30 April 2009

CommuniTree Fest (Bay Area)

"Come celebrate the movement to 'Green our Community and Revitalize our Lives,' at this tri-annual Communitree Festival happening May 6-10, 2009, in Oakland, Berkeley, SF...The CommuniTree Festival is an incredible four day arts and ecology series celebrating environmental education, cultural awareness, and social justice. A powerful gathering of artists, social justice leaders, farmers, activists, permaculturalists, elders & youngers in dedication to fostering peace and prosperity in our communities."

These guys are totally motivated, with a PACKED calendar. Check it out.

Flashback: 23-30 Apr 2008

These posts are STILL relevant, so please comment (I'll approve them ASAP.)

Voting rules in water districts affect outcomes.

BEST (of course!) Dissertation Done! Read my dissertation (Conflict and Cooperation within an Organization: A Case Study of the Metropolitan Water District of Southern California) to learn about the institutional details of urban water management in SoCal -- and everywhere!

In a related post one member agency of MWDSC is suing MWDSC. Conflict!

Who Benefits from Ethanol? Big Ag. I'm shocked! Shocked! Here's a post on the destructive power of biofuels.

Michael Pollan asks himself why we should even bother to do anything about the Earth if an individual's action is unlikely to have any impact...

Both environmental and economic reactionaries are wrong.

Perception vs. Reality


I hope that Maude Barlow tells her fellow citizens THIS fact: Cheap water leads to more demand (Canadians have the highest per capita consumption of water in the world.)

Bottom Line: We cannot manage water if we don't know how much we use or how much that use costs (economically or environmentally).

Speed Blogging

  • The NYT does an excellent analysis: "if your stainless steel bottle takes the place of 50 plastic bottles, the climate is better off, and if it gets used 500 times, it beats plastic in all the environment-impact categories studied in a life cycle assessment." Lesson: Use -- and don't lose -- your bottle!

  • Mexico's most serious problem is illegal drugs climate change. Very interesting strategic development.

  • The New Yorker on Burmese pythons in Florida: "Scientists who study invasive species do not talk like scientists. They talk like detectives on a homicide squad, or generals in a Japanese monster movie. They count deaths, predict extinctions, warn of alien takeovers. There are used to being ignored."

  • An update on the continuing story by AP: "U.S. manufacturers, including major drugmakers, have legally released at least 271 million pounds of pharmaceuticals into waterways that often provide drinking water — contamination the federal government has consistently overlooked, according to an Associated Press investigation." Note that "legal" doesn't mean sensible. The basic point is that ubiquitous drugs really are ubiquitous. Too bad for the environment, too bad for us.

  • "B Corporations address two critical problems which hinder the creation of social and environmental impact through business:
    • The existence of shareholder primacy which makes it difficult for corporations to take employee, community, and environmental interests into consideration when making decisions; and
    • The absence of transparent standards which makes it difficult for all of us to tell the difference between a 'good company' and just good marketing.
    B Corporations' legal structure expands corporate accountability and enables them to scale and achieve liquidity while maintaining mission."

  • Peter Gleick (of the Pacific Institute, in Oakland, CA) is blogging on world water issues. So far, his posts offer facts and things to fix but no solutions :(

  • "The relationship between energy and water use is beginning to get more attention by U.S. policymakers." Lots of numbers, but we wouldn't need to know them if energy and water prices included externalities (e.g., carbon/pollution) and were set by the market (instead of bureaucracies).

  • "Secretary of the Interior Ken Salazar... withdrew a Bush Administration rule that allows more waste from mountaintop mining to be dumped in or near small streams." Good!
hattip to JWT

29 April 2009

Economic Games and Mechanisms to Address Climate Change

This 2.5 day conference will take place at the Mathematical Sciences Research Institute next week (Mon, Tues and Wed am). MSRI is on the UC Berkeley campus, at the TIP TOP of the hill.

As usual, there is NO FEE to attend.

I am one of the organizers, and I am happy to say that this conference will be VERY hands on. There will be tutorials and talks by some of the top economists and mathematicians in the world. The best part -- IMO -- will be the panel discussions, where presenters and participants will do their best to destroy and rebuild the models, simulations and experiments that have come before, to create better versions for consideration and implementation.

This conference is very timely, and I am glad to be participating.

Bottom Line: Academics can do no better than contribute to the benefit of society.
Speaking of that, Ariel Dinar is editing a new journal called Strategic Behavior and the Environment. He is looking for papers that "contribute to our understanding of strategic behavior in design and implementation of environmental policy. Scholars in economics (including experimental economics, political economy, and game theory), political science, international relations, negotiation, and other relevant disciplines, are invited to submit manuscripts for publication consideration, following a peer-review process."

Poll Results -- Earth Day

Hey! There's a new poll (public vs. private) to the right --->
Earth Day is about (choose 1+)
Consciousness Raising 30 votes
Guilt Alleviation 13 votes
Lifestyle Change 15 votes
Fundraising 13 votes
Education 22 votes
Symbolism 26 votes
Politics 8 votes
The Children! 9 votes

Wait! Did Earth Day just happen? Damn, I already forgot!

Bottom Line: We've got Earth Day, Water Week, Drinking Water Month, the Water Year and the Water for Life Decade. That keeps the media happy, but what about us? What about making changes and improvements? I am not quite on board with these "consciousness" events.

Water Quality Bleg

Hey Folks,

I am looking for some help on water quality testing, i.e.,
  • What off-the-shelf equipment is out there?
  • How much does it cost to buy? for each test?
  • How much training does the operator need?
  • Is there a one-shot tester for home use?
  • How long does each test take? How many contaminents does it test for?
  • Can the equipment be moved? Used in the developing world?
Thanks for any help!

Bottom Line: Don't drink the water if you don't know what's in it!

Thirst -- The Review

I just saw Thirst (2004), a movie by local film-makers Alan Snitow and Deborah Kaufman.

As a tale of capitalism versus social activists, it reminded me of FLOW, but it was better. (If I had seen Thirst in 2004, I would have questioned the relevance of FLOW as a me-too film...)

The plot concentrates mainly on privatization stories in Cochabamba, Stockton and Rajasthan. There are scenes of activists confronting befuddled executives from the World Bank and water corporations (Suez, Vivendi, et al.)

The Cochabamba scenes of tear gas and blood are disconcerting. It looks like a totalitarian horror story, but I wanted to hear more about WHY the government and Bank agreed to privatize. (Public water provision was broken. After privatization was reversed -- a great "victory" -- it returned to broken.)

The Stockton story was interesting as an example of an overbearing mayor against activist citizens. Although Mayor Podesto's arguments are valid (we need outside funding for infrastructure improvements; competition is good), his methods were not (ramming the privatization through the city council). I was interested to see the employees of the public water company opposing privatization even though their jobs were guaranteed as part of the contract.

I had lunch with Snitow and asked him about the mayor's motivation. He mentioned an interesting fact: After the water company was privatized, its reserves ($millions) were defaulted to the general fund and spent on revitalization projects (e.g., a stadium). Not cool.

Note: Podesto was term-limited out of office. When he ran in the most expensive state senate campaign in history, his "home" county voted against him. Bad move.

The privatization was reversed in 2007. I'd like to know how citizens in the area perceived service under each regime -- with the caveat that Thames/OMI may not have invested much if it feared getting kicked out -- as it was four years into a 20-year contract. Any data out there?

Next, the movie shifts to Rajasthan, where the ever-reasonable Rajindra Singh asserts the importance of local control of water. He reminded me of Charles Banda, the Malawian well-drilling hero.

