31 Jan 2011

Monday funnies

TS sent this (more crazy than funny):

The private-public cycle

It's common to hear that investor-owned companies taking over water systems raise prices to pay for deferred maintenance (and also because they get "automatic" profits from capital spending), as Food and Water Watch will claim to anyone.

It's also common to hear that municipalities taking over water systems lower prices to better serve citizens, thereby reducing funds available for maintenance and capital spending, as happened recently in Paris.

IOUs spend too much on gold-plated systems, until politicians take them over and spend too little, until deferred maintenance and lack of funds forces privatization again. See the pattern?

Bottom Line: Both private and public water providers pursue goals that may not suit customers.

28 Jan 2011

People choose their paths

Peter Gleick emailed me a response to a recent post (Craig Wilson is wrong about ag water use), and it brings up some interesting issues, which I comment on by [number]:

Your post from yesterday borders on dishonest and ad hominem, though that does seem to be a trend in your blogging now.

"The Pacific Institute's flawed reports (and Peter Gleick)..."? [1] And then you go on to misrepresent our actual reports, which either you don't read, or you choose to misinterpret.

We are far more explicit, and accurate, about the definitions of consumptive versus non-consumptive, beneficial versus non-beneficial, efficiency versus conservation than practically anyone else. We understand far better (apparently) than you, the distinctions and advantages and disadvantages of saving different kinds of water. You apparently do not understand how drip irrigation actually works and when and how it saves water -- having bought into the arguments of farm lobbyists that it doesn't save water.[2] (How ironic: I was just on a panel with a top representative from Westlands on Saturday who described the success their farmers had had in using drip on Pima cotton, reducing water use 30% and increasing yields 30%. Farmers get it. You still don't.) You say we argue for "subsidizing" farmers and then "cite" your own false and misleading blog from last year rather than our report, which is far more sophisticated in its financial arguments, not to mention comprehensive in the tools we recommend.[3]

I realize the only tool you consider worth using, talking about, or forcing on water users is full-cost pricing and markets.[4] But don't misrepresent facts and other points of view when doing so.

Dr. Peter H. Gleick
President, Pacific Institute
Member, U.S. National Academy of Sciences
MacArthur Fellow

[1] I referred to both Peter and PI because they were both quoted in the articles. Taugher's article says:
Wilson will argue Wednesday that farmers who use water inefficiently are violating the constitution's requirement that its use be "reasonable."

His recommendations, if adopted, would mark the first time the doctrine has been applied so broadly.

"It's been taboo," said Peter Gleick, a noted water expert and president of the Pacific Institute, an environmental research organization based in Oakland. "No one has wanted to step up and say, 'This is not a reasonable or beneficial use of water.' "

Gleick added: "We don't have enough water anymore to be able to avoid that conversation."
And just how will that conversation occur? Who participates? Who decides what's "reasonable"? Can a farmer claim that flood irrigation is reasonable because it makes him happy? What if he floods the adjacent wetlands? We all know that the definition of reasonable and beneficial has been changing over the years, but its basic nature is the same: use that makes people happy.  The Pacific Institute's emphasis on measurement and technology is helpful when we need to know numbers, but these numbers are irrelevant compared to the process of deciding water use. As I've written many times (and discuss at length in my book), people have personal subjective opinions on different water allocations. A political mechanism for deciding allocation is not going to please everyone. That's why I recommend a market allocation of water.

[2] Of course drip doesn't "save" water. The main question is where "wasted" water goes. In some places (Westlands, IID, Israel), it's likely to evaporate. In others, wasted water returns to the groundwater or other surface flows. The problem with PI's report (and especially the way that it's been presented and interpreted to policy makers) is that high efficiency irrigation is presented as the solution across California. And Wilson is advocating rulings and regulation on water use technologies, as if outsiders know what type of irrigation farmers should be doing. Westlands is a heavy user of high efficiency because farmers there pay about $200/af for water. Drip makes sense to them, just as it does not make sense for IID farmers who pay $20/af. (That's not to say that I do not advocate ways to move water from places like IID to places like Westlands!)

