guy against the big and powerful. Stop favoring particular industries, companies and locations and make policy that helps PEOPLE.

22 October 2008

GIO: Priorities!

Question 9: How should we prioritize policies, technologies, and business models with respect to water?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Poll Results -- Water for the Poor

Hey! There's a new poll on the right ---->

Can the Poor afford to pay for water?
Selection
Votes
Yes 62%24
No 38%15
39 votes total
These results are the opposite of those at the Economist, where 59% of voters disagreed with "Water, as a scarce resource, should be properly market priced." Many of these people said that "proper" pricing would exclude the poor -- leading to premature death.

IMO, the Poor already pay over the odds for irregular (but "free") water supply, so they can afford to pay for quality supply. OTOH, I've allowed for the possibility that they cannot with my "some free, pay for more" structure of conservation pricing [another two-handed-economist!].

Bottom Line: Readers of this blog are more clever -- on average -- than readers of the Economist. Nice.

Food!

Here are a bunch of updates/opinions on food:

In the first of three IFPRI essays (these are the guys that know about food),
Joachim von Braun, director-general of IFPRI, discusses high priority policy responses including: expanding emergency responses and humanitarian aid; freezing biofuel production; eradicating export bans and investing in rural infrastructure and agricultural research.
Freezing, as in kill ethanol! The other two essays discuss food issues in the developing world.

On a related matter, two essayists argue (here and here) in favor of GMO foods, e.g.,
Heated debate about the food crisis must not detract from an evidence-based assessment of biotechnology's potential for improving agricultural productivity in developing countries. The benefits of GM crops must not be overstated. But neither can poor arguments be allowed to obscure strong arguments for a good cause.
I wonder if these guys work for Monsanto [just kidding!].

Bottom Line: There is no one-size-fits-all way to grow food. Some people need more to survive; some people need less to not die of obesity; and some people just play with theirs. Policies should be similarly nuanced.

CAFO Crap

Grist reports on a GAO critique of the EPA. It seems that the EPA is being lax in its oversight/regulation of Confined Animal Feeding Operations (CAFOs). What's at risk? Groundwater polluted with animal shit. (Not what you want to be drinking, right?)

The Sierra Club has something to say about CAFOs:
America's drinking water, rivers and lakes are at risk from giant, corporate-owned factory farms. Animal feeding operations, many of which confine thousands of animals in facilities, produce staggering amounts of animal waste -- 500 million tons per year. Too often, this waste leaks into our rivers and streams, fouling our air, contaminating our drinking water and spreading disease. According to the Environmental Protection Agency, hog, chicken and cattle waste has polluted 35,000 miles of rivers in 22 states and contaminated groundwater in 17 states.
California, home of the "happy cow," has been the Nation's #1 dairy state (ahead of Wisconsin) since 1993. Of course, California's 1.5 million dairy cows produce a lot of shit. When I asked the local environmental regulator about "effluent plumes" in Tulare (#1 county with an average of 1,200 cows per herd, each using 75 gallons/water/day [PDF].), she fell silent (or was it Kern? Fresno? No matter -- south Valley). It seems that "economic impact" is more important that water quality.

Bottom Line: Cheap meat (and dairy) comes at a cost to YOUR environment. Plan accordingly.

21 October 2008

GIO: Land Use and Water Quality

Question 8: How can we change land use to improve water quality?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Prepaid Water

This post reports on the controversy and opposition to prepaid water meters in the developing world. Without commenting on the irony of people in the developed world complaining about water policies in the developing world (did you get that comment?), I'll agree that people who use "free" (and dirty) water rather than pay for clean water end up with lots of problems, but I'll add that compromise solutions are possible -- like my version of "some" water for free; pay for extra.

Speaking of meters, Treehugger has a great post on different types of meters, adding that "what gets measured, gets managed" -- a phrase from Mr. Deming that I borrowed for one of my freakonomics posts.

Bottom Line: If something is free (or unmetered), we don't pay attention to how much of it we use. Put a meter on it (and charge for it), if you want people to conserve.