Here are a few good quotations:
  • "Water as a human right means free to everyone. That's a fantasy" -- John Briscoe of the World Bank
  • "Who owns water rights? The government? No -- the community. The Bank and multinationals are a new form of colonialism" -- Singh of Rajasthan
  • "They say that everything should be commodified and put on an open market. It's human rights versus corporate rights." -- Maude Barlow of the Council of Canadians.
  • "Activists are unhappy about the results, so they blame the procedures." -- Briscoe of the Bank
These last two statements deserve some comment. First, Barlow is spewing distorted hyperbole (again). Second, activists do not CARE if the result reflects politician's choice, corruption, or the will of the People. If the result is not THEIR result, then it's wrong. Such "holier-than-thou" rhetoric is annoying.

Bottom Line: See Thirst (not FLOW), vote in this week's poll, and then read Water for Sale (see next post).

Water for Sale -- The Review


Fredrik Segerfeldt originally wrote Water for Sale (2005) in Swedish. The CATO Institute has published an English-language version. So, what does a Swede have to say about the private companies selling water to the world's poor? Privatization is a good idea. [Also see this post for Tyler Cowen's opinion that water can be sold in a laissez-faire market. I disagree with him.]

Anyone who works on water policy should read this book. Segerfeldt argues sensibly, with examples, statistics and documentation. His arguments echo and reflect recurring themes (equity, poverty, development, capitalism and corruption) in water policy, and this book will be useful (barring miracles in the water sector) for the next 15-20 years. The book is short (118pp plus 25 pp of notes and references) but complete. The prose is clear, with few redundancies, inconsistencies or errors. The book's biggest strength is Segerfeldt's logical foundation (defend the poor). Its biggest weakness is the omission of the bigger picture (how does one do anything well when the government is corrupt?), but we all fail that test at some point.

Segerfeldt's brutally-effective condemnation of water policy in the developing world is as dispassionate and rational as one can be when discussing how “every minute of every day, 22 people die because they cannot get enough safe water” (p. 8). Children suffer the most -- accounting for one-quarter of the 12 million annual deaths from water shortage.

His main point -- and a good one -- is that the private provision of water by companies seeking profits can hardly make the poor worse off, since “ninety-seven percent of all water distribution in poor countries is managed by public suppliers, who are responsible for more than a billion people being without water” (p. 1).

Can we blame Nature for water shortages? No -- the wettest place on earth (Cherrapunji, India) has water shortages due to poor water policies. Although shortages are strongly correlated with a lack of economic development, development is happening too slowly to save lives. Instead, Segerfeldt suggests improving the governance of water supply, and he recommends importing good governance, via private enterprise.

Private companies don't just have the advantage of outside cash. They have the advantage of management experience and specialization, the advantage of competitive pressures, and the advantage of the profit motive. Public bureaucracies have none of these advantages. Every locality learns by doing (often repeating mistakes "learned" elsewhere), facing no competition, and catering to political whim. The worst problem is that public bureaucracies suffer no penalty when they deliver poor results. Bureaucratic rewards accrue to those who spend their budgets -- not to those who serve more people. Political forces favor rich urbanites and big farmers, not poor slum dwellers or small farmers.

Further, Segerfeldt notes that water is too cheap. Because prices are low, demand exceeds supply and shortages result. Why are prices low? Subsidies of $45 billion per year mean that water prices cover -- on average -- 30 percent of the cost of water service. What's the result? Deferred maintenance (leaky pipes, poor quality) and small service areas. While the rich get piped water, the poor pay 10 to 80 times more to get water from “pirate” vendors. (Pirate in the unregulated sense; they are providing a valuable service to grateful customers.)

What are the barriers to change? “Anti-privatization activists... are driven by an ideologically inspired aversion to enterprise, coupled with fear on the part of vested interests of losing their privileges.” He points out the cost of such ideology -- a failure to serve the supposed beneficiaries of their interest, i.e., “it would be not just a pity but quite outrageous if millions of people were to starve, fall ill, and die through water shortages brought about by the strident propaganda of vested interests and powerfully ideological movements with quite different ends in view” (pp. 4-5).

The rich and middle classes also dislike privatization because they are likely to face higher water bills. First, because private companies want to collect their money, Second, because private water companies are likely to expand service to truly poor customers who are going to use less water (thus making is hard for wealthier customers to claim that they cannot do with less). Third, because government policies designed for the “poor” are more likely to end up serving the poor.

Public sector unions want to protect their jobs, of course, but the worse perpetrators of the status quo are the politicians who use water utilities for selfish gain -- hiring relatives and cronies, diverting cash flow, and contracting with “friendly” firms. (The mayor of Cochabamba, Bolvia would not allow the city's water supply to be privatized until a dam was included in the deal. Conveniently, his friends were in charge of building that dam. The infamous failure of the Cochabamba privatization can be partially blamed on that dam.) Even more common than politicians-cum-thieves are politicians who fail to monitor public water managers. Where, after all, would fines for bad performance go, except from one pocket to the other?

What are his solutions? Private trade in water rights. After Chile “introduced private ownership of water in the 1980s... water supply has grown faster than in any other country. Thirty years ago, only 27 percent of Chileans in rural areas and 63 percent of urban communities had steady access to safe water. Today's figures are 94 and 99 percent, respectively -- the highest for all the world's medium-income countries” (p. 31). Even better, the incentives to sell conserved water increased agricultural efficiency and -- through competition -- lowered the price of water. Farmers did not suffer -- despite the lack of major infrastructure investments, the shift to higher-value crops and greater efficiency resulted in six percent annual productivity growth between 1975 and 1990. Oh, and don't forget those bureaucrats. The lack of “capricious pricing” and quotas on water use left farmers alone to do what they do best -- raise food and make money.

At the retail/urban level, Segerfeldt recommends that contracts for operation be awarded to companies through a competitive tender. He then gives several examples of privatizations that failed and succeeded, noting what went wrong and why. Disturbingly (for anti-privatization activists), it seems that many failures resulted from political failures and corruption -- not greedy capitalists. His main recommendations to avoid failure are that contracts reflect local conditions, annual price increases be capped, and alternative providers be allowed to continue operations (competition!). These common-sense ideas would deflect most concerns about privatization. (Remember that breach of contract can be remedied by re-municipalization!)

Further, Segerfeldt recommends that equity issues (“the poor will suffer with market prices”) be directly addressed through income supports or vouchers. “Cheap water” policies not only subsidize the middle class and rich, but sometimes they only subsidize those classes -- like when the poor don't even have piped water!

Bottom Line: “Keeping water distribution in the public sphere is often identified as more democratic... Using food as an analogy, we can observe that food is also essential to life. Yet in countries where food has been produced “democratically” -- that is, by the government -- there has often been neither sufficient food nor democracy. In this regard water is no different... the question that naturally comes to mind is why anti-privatization activists do not expend as much energy on accusing governments of violating the rights of the 1.1 billion people who do not have access to water as they do on trying to stop its commercialization.” (pp. 113-114).

28 April 2009

Academic FAIL

(via PB) A professor of religion laments the "broken" higher education system, calling for more regulation and re-organization.

Although he's wrong about regulation (MORE government? Please no!) and performance (US universities are great), he's right to point out "as departments fragment, research and publication become more and more about less and less." His example of a true multi-disciplinary program involves water:
In the coming decades, water will become a more pressing problem than oil, and the quantity, quality and distribution of water will pose significant scientific, technological and ecological difficulties as well as serious political and economic challenges. These vexing practical problems cannot be adequately addressed without also considering important philosophical, religious and ethical issues. After all, beliefs shape practices as much as practices shape beliefs.

A Water program would bring together people in the humanities, arts, social and natural sciences with representatives from professional schools like medicine, law, business, engineering, social work, theology and architecture. Through the intersection of multiple perspectives and approaches, new theoretical insights will develop and unexpected practical solutions will emerge.
Why is such a program not happening now? Well, it IS already happening with water in some places (UC Davis has an amazing ecology graduate group), but perhaps it is not happening enough. To me, the fundamental driver of all that ails us is the publish or perish regime. Because academics cannot get tenure* without publishing in peer-reviewed journals, they put a lot of effort into getting those publications. Few people academics read the journals, since most of the articles are too specialized for most. Even worse are the opportunity costs -- less teaching by professors and less outreach to "normal" people.**

Bottom Line: Incentives matter! The way to change academic departments is by changing the reward system, i.e., stop encouraging obscure publications and start encouraging teaching and research for people.
*Lifetime job security is NOT good for innovation.

