Bottom Line: You cannot know your own country (right or wrong) until you have visited another.
Based on analysis of national greenhouse gas production and the provisions of the bill contemplated by the Senate, the price of emitting one ton of CO2-equivalent gas is projected to be $15 in 2011 and rise to $26 by 2019.With a carbon price of $20/ton CO2e, the cost of water would jump by $35/af. That's real money when the price of water to farmers is $45 [or $110/af pdf]
To provide some perspective on this price, approximately 80% of the power used to move water through [Arizona's] CAP system comes from Navajo Generating Station (NGS). NGS emits about 1 ton of CO2 for every megawatt-hour (MWh) of energy it produces, and CAP consumes an average of 1.76 MWh for every acrefoot (AF) of water it brings into the three-county service area. If our calculations are correct, a CO2 allowance price of $15 per ton would increase CAP energy cost by approximately 50%; at $26 per ton, energy cost would nearly double.
This analysis indicates that reference price formation does have significant effects on consumer behavior. Furthermore, these effects are asymmetric with consumers two and a half times more responsive to egg price increases that are in excess of the reference price than they are to comparable egg price decreases.If you do not think that the response to egg price increases is important (demand falls more quickly when prices rise than it rises when prices fall), then you may want to apply this result to other market goods (share prices, houses, etc.) in your thinking of how we are going to respond to a change in current economic conditions -- especially if (5%+) inflation returns to the US.
Hi, I'm wondering what you think of AB 1881 (requiring California towns to adopt a water conservation ordinance by Jan 1 2010), and what you think is the best market-oriented response to it.I have a few reactions:
The default ordinance imposes elaborate irrigation guidelines and landscape planning requirements on any development significant enough to require a permit.
In my town I'm proposing an alternative of self-water-budgeting plus fees for higher-than-average use and penalties for exceeding your own water budget:
33 pages of irrigation rules would become just this:
Feedback and better ideas are welcome. Advocates of market-based water policy in California should cooperate in developing a best-practices response to AB 1881's onerous regulatory requirements.
- Project applicant estimates how much water s/he will purchase in the first 12 months.
- If Estimate > average usage in our town (500 units), applicant pays $3 for every unit above that average.
- After the 12 months, homeowner documents how many units s/he actually purchased.
- If Actual > Estimate, homeowner pays $6 for every unit above Estimate.
- If Actual < Estimate, homeowner is refunded $1 for every unit below Estimate.
Note: I forgot to highlight Joe Tagg's contention that IID's "mismanagement" of water is actually a ploy to "create" excesses that can be sent downstream to a junior water rights holder (The Metropolitan Water District of SoCal). How does this idea work? Since farmers MUST use less than 5.25 af/acre, they will be conservative in choosing what crops to grow. Given that they undershoot 5.25 af/ac on average, there will be "surplus" water. What's his evidence? Someone at IID told him they were counting on 200 thousand acre feet (taf) of surplus.**This story basically confirms that prediction. Guess how much "excess" water IID is sending to MWD (free of charge)? 180 taf.
IID spokesman Kevin Kelley said it's a result of the depressed farming economy, particularly for forage crops such as alfalfa that is fed to cattle.That explanation is pretty empty when you know that IID had planned for a 200 taf surplus.
“It's a function of natural market forces,” he said. “If farm commodity prices were high, those fields would be planted and water would be ordered for them.”
Do you answer questions from lay persons regarding the causes of water shortage in the Delta and the economics involved? I am interested in a simple language and time-frame or point explanation regarding the controversy over the EPA of the Delta Smeldt and farmers in the area, who say, "Just turn the water on." I have read several arguments but none seem very clear. Again, as a lay person, who is right and who is at fault here?Hard to say who is at fault. Seems that several parties are at fault -- the farmers who take water and discharge runoff; the indigenous species; the communities that have taken over wetlands and discharge their sewage into the Delta.
Here in rural Amador County, people went crazy a few years ago when they heard the county might pass an ordinance to measure groundwater use and prevent its offsite transfer.KE has a good point: It's all good to store water underground, but you've got to know the structure of the basin that will do the storing (assuming you want it back).
I suggested to our county supervisors that as part of developing a new general plan, they study the fractured-rock aquifers on which so many rural residents depend. Good to know where the water is and how old (and whether it's being replenished) as you figure out land use densities, right? But oh no -- groundwater use is a sacred property right.