Trading Grass for Carrots

A reader sent me this tidbit:
I am looking at property trends in the Antelope Valley. For farmers, I'd say it looks grim. One of the by-products of the impending changes in canal water deliveries is the land boomlet in the Cuyama Valley. The carrot companies are paying a major premium to purchase land that they have rented for decades and buy-out the remaining alfalfa farmers. Controlling ground water is the driving force.
Put differently, scarcer water is being redistributed from low value (alfalfa) to high value (carrots) uses via land purchases.

I am not sure what "impending changes in canal water deliveries" means, but if it means that water deliveries are going to fall, then property turnover probably reflects the desire of those who are going to lose water (carrot farmers) to get water from those who will still have it (alfalfa farmers).

Bottom Line: Farmers get it: As water supplies grow more scarce (expensive), they change their behavior.

Embedded Water

Tara Garnett (taragarnett@blueyonder.co.uk) of the Centre for Environmental Strategy at the University of Surrey says:

Defra [UK's Department for Environment, Food and Rural Affairs] is interested in the concept of embedded water (EW) in food and non-food products and are considering commissioning case study work to measure the water footprint/embedded water of various commodities. To support this work Defra need to have a clear understanding of current methods and tools used to quantify water use across the supply chain.

I have agreed to undertake some general scoping work for them to gain a greater sense of:
  1. Who is working on waterfootprinting (worldwide) – either as a practitioner or as an analyst of methods (plus contact details);
  2. Which methodologies are being used; and
  3. What the strengths, weaknesses and limitations are of these approaches.
As regards the methodologies, the aim is better to understand:
  • The relative strengths/ weaknesses of methods – e.g. ease of use, scope of use in terms of products, computational requirements, cost
  • The ability of methods to account for different sources of water (grey, green, blue)
  • The extent to which different methods are able to assess other environmental/economic/social impacts within the production locality so as to contextualise the water footprint measurement
  • Whether existing methods and tools are effective or whether refinements are required or new methods/tools needed for both policy and product supply chain use.
If anyone feels they have knowledge to contribute in this area, I'd be most grateful if you would get back to me. I'm keen to hear from:
  1. People/organisations who are undertaking water footprinting: please let me know what analysis you have undertaken so far, who you have done work for, the measurement tool/method you are using and your rationale for so doing.
  2. People who know of water footprinting studies and analyses of water footprinting methods and can send references too (together, with, ideally, any comments / views they might have).
I'd be very grateful if you would get back to me by the 31 October.

Bottom Line: Although it sounds like Tara wants others to write the report for her, Some of you may want to pass along information that is not in circulation in the UK. [She's just trying to get as much information in one spot as possible.] Feel free to post it here as a comment.

20 October 2008

GIO: The Water Cycle

Question 7: What technologies can enhance the natural water cycle?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

My Advice to the President

Peter Gleick offers the following advice to the next president:
  1. Develop a comprehensive national water policy, with a new bipartisan Water Commission for the 21st Century;
  2. Spotlight national security issues related to water;
  3. Expand the role of the U.S. in addressing global water problems; and
  4. Integrate climate change into all federal water planning and activity.
Frankly, I see no purpose to these recommendations. Although the federal government has a lot of power and water crosses many state boundaries, most water issues should be solved at the watershed level. Further, I think that Gleick's ideas are more likely to complicate than "solve" water problems, i.e.,
  1. A water commission will try to impose homogeneous "solutions" on heterogeneous problems. Water institutions vary all over the place -- for good reasons.
  2. National security and water? Does Gleick mean the Canadians? I'd worry about selling guns to nasty dictators before I worried about the national security implications of water policy.
  3. Global water issues? What global water issues? Water -- unlike carbon dioxide -- is a local issue.
  4. Good idea! Perhaps the best way to integrate climate change into federal policies is to implement a carbon tax [prior posts]. Unfortunately, a carbon tax has nothing (directly) to do with water.
I appreciate Gleick's desire to call attention to water issues at the national level, but these recommendations are not relevant (nor perhaps is a national water policy).