** Note that I am conducting my career without regard to this system (see this post). I am looking forward to lecturing in the fall*** (I am a postdoc in a department with 20 professors), and I am spending MY time "teaching" normal people (you readers and groups I speak to). I have no idea where I'll work after June 2010, but this is the way I want MY career to go...

*** Maybe. I am now tied up in bureaucratic knots on this :(

Picture of the Year

PB sent this XLS with a comment:
Not only have consumptive uses north of the Delta exceeded exports for many years, the outflows have not collapsed as some claim. What these figures do not show is the timing of these various diversions and outflows. Our better understanding of and regard for fish needs underlines the importance of timing.
And here's the picture that we've all been waiting for [click for larger]:As you can see, south of Delta exports average somewhere in the 5.5MAFY range. That's large but only relative to in-delta diversions. Upstream consumptive use is much greater.

Addendum: This figure is Figure 7B in the Final Report [PDF] of Delta Vision.

But note one thing, in-Delta diversions were FIRST; upstream diversions were SECOND; and south-of-Delta exports were LAST. Even small diversions can be blamed for "breaking the smelt's back," and the south of Delta interests were "last in time, last in right."

On a related note, PB also sent this analysis from a partisan:
On March 31, 1977, the CVP had 3,035,300 acre-feet of water stored in its northern California reservoirs. This point is still considered the driest on record and yet the CVP was able to deliver to its SOD ag service contractors 25% of their contract supply and some additional water to help protect permanent crops.

In 1991, the fifth year of a protracted drought, the CVP was again forced to curtail its deliveries to SOD agricultural customers to only 25% of contract supply. Under those true drought conditions, CVP storage ran approximately 37% and 44% of capacity, respectively.

On March 31, 2009, northern CVP storage stood at 5,033,200 acre-feet or 61% of capacity [and CVP deliveries are penciled in at 10%]. The difference between these “dry” periods is attributable entirely to changes in the regulatory constraints placed upon the CVP since the last natural drought.

On August 4, 1989, the National Marine Fisheries (NMFS) issued an emergency interim rule listing the Sacramento winter-run Chinook salmon as threatened under the federal Endangered Species Act (FESA). Since that time, other FESA listings combined with implementation of the Central Valley Project Improvement Act and federal Clean Water Act through the State Water Resource Control Board’s Water Quality Control Plan have resulted in the reprioritization of at least 3,200,000 acre-feet of CVP and State Water Project water [every YEAR!] for environmental purposes.[1]

This volume does not include potential impacts that may result from the longfin smelt’s recent listing under the California Endangered Species Act nor the soon to be released NMFS revised biological opinion for salmon, steelhead, and green sturgeon.

[1] ~500,000 af Shasta cold water pool; ~400,000 af Trinity River restoration flow; ~800,000 af Sacramento River and Bay-Delta restoration flows; ~400,000 af wildlife refuge supply; ~1,090,000 af 2009 FWS Biological Opinion; ~100,000 af additional Water Quality Control Plan costs. Many of these numbers may be better or worse depending upon hydrological year type.
State Senator Cogdill (eastern San Joaquin Valley) makes similar claims of a "regulatory drought" caused by 3-4MAF of "environmental takings."

Bottom Line: Seems like there's some space for a north-to-south market in water trades :)

Hype vs. Reality

...or perhaps "Chronicle of a Death Foretold"? Check this out:
Water agencies and politicians from Gov. Arnold Schwarzenegger on down have repeatedly stressed that water shortages this year from the Bay Area to San Diego prove the need for such a canal. It would divert water around the Delta for delivery to farms and cities.

But numbers developed by a state-run planning group seeking to build the canal show it would not deliver more water in dry years.
Although Taugher goes on to report the PC's strategy of shipping excess water from wet years south of the Delta for storage and later use, his main point is a good one: The PC will NOT end droughts and it would NOT fix the current problem.

Bottom Line: Stop the political disinformation. Admit that the PC is about reallocating water among existing (agricultural) uses -- NOT creating more water...

27 April 2009

Neat Ideas

I looked around the exhibit at Investors' Circle after my talk last Tuesday.

Here are a few companies that may interest readers:

World Centric is the second largest maker of biodegradable plastics. I was pleased to hear that they have just got a biodegradable version of those plastic caps that come with your cappuccino... On the market soon!

"driptech designs and manufactures affordable drip irrigation for farmers in developing countries."

"Biochar Engineering designs, develops, and deploys industrial equipment that uses waste biomass, such as agricultural or forestry waste, to produce biochar." I asked about the recent push-back on biochar, but the rep said that was over-stated (no surprise). More-important, I am interested to see how a $50,000 investment that produces char worth $250/ton (fertilizer value, NOT carbon credit value) is going to hit cost-benefit ratios...

Cooler provides carbon footprint data from a company's quickbooks accounts. Start with the information tool and then move to buy offsets, etc.

"Sustainably raised by Kona Blue Water Farms, Kona Kampachi® is a Hawaiian yellowtail that is open ocean grown in the pristine waters off the Kona Coast of the Big Island—hatched, reared and harvested using state-of-the-art aquaculture technology, without depleting wild fisheries or harming the ocean environment."

Monday Morning Smile

This video is great. (Send me more!)



If you liked that music, then check out Susan Boyle singing (kinda funny; mostly amazing).

Nestle Saves the World

According to this morning's press release, Nestle is going to make the world a better place with three initiatives:
The initiatives include an expanded education programme focused on nutrition, health and wellness for school age children around the world, a research and development centre in Africa, and a new Nestle Prize in Creating Shared Value, awarded every other year to foster innovative approaches to solve problems of nutrition, water and rural development.
It seems that the "water" component involves giving money to support NGOs that work on innovative projects that "reduce water use." That's an interesting phrase, given that MOST people in African countries suffer from poor QUALITY water, not using "too much" -- unless you are a farmer growing non-Nestle crops. In that situation, Nestle is probably happy to find ways to reduce your "excessive" water use...

For an interesting lesson in cutting-edge corporate PR (?), check out Creating Shared Value.org, Nestle's PR portal "an open community resource," where "Together...we can tackle some of the worlds’ biggest problems in water, nutrition and rural development." Note that "open community resource" merely means that material on the site (from Nestle's business units) is provided under the Creative Commons license.

Tomorrow (28 Apr), you can watch people Nestle has chosen give their perspectives on four topics (times for Eastern US):
  • 9-11 am: Creating Shared Value: Can Shareholder & Society’s Interests be Aligned?
  • 11-12:45: Water: The Growing Water Security Crisis: Needed Solutions in Policy & Action
  • 1:45-3:15pm: Rural Development & Food Production: Needed Solutions in Policy & Action
  • 3:45–5:30pm: Translating Greater Food Production into Better Nutrition & Quality Diets
During the water component, you can listen to:
  • Ger Bergkamp, Director General of the World Water Council.* He brings 20 years of experience serving the water community, most recently at the IUCN (The World Conservation Union).
  • Anders Berntell, Executive Director at the Stockholm International Water Institute. Mr. Berntell, a biologist by training, has worked within the environmental field for more than 20 years. Prior to joining SIWI he was Water Director at the Swedish Ministry of the Environment.
  • Parviz Koohafkan, Director of the Land and Water Division, Food and Agricultural Organization.
  • Ishmael Noko, General Secretary of the Lutheran World Federation. The first African to hold this office, he joined the then LWF Department of World Service in 1982, and was Director of the Department of Church Cooperation, later called Department for Mission and Development, from 1987 until 1994.
  • Gerd Leipold, Executive Director of Greenpeace International. He has worked for Greenpeace in various capacities for over 20 years including as Executive Director of Greenpeace Germany and as the coordinator of the Greenpeace International disarmament campaign.
Right.