EBMUD wants to stick water in the aquifer in San Joaquin County and just hope it might be there in a dry year. SJ has no gw monitoring or pumping limits and is in chronic annual overdraft. To pull out a metaphor from Dr. John Suen, of Fresno State (fractured rock aquifer study guy), EBMUD's plan is like putting your money into a bank account while a number of people write unlimited checks on it.
Regarding your “Nothing to Fear but…” blog comments, why do you think so many water authorities seem to “Fear” the new, but simple to test ideas that we have been proposing to use waterbags linked in trains to form a fabric pipeline through the ocean to transport water throughout the State, and to move water through the Delta during an emergency using a fabric pipeline?To this, I replied with:
Ray Seed thinks creating a fabric pipeline through the Delta during an emergency is an interesting idea. He thinks it should be investigated. But Ray’s opinion doesn’t seem to influence the authorities who fund these ideas. Ray has told me that the collapse of the Delta levees as a result of a natural disaster is the one thing that keeps him awake at night. And it is an accepted fact that a major earthquake along the Hayward Fault, which may trigger this catastrophic levee collapse, is overdue.
I have some ideas as to how “Fear” relates to implementing new ideas but I wonder what you and perhaps your readers “think?” As I have been saying for years, these ideas are easy to “think” about. They are not rocket science.
West Basin MWD and the Water Replenishment District of Southern California have both passed Resolutions in favor of testing waterbag technology, and sent them on the DWR. Neither of these agencies have received a written response from DWR to these Resolutions, and their... letters requesting DWR’s public support for an investigation of waterbag technology and our emergency applications in the Delta.
Jeff Kightlinger has been kind enough to write me a letter in support of demonstrating our ideas. Jeff recently told me that he thinks waterbag technology will work. But in spite of this support it is MET’s position that they don’t have the time and the budget to study these ideas.
MET staff has never produced a report on waterbag transport technology, or on our idea for creating an emergency fabric pipeline through the Delta. The only letter MET has written to me related to any of these proposals was on an idea to float waterbags through the Delta, which MET staff and I both agreed needed more work.
A motion to have MET staff study our waterbag transport technology and our emergency proposals was introduced to the appropriate MET committee but it was rejected for lack of a second. MET’s opinion is that waterbag technology can not supply enough water to their system in order for MET to spend the time and money to investigate these ideas.
Naturally, I disagree.
I have told Jeff that all we need to do is to start with two waterbags linked together and move them from a selected point A to a selected point B through the ocean. Assuming that this delivery is successful it will then be a simple matter of adding more waterbags to the train, and more trains to the system, in order that over time we will find the limits of developing a simple modular fabric pipeline through the ocean. The economics will be easy to calculate. The environmental effects will be easy to demonstrate. I have told Jeff that this method could prove that waterbag technology could potentially move 100,000’s of acre feet into the Delta and/or down to Southern California.
Jeff did not refute my argument, except by making the comment that,
“It has never been done before.”
I could not refute Jeff’s argument.
But to me, that is a logic based on “Fear.” A “Fear” of failure. Yet history has proven that without failure it is difficult to achieve great success.
If something has never been done before, is that an acceptable reason for rejection, or is it a reaction based on “Fear?”
Maybe the answer is, as you and Peter Gleick have pointed out, decisions for solving California’s water problems are still based on overcoming “Fear.”
I know that Jeff is a man of courage.
I have even used “Fear” in my arguments to try to gain support for a demonstration of our waterbag technology.
What seems so incongruous to me is that almost all the men and women I have met over the past 21 years of pursuing our water transport goals are some of the most courageous individuals I have ever known. They exhibit courage as individuals in the face of the unknown, such as the unknown length and effect of the current California drought.
For years our team has offered an inexpensive way to demonstrate our technology in California, at little or ZERO FINANCIAL RISK to California taxpayers. But we have yet to see our friends in the water industry step forward to overcome the “Fear” of the unknown in order to give waterbag technology a seat at the table with desalination and other multi-billion dollar alternatives that are currently being discussed.
