28 February 2009

Anti-Capitalists

Aquadoc's review of Blue Gold attracted an interesting comment:
Mike, I am compelled to answer your hypothetical question of Maude Barlow: "why is privatization of our water so bad?"

While designing and constructing water delivery sources by experts make sense, the delivery of water is not a highly specialized technology and therefore is quite suitable for delivery by municipalities. And here are the reasons it doesn't make sense for private companies to sell us our water:
  1. Private companies must make a profit on their goods and services for their stockholders because that's what they are in business to do. Most investment firms will tell you that the prospect looks great for water investments because the industry as a whole commands 15% to 20% return.
  2. With private corporations, there is no transparency of operations.
  3. Financing for private corporations is 2 to 3% higher than municipal financing because they are not eligible for municipal, tax-free bonds. They also must pay property and income taxes from which public utility districts are exempt.
  4. Profits generated by the private water company generally leave the community it serves. The majority of U.S. privately-run companies are European multinational corporations such as Veolia (Wilsonville's operator) and Suez.
  5. Water conservation is contra-indicated when a company's profits are dependent upon water volume.
And you expressed concern about the monopolistic nature of publicly-run water utilities. What do you think a private company with a 10-year contract to deliver water to ratepayers is?

By the way, Paris, France, where Veolia's parent company was founded in the 1800's to deliver the king's water to his castle, de-privatized its water delivery last June.

Nancy Matela
Northwest Organizer
Food & Water Watch
To this, I responded with
Hi Nancy,

Michael sent me your post, and I have a few comments:
  1. Private companies can STILL deliver water at competitive prices if they are more efficient, which they are. They are NOT more costly, per se.
  2. The same is true about "public" companies. My colleague needed to file a FOIA to get "public" information from a certain large, public company...
  3. That subsidy costs "us" more elsewhere, and such "unfair competition" should be/can be offered to private companies that are providing the same "public" service...
  4. Public companies return ZERO to their communities, since they run as "non-profits." For profit companies move profits to shareholders, who then reinvest the $$ where the benefits (opportunities) are greatest. That's capitalism -- and why we enjoy this lifestyle.
  5. The same is true for public companies (i.e., they raise prices after people conserve because they need to sell water to break even.
Overall, I fear that your basic argument (like Maude's) is based on fear of/discrimination against for-profit companies. That's a pity, since the REAL problem is not public or private companies, but the lack of community oversight of monopolies (in any ownership form).
Bottom Line: There are costs and benefits of every ownership structure -- non-profit, for-profit, corporate, partnership, etc. If that were not true, every company would have the same structure. Since it is true, we have to pay attention to when they work -- and when they do not!

27 February 2009

Rural vs Urban in New Mexico

The New Mexico legislature is debating a bill [PDF] that will limit municipalities' ability to condemn water in rural areas, i.e., to claim water for urban use that is currently used for agriculture or the environment.

This prohibition makes sense to me, as I prefer voluntary transfers through markets to political grabs of resources in their traditional uses.

The Bill is under intense scrutiny this week, and there is probably going to be another vote next week. Here's the position of one group in favor:
Please call all members of the committee and tell them you support HB40. Municipalities already have a 40 year planning period in which to obtain water rights for their needs; there is no specific water right "necessary" to a project; an active market exists for water rights, so there is no need to ever condemn; condemnation of water and water rights eliminates incentives for conservation by municipalities, as well as destroying any incentive for linking land use and water; condemnation of water means that the future opportunities for small towns and rural areas are completely driven by municipalities hundreds of miles away because of their power and money to take the water from unwilling owners.
Bottom Line: Cities must first become water efficient (by charging MORE than cost for water!) before they look for more supplies. Even then, they should PAY (a lot!) for those supplies.

Two-thirds Wrong

"Two-thirds of the world's population will face a lack of water in less than 20 years, if current trends in climate change, population growth, rural to urban migration and consumption continue, United Nations Deputy Secretary-General Asha-Rose Migiro warned today."

Yes -- and such an outcome can easily be avoided if we price water according to scarcity. The conventional wisdom of setting price to equal delivery cost is no longer wise: Because those prices are "too low," demand exceeds supply, and shortages result.

Bottom Line: Save the Poor! Charge for water! (Some for free; pay for more.)

Environmentalists against Delta Exports

This is a pretty strong opinion:
Increases in freshwater exports out of the California Delta, the operation of Shasta Dam and other inland habitat problems have not only led to the collapse of Central Valley salmon populations, but also threaten the southern resident killer whale population.

These were the conclusions of National Marine Fisheries Service scientists disclosed during a frank discussion of the recently released rewritten draft biological opinion on the impacts of the state and federal water projects during a meeting in Sacramento with representatives of fishing and environmental groups...

As a result of litigation by NRDC, Earthjustice and fishing groups, a federal judge ruled that the previous biological opinion violated the Endangered Species Act (ESA). The court ordered the agency directed to issue a new opinion by March of 2009 - and the draft opinion was released in December 2008.

The Opinion also concludes the water projects would likely result in the "adverse modification" or "destruction of critical habitat for the three salmon species." Jeopardy and adverse modifications indicate that the Operating Criteria and Plan (OCAP) process cannot move forward as planned.

[snip]

We must stop the attempt by the Department of Water Resources and Bureau of Reclamation to suspend Endangered Species Act protections for Delta smelt and legislation. We must also defeat legislation by Congressman George Radanovich (R-Mariposa), H.R. 856, to temporarily suspend the Endangered Species Act (ESA) as it applies to the California pumping facilities during times of "drought" emergencies declared by the Governor. And we must stop the campaign by Governor Arnold Schwarzenegger, Senator Dianne Feinstein and the Natural Conservancy to build a peripheral canal and more dams!
With Delta exports to the State Water Project limited to 15% of contracted terms this year (and federal Central Valley Project deliveries projected to be zero), south-of-Delta interests are going to suffer. If this opinion is accepted and all exports are cut-off, Southern California (ag and urban) will have to do with a lower supply. Some farmers (see photo) may not be happy with me for making such a suggestion, but the end of abundance requires tough changes.

The harm from such reductions can be minimized through water markets (and all-in-auctions), but the political battle over exports and the Peripheral Canal will drag on for awhile, I reckon. Too bad.

Bottom Line: We need to take care of the environment unless we want an environment that cannot take care of us. End exports, forget the Peripheral Canal, and restore the ecosystem.

hattip to DG for the photo manipulation

Clearing the Backlog, Part VIII

  • "Carbon emissions have soared far above the expectations of most climate scientists"

  • "Climate change will seriously affect the tropical Andes by the end of this century and could lead to water shortages"

  • "Scientists have developed a method to predict the spread of the dengue-carrying Aedes aegypti mosquito as the climate changes."

  • "Nigerian farmers who tested new maize crops resistant to the widespread Striga plant parasite are so enthusiastic about their increased crop yields that they are selling more seeds than the official distribution channels."

  • "The California Colloquium on Water [has videos of] scholars... in the fields of natural sciences, engineering, social sciences, humanities, law and environmental design... [giving] lectures designed to increase the understanding and appreciation among students, faculty and the general public of water resources and to contribute to informed decisions about water in California. "

  • "The hydroelectric dam, a low wall of concrete slicing across an old farming valley, is supposed to help a power company in distant Germany contribute to saving the climate — while putting lucrative `carbon credits' into the pockets of Chinese developers. But in the end the new Xiaoxi dam may do nothing to lower global-warming emissions as advertised.... `The CDM' — the 4-year-old, U.N.-managed Clean Development Mechanism — `is an excessive subsidy that represents a massive waste of developed world resources'."