Bottom Line: Nestle's doing what it can to burnish/defend its reputation, but I'd like it to use its corporate muscle to reduce corruption affecting farmers in the countries where it does business. That would create REAL shared value!

* The WWC runs the World Water Forum. It was founded and is funded by corporations but allows others to join. Interesting little things I am learning here...

One More Thing

When I posted the abstract from this paper, I had not read it. This excerpt deserves further comment:
Rosa (1993) and Rosa and Perard (2007) propose another explanation of privatization and nationalization movements in the economy in general. They “consider that the government’s motive is the same than the private investor’s motive: to control the firm’s profit or cash flow in order to further one’s own interests. In the case of government, the one and major interest is political power and survival. In order to succeed any government has to transfer some wealth to supporters, on top of consuming resources by itself. Instead of distributing profits to shareholders or retaining resources for the manager, the state as owner uses the firms’ resources to grant rents and advantages to selected and useful (to him) clienteles thus aiming at maximizing his chances of staying in power. Thus both types of investors, whether private or government, value firms for the cash flow they produce even though the beneficiaries of the cash flow they have in mind are different.”

Since both private sector and governments are interested in firms, the one who value the firm the most proposes the highest bid. It results in privatization if private valuation is the highest one and nationalization if public valuation outbid the private’s one. The difference of economic valuation determines the allocation of property rights
Put differently, the legal structure for water provision does NOT depend on efficiency or quality, but on the political gains from each structure. In the US, private provision is MORE likely (according to Perard's statistical analysis) when
  • the social cost of taxes is high;
  • the government already has experience with outsourcing (public provision of other services, including sewerage, has a negative impact);
  • population density is high;
  • there are fewer public employees (voters) in the area; and
  • the area leans towards Republicans.
Interesting indeed!

Bottom Line: Politics matters more than you think!

Running for Office

A friend sent me this list of questions that a reporter asked of candidates running to become directors of a regional water board:
  1. What qualifies you to be a board member of the district?
  2. What would be your top three priorities if elected?
  3. Where should the district rank irrigation, flood control and recreational uses in importance? How should district resources be distributed among the three?
  4. How can the district effectively address issues related to water supply and demand?
  5. How can the district establish a better working relationship with other local governments?
  6. Should the district be satisfied with its current administrative structure? Are there any improvements or changes that should be made?
  7. Have you or your business (if you are a business owner) ever been the subject of any state or federal tax liens?
  8. Have you ever been involved in business or bankruptcy proceedings?
  9. Have you ever been arrested or charged with DWI or any misdemeanor or felony?
Besides the last three (which may or may not disqualify candidates in the world of water) these are interesting questions. More importantly, it's good to see journalists tracking these politics AND candidates competing for office. When it comes to water politics, far too few elections are contested.

Bottom Line: If we want good people to manage our water, we need them to be qualified, hardworking and exposed to plenty of outside scrutiny and performance feedback!

26 April 2009

Weekend Discussion: Social 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 real fur.) Most important, the discussion allows us to learn from each other. So...

Both agricultural and environmental groups claim that their need for water is justified by the social value that results from their using it. Compare, contrast and discuss.

Why Nobody Listens to (Some) Enviros

About a year ago, I corresponded [see emails below] with Dorothy Green a few months before she died. (At the time, I had no idea how famous she was.)

I've no doubt that Green had her heart in the right place, but I do doubt the ideological stance that she and many enviro groups (e.g., Food and Water Watch) take.

Why? Because they have made a preemptive decision to dismiss ALL solutions that involve markets, private enterprise, capitalism, etc. while simultaneously putting their trust in some sort of magic government made of "public servants" who are really good at predicting and implementing the best policy for the People. (For more on that, check out the history of the USSR and a guy named Hayek.)

In my mind, such an extreme orientation alienates potential allies and eliminates useful (but impure) solutions.

You can see this in their rhetoric ("Privatization has always made matters worse not better for the people and the environment.") but also in their public stances.

Let's take a look at the California Water Impact Network (C-WIN) -- an organization Green founded -- that is "working to promote the equitable and environmentally-sensitive use of California's water." According to their action plan, C-WIN's goal is:
to ensure that publicly owned water projects in California are operated in the public interest. The public interest includes reasonable urban and agricultural uses, as well as environmental values. In this way, we can achieve a sustainable water future.

[snip]

Two immediate issues link our concerns about our water future: the reliance of developers on “paper water” to meet projected future needs, and the push to deregulate and privatize our water resources - turning water into a commodity as a way of dealing with the increasing competition for this precious resource.
On the first issue, I am in full agreement. C-WIN notes that the SWRCB has issues water diversion permits for 532MAF of water, but average annual runoff is only 71MAF. These paper permits must be reduced for several reasons:
  • Extra permits create uncertainty over what a permit is worth.
  • Permits allow diversions. If there are more diversions than water, then water is overused and depleted.
  • Markets in permits will not function until paper permits are retired, leaving "wet" permits (of much higher value) to be traded.
OTOH, I do not agree with their second issue, which says:
Deregulation/Privatization. As competition grows for our water resources, there are those who would sell water that belongs to all of the people to the highest bidder, for personal profit. They believe that the market should decide how to allocate this resource for its highest and best use. However, many, including C-WIN, believe this publicly owned resource should remain in public hands, and that it is the job of the state to allocate water to meet the needs of all the people and the environment. We must remember what happened when California’s energy was deregulated and subjected to market forces. Our economy was devastated. We must not let this happen with our water.
Here are my objections:
  1. Water may belong to ALL the people, but the rights have been assigned -- even if they've been over-assigned.
  2. Those who hold rights have made financial commitments based on the rights. They will suffer unconstitutional harm if their rights are deprived.
  3. Anyone with property is allowed to dispose of it at a profit.
  4. How would the "state... allocate water to meet the needs of all the people and the environment"? I understand that C-WIN has its own ideas, but those ideas are not shared by all. Since demand exceeds supply (the end of abundance), it is necessary to ration water supply in some way. I have proposed several ways that are both fair and efficient, i.e., some for free, pay for more retail pricing and all-in-auctions for wholesale water allocation. Environmental water flows are tougher, but they can be baselined and renegotiated on biological/ESA principles. (The political negotiation of "reasonable urban and agricultural uses, as well as environmental values" would be a nightmare. Trust markets!)
  5. The electricity deregulation fiasco is exactly why the State should NOT be in charge of water. The break-down was MOSTLY caused by the failure to deregulate retail prices at the same time as wholesale prices were "freed". In contrast, consider how the wholesale/retail distribution of oil/gasoline works without the "aid" of regulators. (The shenanigans of Enron et al. were responsible for 20-30% of the problems, IMO, and anyone -- except a regulator, it seems -- could have predicted those actions and put preventative measures in place.
Bottom Line: Those who claim to represent the People should not only accept the institutions that the People have approved (markets, property rights) but also consider ANY and ALL means of improving the People's lot. What do we want anyway? Ideology or results?

hattip to PB (and sorry for the 4 month delay in getting to this!)
From: Carolee Krieger
Date: Thu, Jun 19, 2008 at 9:35 AM
To: Lloyd Carter
Cc: David Zetland, Dorothy Green, Joan Hartmann

Lloyd, here are two letters that we might use...

I am also cc'ing this to Dr. David Zetland (Agricultural and Resource Economics) visiting professor from UC Davis...his specialty is pricing...thought he would like these.