Perhaps you can share my comments with your readers and ask them this simple question,
Innovation is hard because water managers get blame for failure but no praise for success. Since they operate in a monopolistic environment (with appropriate job security and a lack of benchmarking against "peers"), it's much easier to say no, do the same old thing ("Nobody ever got fired for buying IBM"), and then pass the costs of inaction onto their "customers."Bottom Line: It's hard to innovate when the person in charge of innovation is not the person who will benefit from innovation.
As you may recall from the days before email and FedEx, the USPS gave terrible service (even today, they sometimes do, but we can avoid it...). There was no need for customer service or quality or efficiency, since they had a monopoly.
With water, the monopoly is stronger and the risk of disregard for the interests of customers that much greater. Although I know that many in the water business do *try* hard, I also know that they are not forced to. In that instance, there is no penalty for going home at 4:45 (I've been in a few offices by now) or even declaring a shortage.
As I've said before, managers who declare shortage should be fired on the spot for incompetence, but they are not. So where's the penalty for failure?
I, like you, wish that there was more desire for improvement and innovation, but they are not called water buffaloes for nothing!
(My all-in-auctions would fix Met's "dilemma" on reallocation among member agencies -- ending lawsuits -- but Met does not have a single FTE to devote to a pilot study. Why? It seems that failure-as-usual is more comfortable than trying something new. Recall that most water agencies are using the same tools in this drought that they did in 1977 and 1991. Plus ca change.)
This is the turning point I’ve been waiting for. With water costs this high, she’d rather be in a city apartment. I’ve been wondering for years what would herd people in from the exurbs. It struck me as a race between costs of water and costs of firefighting. For a while, the cost of gas and the commute was coming on strong, but that horse fizzled. Now we need people to know this before they lock themselves into houses. Ms. Sanchez, don’t become a water district activist! Spend your energy telling your friends not to do what you did! Tell them the house and lawn isn’t worth it.As water bills rise to reflect the true cost of scarcity, some people area are realizing that their perception and reality no longer overlap. The reality is that it's delusional to expect that your "desert lawn" is going to be cheap.
People want to save the planet but are unwilling to make radical lifestyle changes like giving up air travel or red meat to reduce the effects of climate change...It's been obvious to me that two main adjustments are necessary to get climate change:
Bangladesh's 145m people live on a delta twice the size of Ireland, 40% of which is flooded for three months of each year. By 2050, its population is projected to reach 250m. -- Economist Feb 8, 2007There are many ways to (intentionally) slow population expansion, ranging from the draconian (forced adult sterilization, abortion, etc.) to the evolutionary (the demographic shift).
As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess.I have two comments:
Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation.
The Inland Empire Utilities Agency... is at the forefront of the emerging local-is-good movement. About 70% of the agency's water comes from its own backyard: a patchwork of dairies, industrial parks and planned communities overlying the big Chino Groundwater Basin.Bravo! IEUA may not have big pumps and pipes, but they have water.
Last summer, as the price of gas inched up over $4 a gallon, Toyota dealers couldn't keep fuel-efficient Priuses in stock. We should apply that pricing lesson if we want to conserve water, using increasing block rates to discourage profligate water use. Tucson does that and adds a surcharge for excessive use in the summer, when water mostly goes to fill swimming pools and irrigate landscaping.Bottom Line: Higher prices for water that we get from the tap, restrictions on the water we take from the ground, trade among those who have rights -- that's how we should manage water if we want reliable (sustainable) supplies.
The idea of charging for water offends many people who think that would be like charging for air. Is it immoral to extract fees for an essential resource? Precisely because water is a public -- and exhaustible -- resource, the government has an obligation to manage it wisely.
Think of our water supply as a giant milkshake, and think of each demand for water as a straw in the glass. Most states permit a limitless number of straws -- and that has to change.
Governments in hunger-stricken regions, especially Africa, would then submit national action plans that would provide details on how they would use the donor funds to get high-yield seeds, fertilizer, irrigation, farm tools, storage silos, and local advice to impoverished farmers. An independent expert panel would review the national plans to verify their scientific and managerial coherence. Assuming that a plan passes muster, the money to support it would quickly be disbursed. Afterward, each national program would be monitored, audited, and evaluated.Poor Hayek must be rolling in his grave. Sachs's "straightforward" prescription is full of information and incentive holes big enough to drive a truck through.
[I did NOT take anything out here. He REALLY does continue to say...]
This approach is straightforward, efficient, accountable, and scientifically sound.