3 Mar 2010

Self-interest and community

Economists spend a lot of time discussing the conflict between actions that serve an individual and actions that serve the community. (The Invisible Hand refers to actions that directly serve the individual and indirectly serve society.)

Take water use, for example. People who use more than their "fair share" serve themselves while leaving less for everyone else. If others respond by increasing their use, then shortages grow worse. If they respond by attacking the "wasteful" individual, then conflict can erupt that's even more costly.

One solution -- my preferred solution -- is to allow people to use as much as they want but charge them for the privilege. As prices rise, everyone will use less, and shortage will not result. That's what happened when gas prices rose -- everyone faced the choice of using less or paying more, and everyone was happy with their action. Some people may have been upset at others who continued to drive SUVs around, but they know that those drivers were paying a lot to be wasteful, which was (often) an acceptable punishment for such "anti-social" behavior.

That case with water could be the same, if we raised prices, but there are many barriers -- cultural and political -- to doing so. Without prices, there are fewer options on the table. Most places ask people to use less; some of them regulate use. Both of these schemes will fail if people set themselves above the community. (For example, regulating lawn sprinklers is useless if people water at night, take long showers, or water their back yards.) That's been the case in most parts of the US, where individual rights are often stronger than the sense of community. (There are some exceptions, and they often surface when a critical mass of citizens, media and leaders come together, agreeing to do something.)

In other places (Australia, as I am learning), people are willing to use less, because they have a stronger sense of community, and doing the right thing. That force appears to have been the primary driver behind Brisbane's drop in per capita use to 140 lcd, and Melbourne's current use of 174 lcd (46 gcd).

I am sure that readers can give their own examples of conservation successes and failures that can be attributed to a strong or weak sense of community, respectively.

Ironically, it is hard to built "community" in an area (gated communities, anyone?), but a community, once built, lowers the cost of almost every activity in life -- education, safety, traffic, resource use, and so on.

Bottom Line: There are many ways to motivate people; choose the right one for the job.


Eric said...

How do you build 'community' in a bitterly partisan US where a person gets elected not by building community but by promising to tear down someone else's community? How do you build community when certain factions in the community define themselves as 'correct' and define everyone else as 'wrong and demented'?

How do you build community when the mechanism of enforcement of community rules is the government and very few people trust the government?

Don't you have to start building community by showing respect for others and by acting in ways that rebuild trust?

WaterSource said...

Water differs from gasoline and land in that it is moving. Where the right to use the water as it moves by is a real property whose right to use is owned, the "use it or lose it" doctrine has to be rewarded in order to curtail what others might perceive as excessive use or even waste.

The right to store the moving water or to sell it's temporary use are the only alternatives other than a legitimate interest in sharing with thy neighbor.

Often the "sharing" is problematic because a claim is quickly made for legal precedent so that those without a water supply can continue to receive their kind neighbor's water without payment.

Needless-to-say, the kind neighbor knows not to jeopardize his real property right for temporary feel good generosity.

The marketplace, if there is one, is often difficult; the water that is for sale can only be that amount that was beneficially consumed, not the potential excess that was diverted.

The reason is because the perceived excess that was diverted is return flow that constitutes the water right for the next water user in the priority line and he is not about to see it damaged.

The easiest and most reliable way to overcome all of these obstacles and more, is to introduce into the water basin system water that was not historically been there and subject to the existing complicated allocation arrangements.

It can be done in California and Nevada. Where there is a will, there is a way ... but for now, there is no will.


mhenry said...

A flaw in your re-pricing water is California law. Sure, laws can always be changed but are the people willing to pay for it. Farmers receiving surface water from the State and federal projects have been increasingly targeted as not paying their share. Yet, according to California law, they are. When the projects were originally envisioned, the State and federal government sought partners to provide the payback for the costs of construction, operation and maintenance. These partners became the contractors on both systems and they have been paying the price determined by the contracts (i.e.---contract law). If this process is turned upside down, who reimburses the contractors for paying the cost to make the water available? Besides, who are these “others” who would be receiving the water besides current contractors’ beneficiaries?

Josh said...

Great comments! I have one small issue: Where you write, "In other places (Australia, as I am learning), people are willing to use less, because they have a stronger sense of community, and doing the right thing", you are claiming that putting individual rights first is not, "the right thing."