Carolee

From: Dorothy Green
Date: Thu, Jun 19, 2008 at 9:59 AM
To: Carolee Krieger
Cc: Lloyd Carter, David Zetland, Joan Hartmann

I think we need to get to know more about this gentleman, and perhaps encourage him to get even more involved. How can we do this? What would such a process look like?

Dorothy

From: David Zetland
Date: Thu, Jun 19, 2008 at 10:28 AM
To: Dorothy Green
Cc: Carolee Krieger, Lloyd Carter, Joan Hartmann

Hi Everyone,

Let me jump right in and get involved :)

I just finished a PhD diss on MWD of SoCal, am running a blog on "aguanomics" and will be doing political economy of natural resources at UC Berkeley in the fall. I am not, btw, a professor. I graduated from UC Davis and I am a postdoc at Berkeley

I am VERY interested in reconciling ag, enviro and urban interests via markets, which use prices instead of lawsuits.

I suggest that you browse my blog (esp. sticky posts on the right) to get an idea of how I think and what I've been saying...

Best,

David
ps/I *may* have a piece coming out in Forbes on urban water pricing (raise prices to get conservation) in the next few weeks. My next ideas are for ag/enviro/urban markets and private/public/community water supplies...

From: Dorothy Green
Date: Thu, Jun 19, 2008 at 11:04 AM
To: Carolee Krieger
Cc: Lloyd Carter, David Zetland, Joan Hartmann

So David Zetland is into privatization! He doesn't seem to understand that water belongs to all of us, and that a water right is not an ownership right, but usufructuary.

Dorothy

From: David Zetland
Date: Thu, Jun 19, 2008 at 11:29 AM
To: Dorothy Green
Cc: Carolee Krieger, Lloyd Carter, Joan Hartmann

Ahh Dorothy,

You are precisely wrong -- see this and this.

David

From: Dorothy Green
Date: Thu, Jun 19, 2008 at 1:27 PM
To: David Zetland
Cc: Carolee Krieger, Lloyd Carter, Joan Hartmann

Dear David,

Using market forces, transfers, means to me privatizing it. According to the public trust doctrine, water belongs to everyone and it is the duty of the state to allocate it to benefit the public. The giant agribusiness interests in the San Joaquin Valley have been working hard for many years to blur the ownership rights in order to market their water to the cities, at enormous profit. It is easier and more profitable to market their water than to grow crops. Water has belonged to us all. Historically we have not paid for water, but for the facilities, O & M, needed to get it to us. Big Ag wants to change all the rules and have persuaded some, even in the environmental community, that transfers and market forces should rule.

Dorothy

From: David Zetland
Date: Thu, Jun 19, 2008 at 1:37 PM
To: Dorothy Green

Dear Dorothy,

That's an interesting definition of "private". So, if you are unwilling to use such "private" forces, then I wish you all good luck.

David

From: Carolee Krieger
Date: Thu, Jun 19, 2008 at 2:51 PM
To: Dorothy Green, David Zetland
Cc: Lloyd Carter, Joan Hartmann

David, I completely agree with Dorothy. Privatization has always made matters worse not better for the people and the environment.

Carolee

From: David Zetland
Date: Fri, Jun 20, 2008 at 1:18 PM
To: Carolee Krieger
Cc: Dorothy Green, Lloyd Carter, Joan Hartmann

Hi everyone,

You may be interested in this reaction to your agenda

David

My Stuff in Several Places

I was quoted in this SF Chronicle article, saying "raise prices."

In follow-up interviews, I said the same on KCBS [4:34 MP3] and KSRO.

I also spoke on water and investments at the Investor's Circle. Here's 24 minutes of audio [4MB MP3] of the panel discussion between me, Brian Dunn (Growth Capitol Services) and Dominic Kulik (Dakai Enterprises). Here are my slides [PPT] for my presentation, which I did NOT get on audio :(

Bottom Line: Everyone wants to hear about water problems, but I want them fixed!

Speed Blogging

  • "Yes, Southern California has a water problem. No, it isn't caused by drought. The problem we face is man-made - not nature-made. There is too great a demand for the amount of water available either locally or imported from elsewhere.... The problem was not drought; the problem was unbridled growth." The authors advocate a cap on growth. I'd be happy with higher prices...

  • National Geographic has interesting articles on the drought in Australia and collapsing amphibian populations. Bad news.

  • The Economist says "putting a financial value on the environment, however, may be the most important thing that people can do to help nature conservation. When governments allocate money, they do so according to where it will bring benefit. If a government is unaware of the value of a landscape to its tourism, or of a swamp to its fishing industry—and thus its foreign-exchange income—then it will invest too little in managing these resources. Worse, if the true value of a forest or swamp is hidden, governments may destroy it by subsidising the conversion of the land to agriculture."

  • Why ethanol subsidies are stupid: "In some states, such as Ohio, Iowa, and Kentucky, where corn can grow with little to no irrigation, only five to seven liters of water are required to turn the foodstuff into fuel. Almost all of this water is used to boil, ferment, and distill the biofuel. As ethanol production has increased, however, more corn is being grown in western states such as Nebraska, Colorado, and California, where irrigation needs raise the fuel's water requirements significantly...upto 2,138 liters of water per liter of ethanol."

  • But wait, the news on biofuels is worse. The Economist reports that "the production of biofuels has aggravated rather than ameliorated global warming... most analyses had underestimated the importance to global warming of a gas called nitrous oxide (N2O) by a factor of between three and five. The amount of this gas released by farming biofuel crops such as maize and rape probably negates by itself any advantage offered by reduced emissions of CO2." Another example of how ethanol is more like a salmonella lunch than a free lunch.

  • Businessweek updates us on China's water crisis. Among the problems are water that's too cheap, unregulated waste discharge and subsidies to farmers. They should read this blog...

  • "Schwarzenegger and his allies are trying to pit Delta farmworkers against San Joaquin Valley farmworkers -- and recreational and commercial fishermen in northern California against Central Valley farmworkers and communities. Powerful corporate agribusiness interests are trying to divide communities that have much in common with one another by promoting a false conflict of "fish versus jobs" in order to ram through water policies that will only benefit rich and powerful growers such as those in Westlands Water District." I have been wondering about Schwarzenegger's balance of ethics and politics ever since he came out in favor of the Peripheral Canal -- BEFORE his Blue Ribbon Committee issued their report.
hattips to JWT and DW

25 April 2009

California's Economic Future

I will be speaking at the first Bay Area Liberty on the Mind Conference “California State’s Bankruptcy and its Economic Future” on Monday, April 27, 2009. 1-7PM.

Here's the description:
California, the richest state of the union, is now financially bankrupt with the lowest credit rating in the USA. It is the highest taxed and highest spending state and has been running deficits for years. The state teetered on the brink of collapse in February before a compromise was achieved on the budget. It is not over yet—without voter approval, the crisis will come to head again. The conference will discuss the California State’s fiscal crisis and its structural causes and the likely future course it will take.
My talk on natural resources will be from 4:45 to 5:30. I'll be emphasizing how the lack of property rights (e.g., salmon), prices (urban water), and markets (agricultural water) are magnifying the harm in these "troubled economic times." This event has a libertarian orientation, but attendees are clearly interested in the good and bad policies that put us in a hole and (may) lead us out of it.

Bottom Line: Markets are most effective when resources are least plentiful!

Leshy on Water

John Leshy, professor of law at UC Hastings, has a lot of useful things to say about water law.

In this 2005 article [doc], he creates a dialogue between a California cotton farmer and government lawyer charged with the task of explaining why the farmer is facing reductions in water deliveries when she holds "rights." The dialogue gives a good feel for the evolution, complexity, complications and contradictions in California's water management. (Leshy also favors fish over farmers, mostly from a Public Trust perspective.)

Addendum: Leshy fails to address a critical question, i.e., what is the government's responsibility to compensate when a farmer's investment (e.g., land) depends on a government program that is subsequently changed? Although the farmer "should not" depend on a reliable government policy, it seems capricious to assert that a policy of xx years can be changed "because we changed our mind regarding fish, etc..."