If I had to offer recommendations, I'd say this:
  1. Allocate Colorado flows among states based on shares (not volumes) defined in the 1922 Compact.
  2. Grant property rights to all Reclamation contractors and let them trade/sell those rights.
  3. Require that the US Army Corps of Engineers consider political and economic factors in its projects.
  4. End federal subsidies for flood insurance, levee maintenance, water infrastructure, etc.
Can I be head of the Department of Water now? My first act will be to end/reverse federal involvement in water (10th Amendment!); my second will be to abolish the Department of Water.

Bottom Line: Most water issues are local. They only get federal (national) when the feds interfere, and such interventions are rarely beneficial.

Tail End of the Deal

Wyland, the artist who designed California's "Whale" license plate, is now -- after more than a decade of allowing royalty-free use -- looking for 20% royalties.
Since 1997, when the plates first hit the road, their sales have gone swimmingly, with more than 175,000 sold. They have raised $43.1 million for the coastal commission, the state Coastal Conservancy and the Resources Agency, funding programs like Adopt-a-Beach, the annual Coastal Cleanup Day and grants to schools to teach children about marine science.
Wyland, somewhat incredibly, claims that the State should have expected to pay royalties: "They said they wanted to use one of my images. I said OK," Wyland said. "To say that a guy like me would say they could have my artwork in perpetuity without a contract and with no royalties, does that smell funny? It's an artist's rights issue." Artists' rights, fine, but waiting over ten years to claim them smells pretty funny to me.

The State will not pay royalties. Instead, they are sponsoring a contest for a new (presumably royalty-free) design.

Bottom Line: 20% percent of $40 million is a lot of money, but Wyland got 175,000 cars worth of "free" publicity. Now he's getting lots of free, negative publicity.

Dry Commands

Last month, I mentioned that China's government has diverted water from those who "own" it to those who "deserve" it, i.e., from poor Heibei to rich Beijing. The Economist has an update:
The extent of Beijing’s predicament is not in doubt. Xinhua, the official news agency, recently said the capital’s water supply was “set to reach crisis point” in 2010. Probe International, a Canadian environmental group, estimated in a report in June that with Beijing’s reservoirs down to one-tenth of their capacity, two-thirds of Beijing’s water supply was now being drawn from underground. Ms Dai says the water table is dropping by a metre a year, threatening “geological disaster”.

Beijing has been trying to reduce demand by increasing water tariffs, which are far too low to cover costs. Xinhua reported that the city government was considering a plan to charge residents two to five times more for water if they exceed a monthly quota. Boosting prices might also encourage recycling. Probe International said Beijing’s industries were now recycling 15% of their water consumption, compared with 85% in developed countries.
California reservoirs, by contrast, are at about 50 percent of capacity. Glad to see someone mentioning prices!

Bottom Line: Replace command and control with prices, and keep those thousand flowers alive!

19 October 2008

GIO: Long Distance Transport

Question 6: What are some options for long distance transportation of water?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

What Part of Gone Don't You Get?

Like addicts, they keep coming back for more...

Imperial Irrigation District -- the agricultural entity that controls 70 percent of California's water from the Colorado River -- has a "supply-demand imbalance" (SDI), i.e., they are using more water than they have [prior post].

I was going to try to make a joke about why the SDI is not IID's fault, but I can't. SDI is the natural result of charging too little for water: IID farmers pay about $17/AF for water that costs 10-50 times more in other parts of the State.

Anyway, farmers were relieved to hear that they would get 5.3AF/acre (that's 430,000 acres covered five feet deep, folks*). But that's all they are going to get, right? Not quite:
One of the issues was whether farmers would have access to water if they use all of their allotment. The changes would eliminate what was called a “supply of last resort” that farmers could get water from if they miscalculated their need.

[snip]

Board President John Pierre Menvielle said the IID was not going to cut farmers off, if they need water.
If they need the water. Classic.