  • RA sends a PDF "on rate changes that will be coming into effect for some of the water districts around San Diego. Looks like many of them will be adopting a tiered-rate schedule... which is good." They are better than the City of San Diego's flawed rates, but none of them implement TRUE conservation pricing.
hattip to AP

26 February 2009

Water in Focus

I met one of the Outside the Lens organizers of this interesting project [.doc]:
Water in Focus... calls students to action as they examine environmental justice issues centered on the theme of water... in San Diego [where] they explore the issues of water conservation, water shortage, water pollution, and accessibility to water through photography and visual arts.

[snip]

Each student who participates in Water In Focus will:
  1. Complete a writing piece that reflects their personal relationship to water.
  2. Learn basic photography skills and will capture at least 30 photographs that document water in their lives and community.
  3. Engage in a dialogue centered on water issues through group investigations on the causes and effects of our water crisis.
  4. Complete an educational component that involves factual information.
  5. Participate in our online virtual mural where students can upload photographs and writing pieces centered on water to share with our online global community.
Students participating in the program have from 18 Feb to 22 March (World Water Day) to upload their photos. Selected photos will be exhibited in San Diego from 22 April (Earth Day) until 2 June.

Here's their Flickr group.

Here are the flyer and guidelines [PDFs] for potential participants.

If you are interested in participating in WiF, email Niki Even.

Bottom Line: Water is a complicated issue, and kids should consider it from multiple perspectives [pun!]

Learn Something!

UC Berkeley Extension is offering these courses:

Short, Intensive Water Management Courses
  • Practical Water Sensitive Urban Design Toolkit - February 28 in San Francisco
  • Overview and Sustainability of California River Ecosystems - March 5 and 6 in Berkeley
  • California Water Management Practices and Sustainability - March 13 in Berkeley
  • California Hydrology - March 20 and 21 in Berkeley
  • Practical Sustainable Urban Water Recycling - April 3 and 4 in Berkeley
  • Communication Essentials for Environmental Managers - April 3-11 in San Francisco
  • Sustainable Landscapes: Wetland Creation and Restoration - April 21-24 in San Francisco
  • Aquatic Pollution in the San Francisco Estuary - April 24 and 25 in Berkeley
  • Sustainable Urban Surface and Stormwater Treatment - May 1 and 2 in Berkeley
Land Use Planning and Economic Development
  • Annual Land Use Law Review and Update - March 13 in San Francisco
  • Planning and Zoning Law and Practice - March 20 in San Francisco
  • Environmental Law and Regulation - April 17-25 in San Francisco
Enroll here!

Community Support

This text (via JWP) is from a county manager out in the western part of the Upper Peninsula of Michigan after a severe snow storm last winter:

Up here in the Northern part of Michigan we just recovered from a Historic event --- may I even say a "Weather Event" of "Biblical Proportions" --- with a historic blizzard of up to 44" inches of snow and winds to 90 MPH that broke trees in half, knocked down utility poles, stranded hundreds of motorists in lethal snow banks, closed ALL roads, isolated scores of communities and cut power to 10's of thousands.

[]

George Bush did not come.

Green Laces

Green Laces has a two-part business strategy:
  1. Make a promise to the planet
  2. Wear green laces and show that you're a fan of the planet.

As Natalie would say: Just do it!

Bottom Line: The only way to save the planet is to change individual behavior. Change yours -- and help people change theirs. [I promised to keep blogging, of course...]

25 February 2009

Poll Results -- Buy American!

Hey! There's a new poll (reader demographics) to the right -->

RSS readers -- please visit the blog to tell us who you are...
I would "Buy American" to support the economy
yes 39%26
no 18%12
that's a stupid question! 42%28
66 votes total

These poll results are interesting. Basically the same share of people say they would buy American (instead of foreign? on top of other purchases?) as say this is a dumb question (what is an "American" product anyway?). The minority say that they will not, but that doesn't mean they are not patriotic. More likely it means that they buy what's best for them, no matter where it comes from. At least that's my rationale for saying "No."

Bottom Line: Nationalist purchasing programs are neither good for the purchasers (they may get less product for their money), nor for the sellers (they need not compete for those sales, which makes them weaker in the long run).

Farm Subsidies

DH sent me thing VERY interesting link on WHO gets farm subsidies. Here are some California facts:
  • $6.24 billion in subsidies 1995-2006.
  • California ranking: 10 of 50
  • 91 percent of all farmers and ranchers do not collect government subsidy payments in California, according to USDA.
  • Among subsidy recipients, ten percent collected 73 percent of all subsidies amounting to $4.55 billion over 12 years.
  • Recipients in the top 10% averaged $83,692 in annual payments between 1995 and 2006. The bottom 80 percent of the recipients saw only $1,830 on average per year.
The top recipient in California is the Farmers Rice Coop, which received payments totaling $146,174,314 from 1995 through 2006 -- all for growing rice.

You can click around to get data by crop, state, etc...

Bottom Line: Subsidies keep bad farmers in business, divert resources (labor, water, capital and knowledge) to the wrong crops, and weaken agriculture as an economic sector. The only thing they do is reinforce the iron triangle of corruption among agro-businesses, lobbyists and politicians. End the subsidies!

International Water Pricing

PW sent me International Water Pricing: An Overview and Historic and Modern Case Studies [PDF], which gives a thoughtful overview of water issues and several case studies from the Transboundary Freshwater Dispute Database at Oregon State University.

They cover water as a social, economic, ecologic and cultural good; discuss water as a human right vs economic good; review typical ways to price water; and provide brief details on water pricing in India, Yemen, Eritrea, Mexico, Turkey, the EU and other places...

Bottom Line: Institutional details matter, but ALL water management schemes must get the incentives right.

Clearing the Backlog, Part VII

  • "On April 20th Pepsi will start selling versions of Pepsi and Mountain Dew that use real sugar, rather than nasty high fructose corn syrup. The drinks will only be available until June." If we didn't have farm subsidies, we'd already be drinking sugared Pepsi...

  • Speaking of which... "Coca-Cola, PepsiCo, and NestlĂ© are trying to reverse the decline [in bottled water sales]. They're introducing new flavors, promoting lower-cost brands, and trying to go greener in an effort to stem the growing appeal of tap water." The article also has info on filter and reusable bottle companies -- a lot of $$ at stake...

  • JD says "Here is an interesting opinion [PDF] from the east where water is abundant. Relates to a favorite topic of yours -- the price, cost and value of water. Note that the charging structure relates to the infrastructure to deliver water (potable)/process water (sewage), not on the value of the water itself. This is, in my opinion, indicative of the assumption that water itself is free when it is not perceived as scarce. After all, the name Michigan comes from the Ojibwa words Michi Gamme (big water), as we are surrounded by the Great Lakes."

  • A different kind of water torture:


  • "Countries bordering the Mediterranean are facing the prospect of water crises in coming years. Fuelling these crises are the 200 million sun-hungry travellers who visit the southern European region each year. Their number is expected to triple to 600 million by 2025... most resort tourists use almost four times the daily water consumption of an average Spanish city dweller... Many of the area's hotels claim they have adopted water-saving policies, but in practice these often amount to little more than asking guests to limit the number of towels they use... While climate change and shifting rainfall patterns are being blamed for part of the shortages, intensive agriculture, urban expansion and water-intensive tourist resorts and golf courses are considered the main drivers of the problem."

  • "Jordan Valley Farmers are experiencing a severe lack of rainfall and urgent steps are needed to expand the area covered by greenery and promote the efficient use of water, environmentalists say... Rainfall to date constituted 32 percent of the average annual rainfall in northern areas and 22 percent in central areas."