This excerpt captures the wobbly ground under water rights:
The sad if not well-understood truth is that many states have little idea about who has rights to which water or what actual uses are. Unexercised, "paper" rights abound. Many Western management systems operate as much on assumptions and guesses as hard data, and only rarely are those assumptions and guesses entirely correct. Moreover, a good deal of water gets used in ways that would be, shall we say, of questionable legality if water rights were strictly enforced. This is not a Swiss watch. This is more like a sundial on a partly cloudy day.
Oh great. (He then says that clarifying/retiring paper rights would be tedious and expensive. I don't know what to say, except: "you broke it, you fix it!")
In this 2009 paper [PDF], Leshy suggests actions that states can take to improve their water management, i.e.,
  1. States should have better information and more capacity to manage and regulate water use within their borders.
  2. States should have effective programs to maintain sufficient water flows in their streams to ensure a meaningful level of ecological health.
  3. States should have effective groundwater regulation programs to sustain groundwater dependent communities over the long term and to protect associated surface waters.
  4. States should make stronger efforts to link regulation of land use and water use.
  5. States should vigorously promote measures to conserve and make more efficient use of water. [Raise prices!]
  6. States should have clear policies and processes for addressing transfers of water rights, particularly from agricultural to municipal, industrial, and ecological uses.
  7. States should more vigorously monitor and, where necessary, regulate the activities of special government districts to serve state policy objectives.
While I agree with ALL of these, I only partially agree with his suggestions for federal actions:
  1. Congress should make more money available for essential data gathering and analysis by the United States Geological Survey.
  2. National water policy needs to be closely connected to national energy policy.
  3. National water policy needs to be closely connected to national agriculture and food policy.
  4. The federal government should improve its efforts, including working more closely with the states, to ensure a base level of ecological health in every stream.
  5. The federal government should create a mechanism for systematic, periodic review of the operation of federal dams and other federal projects, to ensure they are being managed to meet these objectives.
  6. The federal government should move with vigor to complete the process of quantifying Indian and other federal water rights, favoring negotiated settlements wherever possible.
Numbers 2 & 3 would not be necessary if we allowed markets for energy and water (plus externalities!) to function and ended subsidies for agriculture. Leshy's recommendations are thus either more pragmatic or more state-centric than that. (I think the latter.)

Bottom Line: Read these papers to understand how water, economics and politics interact. Then pour yourself a stiff drink for the headache :)

Insuring against Incompetance

After I gave a talk outlining "my" idea for using insurance instead of regulation to raise the operating efficiency of water utilities, LM sent me a link to this book (Managing Environmental Risk through Insurance by Freeman and Kunreuther; Springer 1997):
Can insurance be used as a means to obtain compliance with environmental policy? Answering this question requires examination of a broad mosaic of academic issues, including current systems available for providing compensation and deterrence, use of contracts (including insurance) as substitutes for tort law, limitations of regulatory policy-making by government agencies, pre-conditions for creation of insurance products, and market mechanisms necessary for insurance to be purchased or sold.

The purpose of Managing Environmental Risk through Insurance is to highlight the potential role that insurance and performance standards can play in managing environmental risk. Insurance can play a significant role in dealing with one of the most problematic issues facing society today - how to compensate for environmental exposures.

This book analyzes the ability of insurance to play a role in managing environmental risk. It begins by outlining the role insurance plays in society in contrast to other societal tools for addressing risk: government benefit programs and imposition of involuntary liability using the court system. By so doing, the book describes the comparative advantages of insurance. The book then analyzes the insurability of the risks. Finally, the book applies the insurability analysis to three concrete environmental examples [asbestos, not water].
I asked the authors if they know of any applications of insurance to water. They didn't.

Bottom Line: Although there may not be any new ideas, there sure are a lot of good ideas that await implementation!

24 April 2009

Engineers on Native Water and Governance

I was visiting my GF's relatives in Tennessee recently, and I got the chance to speak with them about their work on water infrastructure on Native American reservations, unincorporated counties and places farther afield (Alaska, Nicaragua, Colombia and Haiti).

These water chats [5-6MB MP3s about 30 min. long] will give you a better understanding of how engineers interact with the communities they serve, and how those communities react to the "free" services they are receiving.

In the first chat, I talk with Scott Helgeson of the Indian Health Service, where he works on tribal water systems. We also discuss his work in Nicaragua and Colombia (community water supplies) and emergency relief in post-hurricane in Haiti -- a place much poorer than the "poor" reservations. Something I learned: Not all tribes are rich, and even the tribes with casinos are not rich.

In the second chat, I spoke with Del Corbitt (Scott's father-in-law) about a career that began in the military, moved the Indian Health Service, and ended up in Murfreesboro, TN. Del has a lot to say about negotiating local politics. He also recounts the story behind "the White Man is adding fluoride to water to kill Native Americans."

Finally, I give a talk highlighting the economics that engineers may want to consider as they go about their daily business. The attendees were astonished to hear that places in California still do not meter water (hear that Sacramento?) and that other places do not monitor or control groundwater pumping (hear that DWR?). Let's hope that they avoid our mistakes.

Bottom Line: It's good to talk to people in other disciplines and other places. We all learn from a diverse set of experiences.

Flashback: 16-22 Apr 2008

These posts are STILL relevant, so please comment (I'll approve them ASAP.)

Coachella reactionaries protest water rate increases. They are being asked to pay the UNBELIEVABLE price of $10/AF. $1 for 32,500 gallons! What a ripoff! [end sarcasm]

Best: People in Vermont invoke the Public Trust doctrine to reallocate water rights. They want to maximize the benefit of the People's water, but they risk creating bigger problems by taking water from those who are not "wasting" very much.

Francis and I debate whether water markets violate California's laws on diversions. I am right of course :)

Best: Speaking of markets, Alberto Garrido shows that restrictions on trade harm senior water rights holders. Let's remove those restrictions and have more markets.

We need to price ecosystems if we want them to stay around...

Games that will teach you about water as a natural resource and environmental good.

Best: Native tribes used a river for 10,000 years without ruining it. We should take a few lessons from them!

Technology Saves Resources

This stove design (the "Kyoto Box") just won the Forum for the Future’s Climate Challenge competition:
The box costs about $6 to make, and ironically uses the greenhouse effect to boil and bake. It consists of two boxes, one inside the other, with an acrylic cover, which lets solar energy in and traps it. Black paint on the inner box and silver foil on the outer help concentrate the heat, while a layer of straw or newspaper between the two provides insulation. By making it possible to boil water cheaply, Bøhmer believes the box will save some of the millions of children who die each year from water-borne diseases. It should also halve the need for firewood, saving an estimated two tonnes of carbon per family per year.
Here are the other entries that made the shortlist.

Bottom Line: Pay some money now to get safe water and less deforestation for years to come...

23 April 2009

Behavior Modification

JWT sent this:
David, Here is my April water bill from the City of San Clemente:

Water base fee $8.38
Water consumption 6.52 (4 units Tier 1 @$1.63)
Sewer base fee 18.30
Sewer commodity 11.50
Storm drain 2.96
Clean ocean fee 5.02
________
TOTAL $52.68

So the question for today is this; How much higher will the $1.63 consumption price have to rise before, I, or anyone, will make serious changes in behavior vis-a-vis what ever they are doing today?
Here's my answer: You don't need to modify your behavior. Even better, your bill is about 12 percent variable and 88 percent fixed. That means that your revenue pattern is very closely matched with San Clemente's cost pattern, a goal that I supported here.

Bottom Line: Those who are already using water wisely (JWT and wife used 100 gal/day, which is way below the SoCal average of 100+gal/day/capita) do not need to modify their behavior.

Read This Paper on Demand Management!

