Fleck commented on the post, pointing out that some auctions are better than no auctions.
Yes, indeed, the glass is half full.
So, I have a few additional thoughts on how CAP can run auctions for additional water:
- These auctions should be open to anyone who can take delivery in the current CAP system. Bidders should face price adjustments for delivery costs according to their distance/elevation from the "fountainhead." Conveyance capacity constraints may create problems that will need to be solved (I'd prefer an auction for capacity, of course).
- Bids and prices should be free to fluctuate, without ceiling or floor. A single price (before adjustments) will give the clearest signal of the value of new water.
- In the best case, these prices should determine the price that the CAP pays for additional supplies. It would be a horrible mistake to buy water at one price and auction it at a different (lower!) price.
- Auctions should be run every year, to allow for adjustments in supply and demand on the CAP system. Bidders wanting long term contracts should make options agreements via bonded third party brokers, not the CAP.
Bottom Line: Auctions increase efficiency in water allocation and financial stability.