  • "most parts of Israel have received only 60 to 80 percent of their normal rainfall... the water authority plans to expand drilling in areas such as the Golan Heights, the Hula Valley and the eastern Galilee. In 2008 water allocation for farming was already at its lowest point since the establishment of the state, at 450 million cubic meters." Instead of increasing supply, the Israeli water authority should raise the price of water.
hattip to JWT

Private vs Public Water Provision

Readers will know that I favor neither public nor private (investor-owned) provision of water, since the problems of ownership structure are less important than the problems of monopoly. (And the solution to monopoly -- if not competition -- is careful community monitoring.)

For more evidence on what does and does not matter, read this group project [PDF] by five UC Santa Barbara masters students.
Our research identified two primary differences between the public and privately owned water utilities in Thousand Oaks:
  1. The privately owned water providers operate with greater efficiency than the public utility on three of the four indices of operational efficiency we evaluated;
  2. The publicly-owned water provider charged significantly lower rates in the privately owned water providers for the 15 year period examined.
There was no significant difference between the providers on the basis of infrastructure investment and condition, water quality, water conservation, or customer satisfaction.
Read the whole report (232 pp) to get a serious dose of facts.

Bottom Line: There are tradeoffs between public and private ownership. If they're weren't, ALL water would be provided by one or the other!

24 February 2009

San Diego's Water Purchases

San Diego is looking north for water this year, working out a number of smaller option agreements with Sacramento Valley Districts. I looked into one 10,000 AF transfer with South Feather Water and Power to get a handle on numbers for this year.

San Diego is paying $10 per acre-foot for the option to buy water at $240 per acre-foot from South Feather's reservoir. They are then on the hook for a portion (up to $50) of lost power generation if PG&E is negatively impacted. This water must make it though the delta, and so San Diego assumes a 20% carriage loss, on top of an additional 3% SWP loss to get the water over the Tehachapis. Forgetting the PG&E penalty, the price per delivered acre-foot is near $325.

Because San Diego doesn't own the delivery infrastructure, it must pay MWD to wheel the water from the delta to its service area. MWD charges a lot. According to Dan Hentschke, MWD currently charges around $348 per acre-foot, $180 of which is the estimate for the power component. This pushes up the total price to $673, near the top of what MWD charges its member agencies for treated water.

Bottom Line: There is a more efficient way to deal with scarcity, but this transfer indicates that a more efficient way is still far away.

Yes, Regulate Groundwater in California

The battle is getting started:
The California Legislative Analyst's Office recommends that the Legislature turn groundwater over to the state, which would remove local control

[snip]

[farmers] say they fear that the state would require water meters, find out how much water everyone's using and charge for it.

Valente, vineyard and orchard manager for John Kautz Farms, says farmers assume that if you own a piece of property and you have water underneath it, you're allowed to use that water.

While the Legislative Analyst's proposal would increase state administrative costs to establish new programs, there would be long-term savings to public and private entities across the state
As I have told numerous audiences, California and Texas agree on two things: No to gay marriage and No to statewide control and monitoring of groundwater.

Although I am not going to talk about gay marriage (except to say, yes please), I am going to repeat my complaint that unregulated and unknown groundwater withdrawals of groundwater are California's BIGGEST water policy problem. Why? Because we cannot even price or market water if we do not know actual supply or demand.

Will the farmers' worst fear ("we may have to pay for water") come true? Probably not for the farmers who DO control ALL the rights to the aquifer they use. Farmers who share their aquifer with others MAY have to pay a price -- if that's the only way to slow down the currently unsustainable overdrafting (mining) of water supplies.

Someone told me that there is 13MAF of pumping capacity installed in California's Central Valley. Given that this FAR exceeds the sustainable yield of aquifers (2-3 MAF?) and that surface water deliveries are going to be tiny, the likelihood of overdrafting, collapsing aquifers and other bad outcomes is extreme. Farmers will be destroying their future as they race to outpump each other today...

Bottom Line: The only way to sustainably manage a resource is to know how much of it you have and control access to it. Without these simple guarantees of property rights, a tragedy of the commons will result.

Graywater Information

Amanda of Oasis Design sent me this information on gr[e/a]ywater:

Detailed suggestions and resources for making the most of the SB 1258 opportunity to improve graywater standards in California

A history of graywater regulation in the US, with a focus on the current mess and future opportunities in California

Graywater policy center

Removing Institutional Barriers to Sustainability

Bottom Line: Graywater can reduce our demand for potable water. Please remove the regulations that make it hard to use graywater without breaking the paw!

Insuring against Incompetance...

When I proposed that insurance companies be given the task of overseeing water managers (to make sure they do their jobs), someone asked if insurance companies already monitor another industry to make sure that they do not pollute (i.e., fail at their task). It turns out (thanks CL!) that they do:
...nine insurance companies are responsible for costs of cleaning up PCB pollution of the lower Fox River.

The jury had found that the insurance firms were liable through their contracts with paper company
The only way to keep a monopoly (private OR public) on task is to watch it. If the cost of watching accrues to some but the benefits accrue to all, then free-riding (and undermonitoring) may occur. One way to overcome this problem is to have all beneficiaries contribute to the cost of "professional" monitoring by an insurance company.

Bottom Line: Customers need to watch their water managers to make sure that prices are not too high (which leads to wasted money) and operations are not inefficient (which leads to shortages).

23 February 2009

San Diego Catfight

Alex Ruiz disputes the accuracy of the interview I cited in this post:
Reporter Rob Davis' article is dead wrong in one respect and highly misleading in another. The thrust of the article is Mr. Davis's contention that no San Diegans will avoid an across-the-board reduction in their water allocation.

This is dead wrong.

The proposal that's being developed includes a "floor" below which reductions will not occur. At this point, any customer whose monthly water use is below 600 cubic feet (4,488 gallons) will see no reduction. This information was included in the townhall presentation Davis attended. While the 600 cubic feet consumption threshold could be modified by the time final recommendations are made, clearly we recognized that there are super savers who have already conserved to such a degree that further reductions would be unfair and unrealistic.

Additionally, Mr. Davis contends that "Even San Diegans who have torn out their lawns, planted drought-tolerant landscaping and scrimped on irrigation will have to cut their water use."

This is highly misleading.

Water allocations will be determined from an individual customer baseline established by calculating typical usage during Fiscal Years 2006 and 2007. So customers who took conservation measures since that time n including the period of the "20-Gallon Challenge" -- would not be penalized for any steps they have taken to reduce water use.

These details of our water proposal are not nuances. They have been plainly presented at every public forum and are critical to the public's understanding.

It is important that readers of voiceofsandiego.org get full and accurate reporting on this important subject.
Unfortunately, his points ("floor" and "baseline") do not address MY main criticism that the City of San Diego should allocate water based on the the number of people at the house (Ruiz says "individual customer," but he means household meter) -- not historic use (or waste).

Try again, Mr. Ruiz.

Environmental Justice Symposium at Berkeley (FRIDAY!)

The Berkeley Law Environmental Law Society cordially invites you to attend our Fifth Annual Environmental Justice Symposium [website]: Just Water? Solving an Environmental Justice Crisis

Friday, Feb 27, 2009, from 8:30 am - 6 pm at the UC Berkeley School of Law

Register here! (Students and Faculty Free with RSVP to saraclark@berkeley.edu)

Keynote Speaker: Dr. Beverly Wright of the Deep South Center for Environmental Justice

This year's symposium will explore the intersection of water and environmental justice. Panel and speaker topics include the international human right to water, sustainable fisheries, rural water access in California and abroad, water contamination and indigenous water rights.
Damn. I'll miss this (I'll be in WAY northern California doing water chats...) Please DO send me comments/feedback on it.