Kenney et al. have done us all a favor by analyzing several years of data on the effects of management strategies on water demand in Aurora, Colorado.

This paper [PDF] joins the Santa Barbara study on my must-read list.

Kenney et al. make the following points:
  • They assume that customers respond to the average price of water that they see on their most-recent water bill. They make this assumption because their academic colleagues could not calculate (!) the marginal price of water on sample bills they were asked to examine, and because customers have no idea of what their current use is (more on that later).

  • Low water users have the lowest price elasticity (-0.34) for total water use. High water users have the highest elasticity (-0.75). When use restrictions are in place, these elasticities change, rising to -0.46 for low users and falling to -0.24 for high users. (Restrictions lower demand by 6.5 and 14 percent, respectively.) The implications are that water managers should target high-water users with restrictions in drought (short-run) but higher prices in other times (long-run). Low-water users can be targeted with higher prices, but that's probably not a good idea for two reasons: They cannot make much of an impact in overall water demand (low-water users are, by definition, not using much). Second, higher water bills are more likely to penalize poor people, who tend to use less water (smaller yards, etc.).

  • Further, average elasticities nearly double in drought conditions, rising from -0.56 to -1.11. This is probably due to a greater degree of customer awareness of water in the media, etc.

  • Kenney et al. find that the presence of increasing block rates (not prices) will lower demand by 5 percent. That's probably because people are leery of ending up in a higher block.

  • Finally (and paradoxically), they find that customers with "smart meters" actually use MORE water. Why is that? Because they are able to get closer to the maximum consumption in their block without surpassing it. This finding does not damn smart meters. Instead, it indicates that customers will be more responsive to rates and blocks when they know how much water they are using.
Bottom Line: Cut long-run demand of high water users with higher prices. Cut their short-run demand with restrictions. (I would suggest that MUCH higher prices would be more effective at doing the same thing if the prices got the same amount of advertising to customers.)

Two Scary Pictures

Chris Goemans sent me some survey results that explain a lot of the difficulty we face in implementing aguanomic policies in the West.

In the first (Figure 5; click to enlarge), we can see that respondents' [relative ranking by WHO? managers? customers? Goemans et al.?] prefer to "meet demand during short term scarcity" by restricting watering. This result matches the empirical evidence in a paper (see post above) he co-authored, i.e., that "if the goal of demand management is to control the high-users, pricing policies may provide the best long-term option whereas restrictions may provide the most logical drought-coping strategy."


As you all can see, higher rates are one of the least important strategies. My only note on this (besides sorrow) is that "higher prices" that are not that much higher may indeed be useless. But 200 percent rate increases may provide far-more powerful incentives than 30 percent increases.

In the second (Figure 6), we see several choices for long term water strategies. Note that the two end strategies (limit growth of cities and require home conservation) are command and control methods that address demand. The interior strategies are all on the supply-side, i.e., get/store/move/reuse water. Nowhere is the simpler strategy of higher prices. I am baffled at this missing tool. [I am waiting to hear what Chris says...]



Bottom Line: Good water policies will not be used if they are unpopular, and we need to be able to explain why they are good so they can be popular. (It's interesting to me that most "amateurs" LOVE my "some for free, pay for more" idea, but "experts" come up with all kinds of excuses for why they cannot work. Maybe I've got the wrong target audience in mind?)

Dangerous Consultants

In contrast to the careful study above (academics at their best), we (via DB) have this disaster of a "report" [DOC] given to the SFPUC.

Here's what RFC says:
Since the SFPUC is facing large rate increases over the next several years, it was important to get a sense of the price elasticity of water demand in the service area. As part of this analysis, RFC analyzed the per capita consumption and commodity rate increases from FY 1994 through FY 2007. Using only the commodity rate increase is imperfect, but is the best use of the historical information available.
They go on to estimate (by fitting a line between rate changes and changes in use) that total price elasticity is -0.08, which is MUCH lower than the -0.40 to -0.70 range that I have seen here, there and everywhere...

As RFC admits, "attributing all changes in consumption to changes in rates is questionable" but they then go on to commit the sin of all time, i.e., "we cannot recommend factoring in reduced consumptions to accompany the proposed rate increases," i.e., do not consider how price will affect demand when calculating the impact of higher rates!

Excuse me, but the lack of evidence of an impact of higher rates on demand does NOT invalidate the law of demand.

As RFC admits, their "analysis" omits economic conditions and weather patterns, but it also omits important factors such as income (we spend a tiny portion of our income on water bills), block rates, billing frequency, etc.

I would give an undergraduate who produced this "analysis" -- especially considering its weak economics -- a grade of D.

Bottom Line: I hope that SFPUC got this report for free, since it's worth nothing.

22 April 2009

Clean Water Restoration Act

(via DW) The NYT opines:
An internal E.P.A. report furnished to Congress last year revealed that the agency had dropped or delayed more than 400 cases involving suspected violations of the law — nearly half the agency’s entire docket. The reason in every instance was that regulators did not know whether the streams and wetlands in question were covered by the law.

Until the two Supreme Court rulings, the Clean Water Act had been broadly interpreted by courts and by federal regulators to shield all the waters of the United States — seasonal streams and remote wetlands as well as large navigable rivers and lakes — from pollution and unregulated development. The assumption was that even the smallest waters have some hydrological connection to larger watersheds and therefore deserve protection. The Supreme Court, however, exploiting ambiguities in the law, effectively decreed that only navigable, permanent water bodies deserve protection.

As a result, at least 20 million acres of wetlands and as much as 60 percent of the nation’s small streams have been left unprotected, while effectively shutting down enforcement actions against developers who have been disturbing or plan to disturb these waters without a permit.

The Clean Water Restoration Act would establish, once and for all, that federal protections apply to all waters, as Congress intended in 1972. Now a new Congress and a new White House must ensure that it becomes law.
I agree with this interpretation of the way that the original clean water act has been weakened.

Does anyone have evidence of harm (besides delays in/cost increases for development) caused by the original act?

Bottom Line: A clean water act should promote CLEAN water!

Poll Results -- Walking the Walk

Hey! There's a new poll (Earth Day!) to the right --->

Here are the results from last week:

In response to environmental issues, I have (choose 1+)
Selection
Done nothing 11 votes
Done more research 32 votes
Asked my friends to change their habits 19 votes
Lobbied leaders (poltics, business, etc.) for change 23 votes
Changed my small habits (e.g., eating organic) 41 votes
Changed my big habits (e.g., living in a smaller house) 22 votes
Changed my entire life 12 votes
While I could interpret these results all day, the only thing I will point out is the number of people who did nothing is close to the number who changed their whole life. Interesting.

Bottom Line: We all see the environment -- and our role in it -- differently.

Water Budgets

Water budgets (often associate with Irvine Ranch Water District) are increasingly popular as a means of establishing "reasonable" consumption levels for residential users who have different water "needs."

They basically put properties into categories (by number of residents, lot size, landscape footprint, location and/or heat profile) and then give similar properties the same "budget" for water. People who use less than the budget pay very little, but people who use "too much" pay very high rates. (IRWD rates start at about $1/unit of 748 gallons; they peak at $8.50/unit for "wasteful use".)

This 5pp PDF (via DW) outlines how water budgets can meet legal constraints while encouraging conservation of water in excess of the "budget".*

Read the whole paper -- it's an excellent guide to rates and laws in California. Given the complexity of overlapping (perhaps conflicting) laws, guidelines and institutions. [Also see this post.]

After you do that, reflect on how simple and fair my person-centric version of budgets is. The only measure that a water manager needs is the number of people in the house. No need for lot sizes, landscaping density, temperature zones, etc.

