29 May 2009

Somewhere in the Middle

I often tell people that I am an "equal-opportunity critic" of any view or group in the water business. For me, it's important that we debate things, and MORE important that we consider others' opinions and perhaps change our own to reflect good arguments, analysis, facts, etc. (That's why we have the weekend discussions AND why I never comment in your discussions there. BTW, email me any new topics to debate.)

Since I know both Jeff Michael and Dick Howitt, I have had quite a little ride between their perspectives on the water-jobs debate. In the last few days, I spoke to both, and here's what I just emailed to Jeff:
Howitt is frustrated that you do not appear to be taking marginal effects into account (in theory, a reduction in water > reduction in output > reduction in jobs), but we argued back and forth on the substitution between water and labor (vs. capital, which is expected). More important, to me, is that bias that he may be subject to by looking at a few farms in Westlands. The macro picture may be more diverse.

In the end, I think you make a good point about "where are the lost jobs?" and he makes a good point about "less water WILL reduce output..."

Overall, I am always skeptical about farmer complaints. They, like taxi drivers, can always use more water, money, etc.

The bigger problem is that various interest groups are using your various results to advance their agendas. Agendas that often have little respect for the other side or nuance on interpretation...
One clarification: the substitution between water and labor works as follows: if there is less water, hire more people to spread it more efficiently. Although some of you may imagine workers with watering cans replacing flood irrigation, I mean workers managing drip :)

Bottom Line: If you want to help unemployed workers, give them money. If you want to help farmers, give them water. If you want to "create jobs," then don't bother. Managed economies are dead economies.

1 comment:

  1. David, you are a fine man in the middle.

    Part of the difference is that agriculture to me is just 1 of 20 sectors in the economy. I think that view is important when talking about social impacts like unemployment or public policy that involves taxpayer money.

    In this case, the difference is how much farm employment is determined by labor supply (which depends on alternative employment opportunities since farm jobs are usually least preferred by workers) vs. labor demand (which is derived from production and impacted by things like water).

    While water-labor substitution is a factor, I think the main explanation for farm jobs not disapearing is that labor supply is the dominant factor over a relatively small decrease in total acres in the Valley.


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