Transparently Dumb

I'm thinking that the water managers and politicians in San Diego must be drinking something other than simple, tasty water. It seems that they are bound and determined to implement the most-stupid possible water rationing scheme, i.e.,
Even San Diegans who have torn out their lawns, planted drought-tolerant landscaping and scrimped on irrigation will have to cut their water use if supplies are reduced in July.

That's the approach the San Diego Water Department is contemplating and selling at forums across the city this week. The plan is still being drafted and will require City Council approval. But as it currently stands it will penalize residents who've been civic-minded, requiring them to cut the same percentage as the water hog with the plush yard next door.

[snip]

That has brought protests from city residents who have conserved.

The city says the approach is the most equitable. At a recent news conference, Mayor Jerry Sanders said the city could not guarantee cuts would be fair.

"You're never going to make everybody happy," he said. "In fact we'll probably upset everybody to some extent. And that probably is going to mean that we're in the ballpark of where we should be."

Other water agencies believe they've found ways to fairly distribute water cuts to avoid penalizing those who have conserved.

The Sweetwater Authority plans to follow the same model as San Diego -- with one difference. Homeowners who use less than average will not be required to cut further.

If a 20 percent cut comes, residents whose consumption is already 20 percent below average will not have to cut more. Higher users will.

"We're targeting the people who have used a lot of water," said Mark Rogers, the authority's general manager. "I don't want to penalize people who've already been conserving."
As I pointed out recently, Mayor Sanders should be fired for gross incompetence in pushing this plan.

Why?
  1. It's obviously unfair (and inefficient!)
  2. It's obvious how an alternative scheme would work: Give per capita allocations to homeowners, i.e., some for free, pay for more.
  3. Neighboring cities can and are implementing better plans.
I also have to comment on Sanders' "rule of thumb":
...we'll probably upset everybody to some extent. And that probably is going to mean that we're in the ballpark of where we should be.
No, it's only good that everyone is upset when people are upset about the opposite things (e.g., dividing a pie between two kids, each who wants the whole thing). Sanders has got everyone upset about the SAME STUPID THING, i.e., rationing without regard to prior conservation* or consideration of an individual's RIGHT to water. That's like throwing the pie on the ground.

Note also that Brad Luckey of IID said the same thing ("everyone's upset") and drew the same, false conclusion ("we are doing the right thing") when the opposite was true -- IID is screwing things up royally, for everyone.

Bottom Line: Managers who preside over shortage and rationing should be fired if they are not professional enough to quit.

* Note that per capita allocations reward conservation by allowing customers to AVOID paying more because they do not waste water.

Good Questions, Bad Answers

Rob Davis asks excellent and pointed questions of Alix Ruiz, assistant director of the City of San Diego's Water Department.

Ruiz, by and large, fails to provide good answers to the questions. (He claims that per capita allocations are too hard to calculate, that they did not have enough time to plan for shortages, that they cannot raise prices, etc.)

Since he is merely echoing the flawed and useless policies of Mayor Sanders, I cannot accuse him of being dumb, but I will accuse him of professional incompetence.

Any water manager who is asked to implement flawed policies (i.e., across the board rationing) that reduce both equity and efficiency should quit -- and retain some semblance of competence.

Bottom Line: Water managers who ration should be fired for failing to deliver on their number one job responsibility: reliable water.

Clearing the Backlog, Part VI

  • The smallest number of Pacific Ocean salmon ever recorded swam back to the Sacramento River via San Francisco Bay last fall...only 66,286 adult salmon returned to the Sacramento River to spawn. Six years ago, the peak return was 13 times higher... The ultimate cause of the decline is `sort of death by 1,000 cuts' related to habitat destruction of the delta... `It was a huge marsh, habitat for all of the runs. Now it's been diked, levied and rip-rapped until it's not more than a big ditch,' Grimes said. Dams, pumping water by the state and federal water projects and the operation of hatcheries all contribute to the problem.'"

  • "The deadline to submit entries for ACWA’s new Excellence in Water Leadership Award – Building a World of Difference is Monday, March 2. The award recognizes individuals or groups that have made a remarkable and visible contribution to the enhancement, protection or development of water resources in California. The recipient has the honor of presenting a $5,000 charitable donation to a non-profit organization that works toward the enhancement and / or protection of California’s water resources."

  • "The trees in African rainforests are gobbling up ever more carbon dioxide and thereby mitigating the buildup of the greenhouse gas in Earth's atmosphere. The finding underscores the importance of protecting the rainforests."

  • "U.S. Bureau of Reclamation officials said parched reservoirs and patchy rainfall this year were forcing them to stop surface-water deliveries for at least two weeks beginning March 1. Authorities said they haven't taken such a drastic move since the early 1990s, the last time California struggled through a prolonged drought." Can we get REAL water markets, please?

  • "There is a very high chance that geoengineering techniques will be applied, by someone, somewhere. However, there is also much to lose. There is therefore an obvious case for some kind of international regulation. This paper aims to identify and outline some of the practical and conceptual problems that such regulation would face."

  • "a new study... comparing the climate change and health costs of corn and cellulosic biofuels to that of gasoline... finds that when the entire life-cycle of a fuel is taken into account, the health and climate change costs associated with corn ethanol are highest, followed by gasoline and then cellulosic ethanol." The ethanol program is bad for us (taxpayers and consumers), bad for the poor (expensive food) , and bad for the planet. END IT!
hattips to DW and ES

22 February 2009

Weekend Discussion: Moving Water

NOTE: This post will stay here until Sunday night. Posts for Saturday and Sunday morning go below this post.

Dear Aguanauts,

Discussion posts allow you to discuss your beliefs on a topic -- to share your understanding, experience and opinions -- without worrying about what's right or what others think. (Check out last week's discussion on water prices.) Most important, the discussion allows us to learn from each other. So...

Should we move water between watersheds?

Rain Delay

This story illustrates a familiar theme:
State water managers last week asked regulators for an emergency relaxation of February water quality standards that are beneficial to Delta smelt so they could better maintain cold water flows for spawning salmon this summer and fall.

But hours into a hearing on the emergency request, Department of Water Resources engineer John Leahigh said the rains are providing enough flow into the Delta that the standards will be met for the rest of the month.

That resolves a tough balancing act between water for smelt now and saving cold water for salmon later.

But the reprieve is only temporary. Water officials said that if the rains stop, they still could be back with another request as soon as March.

And the storms have not ended the drought.
As I said here, water policies are often driven by short-term events when they should be driven by long-term wisdom, i.e., markets with proper price signals.

Bottom Line: We need accurate water prices so that water becomes more expensive in shortage and cheaper in abundance. Such a sensible (and predictable) policy will cause far less uncertainty and harm than the conventional reactionary approach to water supplies (cheap water then rationing) that serves nobody and wastes this precious resource.

Drought Meeting in Oakland (tomorrow!)

Monday, February 23, 2009 10:00 a.m. - 12:30 p.m.

Elihu Harris State Building 1515 Clay Street, Oakland, CA

Chris Brown: Executive Director, California Urban Water Conservation Council on the state debate over percentage cutbacks & measuring conservation

Katy Foulkes: Director, East Bay Municipal Utility District on the District's experience as the only Bay Area water purveyor to establish mandatory rationing in 2008

A Third Speaker: From a Bay Area water district to be announced

I'll be going...

Expensive Water Increases Conservation

This story press release illustrates some basic economics:
The California Farm Water... coalition's analysis shows that while agricultural water use is almost unchanged during the past 40 years, crop production figures have increased dramatically.