Bottom Line: Water prices and allocations should reflect our common sense: Survival water for people is a RIGHT; commodity water for lawns, etc. is a LUXURY. Like the bumper sticker says:
* The article discusses a key point of California's Proposition 218, which requires that voters approve fees associated with property. Although 218 was not obviously directed at water bills, California's Supreme Court ruled in the 2006 Bighorn-Desert View Water Agency v. Verjil decision that "water is indispensable to most uses of real property." That decision means that changes in water prices need to follow a certain procedure (45 days of notice, public hearings, etc.) before they can be implemented AND that water prices must reflect some underlying cost of service.

At first glance, my "some for free, pay for more" water pricing proposal may appear to violate Prop 218. Why? I think that the prices in higher tiers should be high enough to choke demand, which may be higher than the cost of service.** Although I will address that complaint in another post, I want to point out that my "human based" system (the amount of "some for free" depends on the number of people, not property characteristics) is not based on property. I would thus argue that "people-centric" prices are outside the purview of Prop 218. Flipping the court's comment on its head, there is no point of having water on an urban property without people. (OTOH, Prop 218 DOES apply to agricultural land, for the reasons given by the court.)

** The authors of the article point out that rates in higher tiers CAN be much higher, since Prop 218 can be interpreted to apply ONLY to the price of water in the budget-based lower tier. This is good news from a different perspective.

Shantytowns and Growth

JR has two questions:
Will the increasing population of the southwest (which currently appears to be a function of both magnitude and distribution, to use your apt words) actually stabilize and decrease as the demographic transition model theorizes, or will we simply have ever-expanding shantytowns like the one growing in Fresno? [1]

Although the homelessness problem is chronic to some degree, clearly our current economic problems have worsened it. And in some California cities such as Fresno, apparently the problem is growing because people who came to work in an agricultural industry that can no longer support them -- due to drought-related cutbacks in agricultural production -- are nonetheless remaining to subsist in shantytowns.

Seems to me that the panoply of current and potential issues and problems -- both in the U.S. southwest and elsewhere around the globe -- are far more complex than the demographic transition model can account for; and, of course, the model doesn't even attempt to address migration issues, which are eventually bound to become an enormous problem world-wide due to climate change.

Another question (I'm guessing I know what your answer will be but...): Do you think there should be any firm government-imposed restrictions on further development in the southwest (e.g. no more new housing projects) due to anticipated decreases in the amount of available freshwater throughout the region? [2]
So let's take these in turn:
  1. The demographic transition takes awhile to manifest, and it takes place at a certain income level. Given that the US is well into the transition (low birthrates, low death rates), what we are really seeing is "misplaced" population. In Fresno, people are in the "wrong" places because they have lost their jobs and cannot afford to move.

    I am not sure about the solution to that problem. Some people advocate one-way bus tickets; others think that people should be given loans to move; still others think that employers may pay for people to arrive in places. The first two ideas make no sense if there are no jobs in the area. The last one will probably not work because it requires that employers know where "cheap" workers are located. Besides one obvious example (in Mexico), there's little to do about that.

    I'd prefer to support people via unemployment payments/welfare that are high enough to stay alive, but low enough to encourage job search.

  2. Government is already restricting development (via "show me the water" legislation that requires new developments to have 20 year supplies). Although I am free market person (higher prices would have minimized sprawl), I prefer regulations on growth per se to regulations on water that are designed to slow growth. In this post, I describe how "cap and develop" could work.
Bottom Line: The best we can do to control population (size and distribution) is to make policies and prices that reflect the "cost" of an additional person in a place. After that, we can only pray for good results.

The Water Cone

In response to this post on the 884 million people without access to "adequate water delivery," HR mentioned this interesting device. It looks low-tech and reliable, but I wonder about daily yield....

Here's the description:
Based on evaporation levels of 8.8 Liters per square meter (average solar irradiation in Casablanca, Morocco), the WATERCONE(r) (with a base diameter of 60 - 80 cm) yields between 1.0 to 1.7 Liters of condensed water per day (24 hours). The salty / brackish Water evaporates by way of solar irradiation and the condensation from that Water appears in the form of droplets on the inner wall of the cone. These droplets trickle down the inner wall into a circular trough at the inner base of the cone.
They have won many prizes for the device, so they have acknowledgement. Now let's see if they get market penetration...

Bottom Line: Clean water doesn't need to cost an arm and leg!

21 April 2009

More PR

These things may be interesting to you. I am not endorsing any of them:
  • "The Handbook on Integrated Water Resources Management in Basins provides useful advice to improve governance of fresh water resources in the basins, using practical examples of projects already undertaken in various countries." Download the PDF for free here.

  • "As part of an annual Earth Day sale, RFF Press is offering the opportunity to purchase books at a 40% discount. Our publications represent some of the leading scholarship on natural resources and the environment. This year’s sale covers all published books, including works on land and water resource management, forestry, environmental economics, international development, human ecology, and environmental law. We invite you to explore our catalog here. Happy Earth Day!”

  • "Using trained cows to manage weeds is an efficient and inexpensive alternative to herbicides or to renting and hauling in goats or sheep. Because many weeds are the nutritional equivalent of alfalfa, trainees gain weight at expected rates and calve normally. They train their herd mates, making it possible to have a whole herd of weed warriors in one grazing season. Best of all, producers have a new forage source to help them through drought."

  • "Green21 is a media project to bring a narrative to the environmental, sustainable and social justice movement. Green21 started out as an idea for a public television series... [and developed into] a multi-platform media initiative which bridges broadcast television and Web 2.0... we welcome your suggestions and comments regarding the project or content proposed in the series. Currently we’re in the fundraising stage and hope to start filming in the Summer of 2009."

  • The free online magazine Water Efficiency has articles on desalination, outdoor irrigation and infrastructure repairs.

  • "A new report by the Sustainable Development Commission argues that the pursuit of economic growth is one of the root causes of the current financial crisis, as well contributing to a growing environmental crisis and undermining well-being in developed countries... The pursuit of growth has also had disastrous environmental consequences. In the last quarter of a century, while the global economy has doubled, the increase in resource consumption has degraded an estimated 60% of the world's ecosystems and led to the threat of catastrophic climate change. The global economy is already almost 5 times larger than it was 50 years ago. If it were to continue to grow at the same rate, it would be 80 times larger by the end of this century. While modernising production and redesigning goods and services have led to greater resource and energy efficiency in recent decades, the report finds that aspirations for 'decoupling' environmental impacts from economic growth are unrealistic."

The Value of Water

JC asks a big question:
Your post on the Water Plan prompts a question...

I know the Water Plan makes an attempt to show where all water (developed and undeveloped) goes. What kind of mountain moving equipment would it take to have it show in some form (preferably economic terms) what we get in return? I know Gleick has done some stuff showing the economic contribution of vineyards, silicon chip manufacturers, etc. My one-pager needs updating. Given the significant resources that DWR puts into the periodic updates of the Water Plan, couldn't they do something similar and more comprehensive?

This is all a part of my abiding belief that no real progress will be made reforming water policy until media, elected officials, and the thinking folks among the general public begin to assimilate some basic facts.

I have moments of great naivete, and this is probably one of them.
Well that's a good question. To get an idea of how hard it is to find out the various values that result from water use, consider how hard it is to find that information on the value-in-use of anther precious liquid: gasoline.

In fact, I dare say that NOBODY has that information.

Now the curious question is "why not?" has a surprisingly easy answer: It doesn't matter. Gasoline is allocated in a market where access is rationed by price. There is no reason to find out the values-in-use, because the lower values-in-use are filtered out by the price filter.

You can see where I am going with this...

If we allocated water in markets, with competitive prices, then it would end up in the highest uses. Since we do not (and we use bureaucratic methods instead), we all have to argue over who "deserves" the water. Egads, what a mess!

Bottom Line: Water "management" is not necessary when water is allocated by prices and markets. Even better, the resulting distribution will be as efficient as possible. (As usual, we can maintain equity by ensuring that everyone gets a human right allocation before using markets to distribute the rest.)