Bottom Line: IID continues to ignore basic economics. Its water is too cheap, its rationing is inefficient (giving the same to everyone instead of using auctions, trades, etc.), and its penalties for waste are non-existent. The case for seizing IID's water (lack of "beneficial use") grows stronger.

* 5.3AF/acre * 430,000 irrigated acres (2005) does NOT equal IID's 3.1MAF entitlement, but those numbers -- from different sources -- give you an idea of scale.

What's Fair?

In response to this post on Budget Based Water Rates (where I claim that water budgets are based on average water use, i.e., go over the average for your "group," and you pay penalty rates), Tom Ash wrote me a few emails, which I excerpt here:
I was at Irvine Ranch Water District [IRWD] in 1991 when we designed the water budget rate structure. An individual customer is not compared to a group or a generalized allocation/budget. Each individual customer is allocated water based on their specific situation (number of residents, size of landscape area). So, there is no comparison to a standardized allocation or "average property". Each customer is compared to the individualized site specific allocation based on their characteristics. This is considered much more equitable than comparing all customers in a group to a single standard. It is partly what makes the IRWD rate structure so accepted by customers and so successful.

[snip]

The residential customer group has an allocation equation. That equation establishes a per capita use goal or standard of use per day per person. The second part of the equation includes the size of landscape and daily ET. It also establishes an efficiency standard, say 70% of the local ET allowed for the irrigation needs (this is the State of Calif. Legislation standard). With these 2 elements of the allocation structure, individual allocations are calculated per home. Those allocations change as the weather changes as real time ET is used and downloaded into the billing system each day.

This system does not compare one customer to another as each customer has their own set of circumstances. Using high efficiency standards and an individualized approach we were able to create equity and high customer satisfaction levels. With a generalized allocation or budget we would have underallocated some and overallocated others. This would have made for (1) less conservation achieved and (2) political/public relations problems across customers being fit into a single allocation box. The generalized allocation is the method most agencies use because they see it as easiest. Those same agencies have seen customer dis-satisfaction as the result.

If a customer uses more water than their individualized allocation, they certainly pay higher prices. However, one customer can use more than another and not be penalized if their situation is different (say more residents and/or larger landscape area). Over water use, not high water use, triggers the penalty costs.

[snip]

Sometimes this argument is one of semantics. I think most would agree that wasted water should be expensive water. But water that is needed for what people already have (business, family size, outside water need) should be priced low. I hope this is clear of what the IRWD system does. It achieved significant savings and very high customer satisfaction (over 90%). The rate structure also generated "excess" revenue that was used exclusively for conservation programs. It created a scenario where only water wasters paid for conservation. This also made sense to end users.
Although I agree with Tom that IRWD's system is "fair" in requiring that people make the same reduction in their physical "needs," I do not agree that the budget should be based on lawn size or business consumption. (Golf courses in the desert should pay a heavy charge if they use a lot of water.) As I said in my original post, budgets should be based on the number of people in the house.

OTOH, I see Tom's point on customer acceptance -- by grandfathering in wasteful practices, IRWD made it easier for wasters (huge lawns) to cut back slowly, without getting hit by a massive "conservation" price increase.

Perhaps the best case would begin with budget based rates and then (over 5-10 years) move to human-based rates.

Bottom Line: It doesn't matter how good your rate structure is if it's not adopted.

18 October 2008

GIO: Empathy

Question 5: How do we understand how someone else feels about water?

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

Bong Water

The Drug warriors are now saying that marijuana is destroying national parks:*
“Think about Sequoia,” Wanek said. “That’s 159 sites that we know of where there has been ground-clearing, and pesticides and herbicides applied. The impact goes well beyond the acreage planted. They create huge networks of trail systems and the chemicals that get into watersheds are potentially very far reaching — all the way to drinking water for the downstream communities.
Unfortunately, the trend (growing pot on park land) has nothing to do with growers desire to destroy ecosystems and everything to do with marijuana being illegal. It's not like people are going to risk land-forfeit by growing on their land.