In 1967, the state's farmers applied 31.2 million acre-feet of water on their irrigated cropland. In 2000, that figure was 34.2 million acre-feet, an increase of 9.6 percent. During the same period, acres planted increased about 8 percent.

But production volume for field crops, fruit and nut crops, and vegetable and melon crops jumped from 35.8 million tons to 67.7 million tons, an increase of 89 percent.

[snip]

A coalition survey of irrigation companies and suppliers shows that between 2003 and 2008, California farmers invested more than $1.5 billion on drip and microsprinkler irrigation technology. About 1.3 million acres had high technology irrigation systems installed during the period.

[snip]


In addition to installing on-farm irrigation technology, many farmers engage in other kinds of conservation practices, for example use of cover crops, minimum tillage, water recycling and mulching.

"Let me put the decision this way," said farmer Ted Sheely of Lemoore. "When we converted to underground drip tape we saved about a tenth of an acre-foot of water per acre, but we also increased crop yield more than 20 percent. That's were the business economics come in."

Sheely says a farmer can make the conversion and pay for the cost of installing the system in four or five years.

"The high cost of water, however, isn't something we can escape. We use drip on tomatoes and all our permanent crops, pistachios and winegrapes. We provide the precise amount of water we want," he said. "On the other hand, it doesn't matter how much drip equipment you put in, if you don't have water to send down the line. Right now we don't have enough water to supply all the high-tech irrigation systems that are out there."
Farmers will spend money to increase efficiency when water becomes too precious to waste. That's happening NOW because of man-made shortages (price too low --> Demand exceeds Supply), which are set to get worse. The next step is to reduce the cost of shortages (in fact end shortages) with markets that will give farmers accurate signals of what water is worth AND allow them to reallocate water so that additional conservation investments can be avoided, and losses from shortages and rationing are minimized.

Bottom Line: Farmers will conserve water when it makes sense to do so, and market prices give the most accurate feedback on what's sensible. More markets, please!

21 February 2009

Water Chats -- Hasencamp of MWD

My last water chat was with Bill Hasencamp, Executive Manager in charge of Colorado River imports to the Metropolitan Water District of Southern California -- source of 80-90 percent of Southern California's imported water.

During the one-hour and 45 minute talk [37MB MP3], we discussed the Peripheral Canal, building a second Colorado River Aqueduct, his experience of water policies in northern and Southern California, and how MWD can use auctions to end the current lawsuits among member agencies.

Bottom Line: Urban Southern California is in for some EXPENSIVE water, and they should plan for a "drier" lifestyle with fewer neighbors (well, fewer people, but closer together).

20 February 2009

Business Cycles

Some of you may be wondering why the government is so interested in "stimulating" the economy to keep growth positive.

Let me tell you -- it's NOT to make the economy stronger OR to protect workers.

It's to help companies and protect jobs.

The trouble with such policies is that they protect the status quo, which includes mispricing, misallocation of resources (capital, labor, materials) and mistaken notions of what works and does not work.

In other words, the "stimulus" impedes the natural ebb and flow of the business cycle and prevents the creative destruction that defines real capitalism.

From everything that I read and hear, I have come to three conclusions:
  1. The banking system is in crisis and DOES need to be rescued/nationalized
  2. Few people know what financial instruments are worth, and we will not get anywhere until those instruments are traded and marked to market.
  3. Everything else (stimulus, mortgage purchases, bailouts, etc.) are a waste of OUR money, excuse for corruption AND non-solution to our problems.
I say all these things as a micro-economist who understands incentives. I am no macro-economist, but I think that there are other, better ways to restore confidence and tame the animal spirits that are causing havoc in markets.

Oh -- and one more important thing: Many politicians are being told to "do something." Such a request -- combined with their natural tendency to command and control -- underpins the terrible ideas that are coming out of DC.

Bottom Line: It's time to have a little humility (we can't do anything), let the cycle run (we're gonna lose a lot of $$), and concentrate on protecting people (not jobs or businesses) until the market finds its feet again.

Progressive Taxation of Home Energy Use

Stanley Veliotis, a professor at Fordham University, sent me this op/ed:

"With the preoccupation over the current economic crisis, our politicians may be losing sight of other global challenges. Even if a slowed world economy has reduced demand for fossil fuels, we still confront dwindling fossil fuel supplies and warming climate. I propose a progressive tax on home consumption of energy primarily derived from fossil fuels to help discourage excessive and wasteful consumption.

A progressive electricity tax would include an exemption for a subsistence level of electricity, such as an amount sufficient to power a modest kitchen. Taxation is then imposed at progressively higher rates on bands of Kwh consumed above the exemption. For example, the first 4,000 Kwh per year could be exempted, while the next 4,000 Kwh are taxed at 10 cents each, the next 4,000 Kwh at 15 cents each, and so on. My household, which uses approximately 10,000 Kwh a year, would pay $700 in annual tax. If I reduced consumption by half, to 5,000 Kwh, my tax would be cut by 85%, to $100. Similar approaches could be used for progressively taxing home heating oil and natural gas.

The progressive increase in energy cost is a better way to motivate conservation than our current approach, under which utilities typically charge consumers for energy at a constant rate (e.g., 20 cents per Kwh, $3 per gallon). Constant rate pricing does not provide sufficient disincentive to consume beyond subsistence levels and does not adequately punish inadvertent or ignorant waste. The current cost per Kwh is the same to light my dinner table, to continuously power hundreds of holiday lights, or, as noted by president-elect Barack Obama last year, because I “like to leave all lights on in the house.” The cost per Kwh for non-essential use or inadvertent/ignorant waste should be progressively more expensive than for subsistence-level usage so that consumers make more intelligent energy decisions.

Basic economics teach that increasing the price (including sales tax) of an item reduces its overall demand and drives consumers to seek substitutes. Increasing costs of energy through a progressive tax regime should lead to consumers’ marginal decisions to not use energy or substitute climate-friendly alternatives. A progressive energy tax also has a distinct advantage over cap-and-trade and uniform carbon tax approaches, which impose added costs at the aggregate market level. Charging progressively higher tax rates on each consumer’s increasing use of energy better identifies affordable demand at the user level. If the user can afford to pay a higher amount per non-essential Kwh, then he pays it; if he cannot, he corrects his behavior by reducing non-essential use or avoiding inadvertent or ignorant usage.

Concepts of horizontal and vertical equity, which underlie our current progressive income tax structure, likewise support the targeting of progressively higher tax rates to specific individuals as they consume more and more energy. Nonetheless, a progressive energy tax proposal may confront political resistance. Two approaches could overcome this obstacle in the U.S. First, with the recent election success of the Democrats, generally more accepting of tax increases than Republicans, the public should be easily convinced that a national progressive tax regime will primarily target luxurious use of energy by those with the ability to pay. Second, for states and localities that currently have energy sales taxes, a restructuring of tax rates and exemptions could impose progressively higher rates without raising overall taxes by shifting the tax burden to higher users.

Despite recent reductions in fossil fuel prices, we must act now to conserve fossil fuels until climate-friendly and abundant alternatives are discovered and implemented for home energy purposes. While our standard of living may be somewhat reduced by an increasing energy taxes for non-essential use, we do not have the luxury of waiting for the next great energy source. We must act immediately to deter excess energy consumption until appropriate alternative sources are available."

[My] Bottom Line: The price of a scarce resource should rise. If it doesn't, overconsumption and shortage result. When the resource is "essential," that price structure must include a "cheap" block to ensure that everyone gets a minimum amount, i.e., "some for free; pay for more."