I don't know what I think about this... I understand the conundrum, however, and I'm not taking a side on that particular issue.

Mark S said...

Community and social pressure do work, but social behavior may be the major water use driver that needs to be overcome in a municipal use setting.In my north Idaho city (ok, village by CA stds, population 25,000), city water use dropped by 150mgy (about 20%) after an intensive education campaign by citizen water conservation groups followed by enactment of a city ordinance restricting irrigation watering to non-heat-of-the-day hours (with appropriate exemptions for new plantings, etc). What happened is the social stigma of not having a bright green lawn all summer evaporated. The social taboo of having a brown lawn was replaced by community recognition, brown lawn by brown lawn, of an individuals contribution to solving a water shortage problem.

David Zetland said...

@Eric -- communities are built around fair, and paying for your water is the right way to go.

@Ray -- you are mixing up urban retail (know water supply) and rural wholesale. Different issues. Further, more supply (The Source) does not fix demand :)

@mhenry -- again -- different type of water you're talking.

@Josh -- individual rights are NOT the right thing if the ensuing fight kills the individual :)

Eric said...

Who gets to define 'fair'?
What happens if someone disagrees with this definition?

If 'fair' were easy to agree on, most of the news media would be showing blank screens.

In the 1830's many Protestant American Christians decided that they would not listen to the 'fair' decisions of their parent churches in England and Scotland. Instead, they would decide 'fair' by reading the Bible and listening to what it said. This approach is called sola scriptura.

By 1870, there were 3,000 distinct Protestant denominations in the US, all agreeing on sola scriptura, and all disagreeing with each other.


Josh said...

David, your ethical claims are dragging people into a great set of deep thoughts, something I love.

You have put yourself out into the individual rights vs. communitarian debate, which falls into some strange places. For example, does a community have the right to infringe upon an individual's rights? Which ones? The problem is that these over-arching constructs eventually play out in individual cases.

David Zetland said...

@Josh and Eric -- yes, you are right. I have a strong sense of individual rights, both for freedom of action and freedom from infringement by others (typical libertarian). I think that people should do as they please, but pay the cost of their actions.

Eric's version of community is fine. I agree with Josh that cases are easier than generalizations.

mhenry said...

So, what water are you talking about? State law, here I go again, protects the rights of the individual by prohibiting water districts from charging their customers more than the actual cost of supplying, treating and delivering water to the home. I sit on a board for a small community water services district (1,000 hook-ups, both residential and commercial) and am constantly reminded of this prohibition when some uninformed individual tells our board we should increase rates to fund their pet project.

Anonymous said...

If agribusiness obtains water by contract - who is the Owner in that relationship? Obviously not the same entity as the Contractor. So the State (people of) still owns the water and the facilities to provide it. I don't know what the terms of the contracts currently include regarding resale, but it seems to me they could be written to prohibit transfers if that is the desire of the Owner.

mhenry- Does your district obtain water from the SWP? If not, then I suspect the laws you cite do not apply here. In any event, such laws can be changed...

These projects were built at public expense for specific purposes. For agribusiness to decide now that they want to cash out by changing that purpose seems perverted and corrupt. Urban areas already have plenty of water; they just mismanage and misuse it. Increasing their supply of cheap water will lead directly to more unsustainable population growth and eventually demands for more new water supply projects... just as has happened throughout California's history. "Too much is never enough."

Chris said...

Community? I don't think there is much of that in today's "me-first" thinking U.S. of A.

I think most people are more concerned with their accumulation of wealth & stuff, not so much with how their neighbor or community is doing.

In our quest for lower prices, most of us would likely happily buy from the cheaper source on the internet, then from our own local storefront (& neighbor).

I also suspect that a significant number of people would not bother to conserve themselves if they really thought the rest of everybody else was conserving. They probably think, is it really a big deal, if everyone else is conserving, if I do not?

Kinda like the guy who drives the car around even though it spits out a big blue cloud every time he accelerates. He probably justifies it to himself, thinking that he doesn't have money to fix it, it's likely not worth fixing anyway, and gee, everyone else drives cleaner cars, so is driving one little stinky polluting car going to make a much of a difference, anyway?

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