Bottom Line: Legalize it -- and the water will run pure.

* Oh, and I love the rhetoric of "Mexican drug cartels" -- I bet a month's salary that these ops are being run by gringos.

Committee Thinking

The Delta Vision Task Force [DVTF] has released its Fifth Staff Draft Strategic Plan, which -- when implemented -- is meant to "fix" the Delta. How did they design the plan?
Both the Task Force’s vision for the Delta and the following strategic plan are based on one co-equal goal: Restore the Delta ecosystem and create a more reliable water supply for California.

It is a co-equal goal because one can’t be achieved without the other.
Now perhaps you are wondering what I am wondering -- how do you get ONE co-equal goal from TWO conflicting components? I have no idea, but I am reminded that the "camel is a horse designed by committee."

The DVTF then says how it proposes to reform the institutions that lie in the way of the co-equal goal:
More than 220 federal, state and local government agencies have some jurisdiction in the Delta. Everyone is involved but no one is charge. A key strategy in achieving the Task Force’s co-equal goal is creation of a new governance structure.
These 220 agencies will, of course, cede all power and knowledge to the new, Super Duper Delta Agency. And how will that SDDA act?
This Task Force believes the time is past for denial of crises and illusory hopes that past practices or institutions can meet the challenges of the future. Although the strategies presented in this report will have effects over decades, conservation, water system efficiency, promoting regional self-sufficiency and Delta ecosystem revitalization are, in the near term, the most likely actions to improve California’s water future. To achieve the seven goals, the Task Force recommends 21 strategies and 71 actions
Wait -- how does one co-equal goal become seven goals with 21 strategies and 71 actions? Holy cow, I see dead people!

Bottom Line: Delta management is surely a complicated task, but it's hard to see how the insanely complicated web being weaved around the Delta is going to fix things. (Or, wait, is their strategy to replace flows of water with flows of paper?)

hattip to DW

17 October 2008

GIO: Singapore's NEWater

Question 4: What's Singapore's model to recycle water?

Background: NEWater on gov't site and wikipedia; AWWA briefing [pdf] on marketing reclaimed water.

Please give your thoughts, opinions, facts, arguments, etc. in the comments.

To see all posts on the Global Innovation Outlook, click here.

The Other 99 Percent

A few days ago, I said that "90% of people" lack the self-control to "do the right thing" and suggested that they might notice higher prices. It seems that I was optimistic:
As arid San Diego stares down the possibility that 2009 will bring the first water rationing in nearly two decades, Sanders has frequently emphasized the need for residents to conserve water. The mayor is in the midst of holding water forums across the city. But they've been sparsely attended. Monday night's audience was the largest; others have attracted crowds as small as 10 people, highlighting the difficulties of conveying the serious nature of San Diego's water supply crunch to a populace that does not appear to be listening.
What's likely to happen when rationing (SD's preferred coping mechanism) is instituted? Some agencies will raise prices to penalty levels (good, if late), but others put on the jackboots:
Mark Rogers... said his agency's board will consider a proposal in December to cap the amount of water it delivers to customers based on their historic consumption levels...Instead of fining violators, flow restrictors on water pipes would halt deliveries to scofflaws.

Rogers calls it "the adult approach." He said the agency fears financial penalties won't dissuade some homeowners from keeping green lawns if they can simply pay nominal fines to continue excessive use.

"We don't want people to be able to pay their way out," he said. "I'm not going to tell you how to use your water. I am going to tell you how much you can use."
Do you hear that? The sound of power-freaks cracking their knuckles, anxious to enforce their will? Yuck.

Bottom Line: Raise prices and let people decide how (or if) to save water. Since aggregate demand is all that matters, it makes no sense to chase and prosecute the "immoral" people who refuse to conserve water!

hattip to DW

Broken Radar

The American Water Works Association (AWWA), the "largest and oldest organization of water professionals in the world... [whose] 60,000 members represent the full spectrum of the water community" has released State of the Industry Report, where they find that AWWA members'
top concerns are source water supply, infrastructure, regulatory issues, workforce needs, and business factors.
Was there any concern about demand? I searched for "price" and got nothing. A search for "rates" reveals that some members are worried that rates may not rise fast enough to cover infrastructure costs.