Clearing the Backlog, Part V

  • "With no synthetic pesticide use and more habitat kept intact, organic farms tend to have more biodiversity than conventional farms--including beneficial wasps that kill crop pests. But do these extra insects give organic farmers an edge in natural pest control over conventional growers? A study of 20 farms in the southwest of the United Kingdom says no."

  • "Even if humans can rein in the atmosphere's carbon dioxide content by the end of this century, large zones in the oceans could remain depleted of oxygen for hundreds or even thousands of years, researchers reveal."

  • "Climate change may be poised to claim its first Hollywood celebrities. Shrinking sea ice could wipe out the tuxedoed cast of March of the Penguins--or their descendents--by the end of the century."

  • "The Little Hoover Commission urged the governor and the Legislature to reform the State Water Resources Control Board and nine Regional Water Quality Control Boards...the Commission found that the water boards face increasingly complex water quality problems, caused in part by hard-to-regulate sources such as urban and agricultural runoff. The Commission also found that a decentralized governance structure, with nine regional water quality boards operating with distinct policies and processes, hinders accountability and transparency." [Read the report]

  • "Aquifer Storage and Recovery (ASR) involves injecting water into an aquifer through wells or by surface spreading and infiltration and then pumping it out when needed. The aquifer essentially functions as a water bank. Deposits are made in times of surplus, typically during the rainy season, and withdrawals occur when available water falls short of demand." [More about ASR]

  • Rainwater harvesting in San Francisco.

  • Tucson Water's 733,000 customers are conserving so well that they've put the water utility into a financial hole. The city water department expects to run $15.4 million short... because water sales to homes, apartments, businesses and other customers are well below those of a year ago. City officials attribute the 6 percent decline this fiscal year to the recession and to continued concerns about drought and water conservation. As growth and development have slowed, the city is also getting less revenue than expected from new water hookup fees and other fees... The one thing the utility won't do? Ask its customers to use more water to bring in more money." While I think it's NICE that they are not asking for more money, I also think that digging into reserves and selling water rights (what the utility IS doing) is financially irresponsible. What they should do (have done!) is raise water rates FAR above cost of delivery and use the surplus $ for capital expenditures and/or per capita rebates.

  • "the Olivenhain Municipal Water District plans to charge developers about $3,000 for each new meter issued, which will be used to offset each new home's demand. Olivenhain will invest the money in recycled sewage distribution pipe expansions for golf courses and irrigation users, freeing up potable water for the new residents." That's the right way to reduce demand for new connections AND increase supply reliability.

  • "The Sacramento Municipal Utility District... began sending out statements to 35,000 randomly selected customers, rating them on their energy use compared with that of neighbors in 100 homes of similar size that used the same heating fuel. The customers were also compared with the 20 neighbors who were especially efficient in saving energy.

    Customers who scored high earned two smiley faces on their statements. “Good” conservation got a single smiley face. Customers like Mr. Dyer, whose energy use put him in the “below average” category, got frowns, but the utility stopped using them after a few customers got upset.

    When the Sacramento utility conducted its first assessment of the program after six months, it found that customers who received the personalized report reduced energy use by 2 percent more than those who got standard statements." I LOVE this idea [more], but SMUD must consider the number of people in the house -- not its size! If they make a census, the same numbers can be used to calculate per capita water allocations :)
hattips to ML and DW

19 February 2009

Conservation Pricing for Businesses

Throughout this blog, I have advocated all-in-auctions for allocation of water among rights' holders at the wholesale level (e.g., among farmers in an irrigation district, urban water agencies that buy from a wholesaler, or between sectors -- ag, urban and environment) and conservation pricing for homeowners at the retail level (i.e., every PERSON gets some for free, but must pay for more).

My goal -- on the wholesale level -- is to move a FIXED AMOUNT of water from those who own it to those who value it (sometimes the same person!). At the retail level, my goal is to ensure that everyone gets a "human right" allocation of water and that those who use more, pay MUCH more for their discretionary consumption of water-as-commodity.

Unfortunately, my retail scheme doesn't address businesses because it's based on per-capita blocks (e.g., the free block is 75gal/capita/day and later blocks are much more expensive), and businesses have widely varying water needs that do not reflect sales revenue, employees, location or customer numbers.

So, we need a pricing scheme that gives businesses the incentive to use as little water as they can get by with BUT also recognizes that some businesses are more water-intensive than others -- restaurant versus office, for example.

So, here's the way to do that:
  1. Every business pays a fixed monthly charge based on the size of its water meter. "Meter" basically means the diameter of the pipe for incoming water, i.e., 1/2, 3/4, 1, 2, or 3 inches.
  2. Given the size of the pipe, the business then gets a cheap block of water that's bigger if the meter is bigger. After that cheap block, the next block is more expensive, and so on...
This system gets closer to matching fixed and variable costs to fixed and variable prices (via meter and use costs). In addition, it gives businesses an incentive to install the smallest meter possible (to minimize the monthly base charge) and then -- for a given meter size -- use as little water as possible.

Bottom Line: Encourage conservation by charging more, but make sure that "more" fits the scale of the enterprise.

Water Markets in Colorado

In response to my request for more information on water markets in Colorado, Tyler McMahon wrote the following:
This paper [PDF] on water transfers in Colorado is more on the economic impacts on the comparative basins, but also discusses historical transfers.

Another paper [PDF] by Charles Howe, Jeffrey Lazo, and Kenneth Weber (1990) has a table of water transfers in the Arkansas Basin, the most controversial basin - but no prices. I've attached a copy of this table [DOC] that I updated for my thesis with information from the District 2 State Engineer and the Howe and Goemans paper. As you can see there is limited information on these transfers, part of the problem.

The Northern Colorado Water Conservancy District has a functioning water market internally, everybody uses it as a model of the market. The problem is that it is transbasin water meaning no legal obligation for return flows and the market is between anybody in the water district that receives Colorado Big Thompson water.

Charles Howe has been very active in discussing water markets and has a lot of stuff out there with other co-authors on Colorado's efforts.
Please comment if you have more information on water markets in Colorado.

Bottom Line: Markets differ in form, function and efficiency. Take the time to find out why.

RUBing the Wrong Way

CL sent in this:
I recently got a letter from my apartment complex telling me they are switching from hot water sub-metering to a ratio-utility billing system [RUBS], and they will bill based on square footage of the apartment. From what I can tell, sub metering is superior because it gives people a financial incentive to use less water and is also useful in locating wastage (ie. leaks). The complex claims they are switching because of billing problems with the submetering method, but from what I can find it is just easier and more profitable for the management company to use the RUBS method.

I am trying to convince some of the other tenants to join me to protest this change
CL's analysis is spot-on. Tenants who face a flat fee based on apartment size have ZERO incentive to use less hot water. When they use more, overall water bills will go up, and the landlord will collect that money PLUS a "small" convenience fee to keep the profits rolling in.

The reason that the landlord wants to avoid submeters is the cost of installation (I am wondering about timing of this change. Is the landlord facing a meter upgrade fee?) as well as the accounting for bills that will vary by month to month.

Bottom Line: All-you-can-eat billing results in the MOST consumption and the LEAST equity (i.e., misers subsidize wasters). Fight this stupidity.

18 February 2009

Housekeeping -- Missing Blog?

Is anyone having a problem with the posts in my blog NOT appearing?

I think that the tag cloud may be causing trouble...

Poll Results -- Living Spaces

Hey -- there's a NEW POLL ("Buy American") to the right --->
If I had to move house today....
Selection
Votes
I'd live in a community without parking, private yards or commuting 56%
I'd live in a community with personal conveniences, space, and commuting 44%
34 votes total

My intention with this poll was to find out how many people prefer the compact, urban lifestyle and how many prefer the spread-out, suburban lifestyle.

