9 Dec 2009

Economists solving problems

This article, via MD and PM, discusses the role of economists in Australia's water policy debate and operations. I'm hoping to contact many of the people mentioned (a few of whom I've already met) when I am Down Under from late Jan to late Feb...

Here's a good quotation:
But while everybody understands the drought, there is a disconnect in the way we deal with it. Scientists warn of the damage done by extracting water from inland rivers the environment cannot afford. State and federal ministers throw money at the problem in the hope of containing the contradictory claims of irrigators and environmentalists.

And amid all the arguments, economists are working on ways to make the most of what water there is.

Not that everybody is interested in their efforts, which often emphasise market-based solutions. There is still an assumption, among people in the cities who refuse to accept they should pay the real cost of water, that it is a free good. And environmentalists, worried about the state of inland rivers and wetlands, are appalled at the idea water is like any other commodity.

The curious thing about water economists is the way their work is immensely influential in shaping the future of rural Australia, but still often ignored in the arguments about the way we should manage water.
Bottom Line: Economists are good at reconciling subjective views with objective mechanisms (markets), and Aussie economists are on the "bleeding edge" of dealing with the End of Abundance.