So it appears that the professionals in charge of water supplies in North America are only worried about finding enough water (supply!) to serve "whatever" demand might appear. It's too bad that these engineers -- highly skilled at running water systems -- have no concept of demand-side policies.

Bottom Line: Raise prices to reduce quantity demanded -- and stop worrying about supply "shortages".

Ethanol in California?

Ethanol is not only a monster that refuses to die, but it's spreading its foul tentacles throughout these United States Congressional Districts [prior posts].

This press release is a classic -- hitting all the best PR memes (ST jobs, multiplier effects in economy, LT jobs, green-collar jobs, cow food production, etc.):
Pacific Ethanol, Inc. (Nasdaq: PEIX), the leading West Coast-based marketer and producer of ethanol, officially marked the opening of its newest ethanol production facility in Stockton on Friday...

"We are excited to celebrate this milestone with the community," said Neil Koehler, Pacific Ethanol's President and CEO. "The start-up of our Stockton plant marks the achievement of our goal of 220 million gallons of annual production capacity and dramatically increases the availability of renewable fuels produced in the state of California." The 60 million gallon per year Stockton facility is located at the Port of Stockton, with access to water, rail and road transportation. This San Joaquin Valley destination is home to over one million dairy cows, providing a ready local market for wet distiller's grains (WDG) and other ethanol co- products.

The facility will process 21 million bushels of corn per year, producing both ethanol and 500,000 tons of WDG annually for the use by local dairies for feed products.

"The opening of this new ethanol facility not only advances the use of cleaner, renewable sources of energy, it is creating green collar jobs and bringing economic opportunities to the region," said Congressman McNerney. "That's an important step toward achieving long-term sustained economic growth and energy independence in the future." Construction of the Stockton facility entailed a $150 million investment. The construction phase generated 200 new construction and service-related jobs and provided a $200-$250 million boost to the economy. The plant will permanently employ 38 full time employees, will generate $1.6 million in local tax revenues and help create 700 jobs economy wide.
They go on to say how "clean and green" ethanol is (NOT!), but that's to be expected. [Did you see the 500,000 TONS of WDG? That's a lot of corn waste -- but apparently enough for one-half ton/cow...] What they fail to mention is the impact of ethanol production on water supplies. Conveniently, Kevin Fingerman et al. (UC Berkeley) have looked into the question. In this paper [PDF], they say
water use... could be, in the words of a recent report, the “Achilles heel” of biofuel production (Keeney, 2006). This study projects the effects on California water resources from some scenarios of in-state feedstock and fuel production...

We find that on average over 1500 gallons of water are consumed... in the production of a single gallon of corn ethanol in California – with feedstock cultivation accounting for more than 99% of this use. In comparison, the amount of water required to produce the average daily diet in North America is 1330 gallons...

[snip]

Our research shows that biofuel production in California could either increase or decrease the sustainability of the state's water resource use. It also makes clear the feasibility and importance of estimating the water consumed in production of fuels from various feedstocks grown in different regions of the state.
This figure highlights the tradeoff between water consumed (x-axis) and ethanol production (y-axis). Notice that Imperial County (top right) can produce about 1425 gal/acre -- by using about 3.7AF/ac, i.e., taking about 850 gallons of water for each gallon of ethanol.* (Kings County has about half that yield; does this mean Imperial is a good place to grow stuff or that Kings is just really bad?)


Bottom Line: With one step forward, we go two steps back. Not only are we growing fuel of dubious environmental benefit, but we are diverting water from elsewhere [the authors say ethanol may reduce water use IF water-thirsty crops are not grown] and encouraging more industrial meat production (a million cows!). What a disaster!

* Who grows anything in Imperial with less than 5-6 AF/ac?