Bottom Line: When it comes to doing the right thing, people choose to do what they want.

Interesting Data

On my water chats tour, I picked up some interesting data. The following images [click to see full size] will be interesting to people who wonder about IID's crop mix, its water application efficiency, and the drainage of the Colorado River.

2007 Crop Mix [page 1]

2007 Crop Mix [page 2]


Joe Tagg's water inflow/outflow showing a 1.48% tailwater ratio


Colorado River Drainage



Bottom Line: A picture is worth a thousand words, but data are worth more...

Clearing the Backlog, Part IV

  • Living off the water grid. Good coverage of decentralized water/sewage systems, but failure to consider the CURRENT mismatch between population and water (caused by water-moving projects) that pretty much defines "unsustainable." Apply in places without good infrastructure.

  • Chinese farmers apply too much fertilizer: "The team tracked the fate of fertilizer nitrogen and found that 20–50% of it leaked into air and groundwater — although the main pathway through which it was lost varied from crop to crop."

  • The Voyage of a Plastic Bottle

  • A great podcast in which Russ Roberts and Robin Hanson (economists) discuss the problem of bias in economic research.

  • The Economist on banning/taxing plastic bags. Factoid: Bag use dropped by 90% after Ireland imposed taxes.

  • "Many drivers operate under the misconception that more fuel is wasted when an engine is started than through idling. The opposite is true with the majority of modern cars, which require less gas to start than is spent during 10 seconds of idling." Go to the post to read EDF's interesting report on the harms of idling...

  • "Our most credible estimates imply that a 10 cent per gallon increase in the gasoline tax would reduce U.S. gasoline consumption by 4% and reduce total U.S. carbon emissions by about 1%. We conclude that there is no statistical evidence that a gasoline tax increase of the magnitude recently contemplated by policymakers would reduce carbon emissions enough to reach the targets described by the United Nation's Intergovernmental Panel on Climate Change in 2007." That's easy to fix -- raise taxes by MORE than 10%. Duh.

  • Climate change is even bad for species that fly: "scientists worry that the quickly warming climate might not only force certain species to move northward, but wipe out others that are not quick to adapt."

Water Wikis

I just googled this term and found these wikis:

The Water Wiki: The Sustainable Water Resources Roundtable (SWRR) meeting on June 26-27, 2008, discussed the idea of starting a Wiki to support ongoing discussions, especially of the new Whitehouse Council on Environmental Quality Plan to Develop National Environmental Indicators, in preparation for its next meeting in the fall. The Sustainable Water Resources Roundtable meeting on November 15-16, 2007, experimented with a Web 2.0 Wiki.

Waterwiki: No description, but 467 articles.

Water Wiki: How should water be managed in the southeastern United States? This wiki is devoted to discussion and debate of the many facts, issues, opinions and points of view this question raises. Over 200 articles.

Does anyone know of other wikis?

My goal is to create a SINGLE wiki that lists and links water user groups (irrigation districts, municipal utilities, etc.), to infrastructure, water trades, prices, etc.

If you want to help on this task, please email me!

Bottom Line: It's difficult to find something if you have to search in multiple places. Time for some centralization!

17 February 2009

Drought and Economic Meltdown

Tom Graff of EDF asks:
Can we use the attention the drought has focused on water to address long-term issues, including most notably the effects of climate change, simultaneously with the focus on addressing this year's immediate drought-related problems?
...and here's what I said:
Now is the time to introduce the radical (!) notion of markets for water in the agricultural sector. Markets would allow ag to reallocate 80% of "our" water among themselves without getting into the pain of ag-urban or ag-enviro transfers.

With a drought AND poor economy, it makes sense for ag to improve the allocation/pricing of its most important input.
Obviously, functioning ag-water markets would reduce the cost of ANY transfers (forced or voluntary) from ag to urban/enviro uses.

They would also push back the day when California can no longer grow food for lack of snowpack and preciptation.

Bottom Line: Markets serve all those who use them. Farmers need water markets if they are to prosper in the new era (well, since the 1970s) of water scarcity.

Water Chats -- IID Staffers

Yesterday, I posted Joe Tagg's water chat. Tagg claims that IID does NOT own the water and that IID's entire job is to deliver water to farmers.

That's not what IID appears to think. In today's hour and 22 minute water chat [29MB MP3], listen to me talk with Dean Currie (Key Customer Coordinator), Brad Luckey (Governmental & Regulatory Affairs Manager), and Carlos Villalon (General Superintendent of Water Operations) on these issues (and MUCH more):
  • IID power is FAR larger than IID water in revenue ($600 million vs. $100 million revenues), but both divisions are similar in staffing.
  • IID power is sold outside IID's political jurisdiction (140,000 meters).
  • 97% of IID water goes to farmers (about 300?), but 3% goes to people (100,000 meters?) in the service area.
  • IID is paying hardly anything to restore the Salton Sea because the State government agreed to cover those restoration costs in the 2003 QSA.
  • IID is limiting farmers to 5.25AF/acre for the first time. This is causing many problems with farmers' legal and operating procedures.
I came out of this interview convinced that IID is walking into a shitstorm of its own making:
  1. Nobody appeared to know how much revenue IID has made from water exports to urban areas or when or how that revenue would be distributed to farmers who fallowed land. Farmers are angry about that.
  2. IID is trying to set quantity (5.25AF/acre) AND price ($17/AF) at the same time. It's basic economics that you can't set both without getting a surplus or shortage.
  3. IID appears to think that water rights do not belong to the farmers whose land initially attracted those water rights. That's just silly.
To get a preview of how IID is getting into trouble, compare the new 10-page water rate card to the old index-sized cards. Farmers in the area told me that these new cards are going to be rejected by farmers under Prop 218 (no taxation without representation). Rejection will lead to an operating and governance deadlock.

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 taf of surplus.

To understand why farmers are fighting with "their" water agency, read the next post.

Bottom Line: IID staffers are nice but confused. This confusion weakens their mission, reduces their efficiency, and makes it more-likely that IID will be pushed around by outsiders determined to "fix" things.

Why IID Is Dysfunctional

This 1993 paper [PDF] by Michael Rosen and Rich Sexton (chair of my PhD dissertation committee) was written with the Imperial Irrigation District in mind.

Abstract: The response of water supply organizations to potential rural-to-urban water transfers is examined using cooperative and club theory frameworks. Such organizations exercise control over agricultural water rights in their areas. The proposed water trade between Southern Califronia's Imperial Irrigation District and the Metropolitan Water District is analyzed and the results show that conflicts within these organizations may result from transfer proposals, leading to the temporary or permanent stoppage of such beneficial programs. Such conflicts may be avoided by explicit definition of property rights and by fostering a careful correspondence between these rights and the strategic and operational aspects of the water supply firms.

What the abstract doesn't make clear is that "conflicts within these organizations" refers to a divergence between voting and economic power. At IID, this means that one-man, one-vote political power does not match the concentration of economic power in farmers who are few in number (about 300) but responsible for 97% of water purchases.

The result is that the majority (by vote) makes policies that serve it (e.g., no water trades or reform of water institutions), and the minority (by vote) suffers from a reduction in the value of their assets (irrigated farmland).

During my recent water chats, this mismatch repeatedly came up as a source of friction and dysfunction. The easiest way to fix it is to separate IID's functions (water and power) into two organizations -- one to do power (governed by popular vote) and another to do water (governed by vote in proportion to assessed value -- as is standard in water districts elsewhere). Since there is little overlap between water and power (only 5% of power is generated by hydropower), this split will result in few operational losses.

Unfortunately -- and as was revealed in my chat with IID staffers -- there is no political will to allow water to split off. Those who have to political power to approve such a split would rather keep control over water, no matter the inefficiencies. That's a pity, since IID controls about 3MAF (or 7.5%) of California's entire water supply.

To read IID's dismissal of such a silly idea, click here [jpg]. Sorry, but that justification ("the intrinsic connection between water and power") is just lame.

Bottom Line: IID will continue to mismanage and waste its farmers' water supply for as long as it is run for the benefit of those other than the farmers.

16 February 2009

Water Chats -- IID and Joe Tagg

Last Wednesday, I had a water chat with Joe Tagg, a farmer (and much else) who works about 3,000 acres in the Imperial Valley. Joe is a salt-of-the-earth kinda guy who says what's on his mind, and he says quite a lot. Here are some highlights of our 1 hour and 22 minute chat [29MB MP3]:
  • Water is too expensive at IID. $17/AF is way more than $6-12/AF that farmers pay elsewhere.
  • Farming is tough. There are bureaucrats everywhere with their hands out for fees and forms.
  • We want to FARM the land. Stay out of our way, and let us control our water.
  • Products are exported to many places domestically and internationally. The economic slowdown is brutal [demand for milk down?!]
  • The Imperial Irrigation District does NOT control own the water. It belongs to the farmers.
  • IID farmers grow alfalfa because water is cheap and labor is expensive.
  • The IID doesn't care about its farmers. If the farmers fight, the IID will "fight you with your own money." [Why? Because IID is controlled by popular vote, not a vote of landowners -- as is the norm in other irrigation districts.]
That's just in the first half-hour, so now you have a reason to listen to the rest.

Tomorrow I will post the interview with IID staffers and an analysis of the institutionalized dysfunction of IID. This is going to be good. Promise.

Tagg's Bottom Line: Let us (farmers) control our water.

Higher Prices Save Lives

BS sent me this story:
The National Safety Council announced today that motor vehicle deaths in 2008 achieved the lowest rate since the NSC began publishing its annual Injury Facts statistical report in the 1920s. The estimated annual death rate from motor vehicle-related crashes in 2008 was 13 deaths per 100,000 people, a 9 percent decrease from 2007, according to NSC data. The estimated annual mileage death rate for 2008 was 1.38 deaths per 100 million vehicle miles traveled, a 4 percent decrease from 2007.
So, where's the economics? Although I think that the regulatory/legal safety framework may have mattered in determining a baseline safety rate, I think that the major reason for the fall in accidents was higher gas prices. People drove less often and less fast, so there was less congestion and lower crash damage.

Bottom Line: People respond to prices. Use them!

SoCal Photo Essay

Here are some photos [click to see full size] from my recent 850 mile trip around Southern California. I spent the first days in Long Beach, and then went to Fountain Valley, Imperial Valley, Palo Verde Irrigation District (HQ in Blythe, on the AZ border), and then Los Angeles.

I was shocked to see SNOW in the mountains. It rained alot, but rain doesn't help if it cannot be stored as snowpack for the summer.


This was my first view of the Imperial Valley (about 35 mi from El Centro on I-8)


In El Centro, I saw a LOT of alfalfa (and other forage crops) being grown and harvested. I'll discuss the economics of this practice elsewhere (see Tagg's water chat, above).


This is the "Central Main Canal" -- it's earth-lined, and that matters because nobody in IID uses groundwater. Tailwater is gathered and drained into the Salton Sea.


A zanjero (irrigation ditch "wrangler") floods the fields -- making the birds happy.


I camped here on my way between IID and PVID. Perhaps "growing alfalfa in the desert" is not too far wrong :)


This photo (taken at PVID) shows both seepage from the canal and salinity of the water. One reason that IID and PVID farmers have to flood their land is to make sure that there is enough water to flush salts into the drainage ditch. Salinity is about 800ppm coming in and 3,000ppm going out.


This view looks the other direction. Notice the "Colorado River" sign :)


Notice how green the earth is without irrigation water.


On my way out of the area, I drove past the largest concentration of windmills I've seen. There were hundreds, and many owe their lives to government subsidies.

15 February 2009

Weekend Discussion: Water Prices

NOTE: This post will stay here until Sunday night. Posts for Saturday and Sunday morning go below this post.

Dear Aguanauts,

Discussion posts allow you to discuss your beliefs on a topic -- to share your understanding, experience and opinions -- without worrying about what's right or what others think. (Check out last week's fluoridation .) Most important, the discussion allows us to learn from each other. So...

Why does the price of water to customers range from $6 to $1,500/AF in California?

Xenophobia and Water

Last week in Fresno, Judge Wanger of the US District moderated a debate between farmers and environmentalists over water exports from the Delta.

Although the debate included the typical give and take, the part that got everyone's attention was this comment by Lloyd Carter, who represented the environmentalists. When asked about job losses that may result from a reduction in water exports to the southern San Joaquin valley, he said:
They're not even American citizens for starters. Do you think we should employ illegal aliens? What parent raises their child to be a farm worker? These kids are the least educated people in America or the southwest corner of this Valley. They turn to lives of crime. They go on welfare. They get into drug trafficking and they join gangs.
To view this quote in context, watch this video, but -- even after watching the video -- I do not think that Carter's comment was either appropriate or an accurate description of farm workers. Yes, they are poor, but their criminal activities are probably at/below the criminal activities of people in that income class. Further, job losses are only likely to increase criminal behavior...

I asked Lloyd to explain his comments, and he gave me two references: the apology in his blog and a working paper that he is submitting to a law journal. The apology says:
My comments were directed at the exploitation of farmworkers in the southwestern corner of the valley, which is the poorest place in America but, as worded, implied that ALL farmworkers turn to lives of crime or gangs, which is obviously not true. My remarks were intended to focus on the social costs of exploiting an immigrant worker population which is denied adequate pay, housing and education.
The paper (which I said I would not post) makes the important point that poverty in the Westlands area is much higher than elsewhere in the Valley (West versus East side), and that those who are in poverty are more likely to turn to violence, drugs, etc.

While I agree with him (Westlands is NOT interested in the welfare of its workers), I DO have to say that his comment is not helpful.

There are plenty of xenophobes who blame "immigrants" for budget, water, and economic problems. Those racist bigots are hypocrites (with few exceptions, we are all immigrants) and useless analysts: The poor, by definition, use far fewer resources than the rich. Their "foreign" nature makes them easy targets and scapegoats, however.

Carter should have been more careful with his words.

People who lose their jobs suffer, and we should take care to help them find other jobs. Some may turn to crime, but that's not often their first choice, and there are far bigger criminals (cf. Wall Street, Sacramento and DC) who get off with far less punishment.

Bottom Line: If water were allocated by markets instead of bureaucrats (Carter calls them the hydraulic brotherhood), we'd all be better off.

Stop Misleading Media Claims

FRCN sent this interesting note in which the UK's chief meteorologist decries the poor quality of reporting on climate change:
For climate scientists, having to continually rein in extraordinary claims that the latest extreme is all due to climate change is, at best, hugely frustrating and, at worst, enormously distracting. Overplaying natural variations in the weather as climate change is just as much a distortion of the science as underplaying them to claim that climate change has stopped or is not happening. Both undermine the basic facts that the implications of climate change are profound and will be severe if greenhouse gas emissions are not cut drastically and swiftly over the coming decades.

When climate scientists like me explain to people what we do for a living we are increasingly asked whether we “believe in climate change”. Quite simply it is not a matter of belief. Our concerns about climate change arise from the scientific evidence that humanity’s activities are leading to changes in our climate. The scientific evidence is overwhelming.
Bottom Line: Science discards personal belief in the face of evidence. Let the scientists science speak!