[3] The executive summary of PI's report says:
The report Sustaining California Agriculture in an Uncertain Future shows that California agriculture can flourish despite diminishing water supply and future uncertainty from climate change, but it will require great strides in increasing the water efficiency of the agricultural sector.

Many farmers and irrigation districts have already been making water-use efficiency improvements. Yet the analysis estimates that potential water savings of 4.5 - 6 million acre-feet each year can be achieved by expanding the use of efficient irrigation technologies and management practices... ["practices" are later defined as]... including efficient irrigation technologies, improved irrigation scheduling, rainwater collection, integrated groundwater management, and measures that enhance soil moisture retention.
So the tools recommended in the report, the tools that everyone reads about and understands immediately, are technological and engineering techniques to get more crop per drop. There's no mention of the incentives to use less water or use these tools. Once again, the Pacific Institute demonstrates a mastery of measurement and technology while ignoring failing to integrate management practices that include incentives, decisions, cooperation, coordination and so on.

And that gets us to [4], where Peter (apparently not a close reader of this blog) misses three main points that I often make here:
  1. I do not advocate "force" (a la Delta water master) for reforming agricultural water allocations. I recommend all-in-auctions for those, within self-governing irrigation districts.
  2. For urban water supplies (not the topic here, except that Peter mentions it), I certainly do recommend that water managers "force" customers to pay prices that reflect scarcity (some for free, pay for more). Full cost pricing is useful for paying the bills but it does not prevent shortages.
  3. As an economist, I am concerned with incentives. With water, that means the incentive to use more or less water. In the debate over means of reducing shortage, Peter advocates [IMO] the "soft path" of reducing demand though water conservation measures -- as opposed to the "hard path" of building infrastructure to increase supply. So let's say that there's a fork in the road, one leading to a soft path and one leading to a hard path. Peter argues that people should take the soft path, but that doesn't mean that people will take that path. I am interested in the incentives for going hard or soft, and I go beyond economics, to politics, sociology and psychology, to understand the institutions that affect our decisions at that fork and how we make decisions at that fork.
A few years ago, I created a tag for this blog, economics vs engineering, to highlight the difference between mechanistic solutions that assume "just adopt this technology" answers and political-economic solutions that address social or political compromise or allow people to choose custom solutions. That's why I advocate water markets for agricultural water: they give farmers the option to sell water instead of using it. Some farmers may fallow land to sell water (the case at PVID); other farmers may adopt technology to reduce their consumption, to save money, or sell their surplus (a solution that often goes wrong due to our habit of quantifying rights in terms of diversions, not consumption; cf lining of the All American Canal )

Although the Pacific Institute's report may mention water prices or markets (or financial arguments that are more about accounting than economics), it's clear to me that its main emphasis, point and impact has been to advocate technological, soft path, fixes that have little economic justification and require political force to foist onto farmers.

Bottom Line: Engineering and numeric calculations mean nothing without the economic incentive and political freedom to change water use decisions.

Webinar today -- 8 am Pacific Time

I just wanted to clarify the time (too many time zones in this world; we should do it like China).

The webinar is on "politicians and regulators managing water supplies." I'll be speaking for 10-15 minutes, and then we will go to Q&A and case studies from listeners. There will be a recording of some sort available.

More information here.

The economics of coffee

I was just in Venice, where they serve a delightful cappuccino for 1.30€
I got it at this caffe, which churned out drinks fast enough to keep the patrons caffinated. No Tall, nonfat, caramel lattes, extra hot with two splendas here!

The caffe was in between my hotel and the boat launch for the conference center (post coming soon!), so there were some tourists as well as locals in the bar.

On my third visit (Saturday morning), three carabinieri were already at the counter, telling jokes. An older man bought them their espressos, which is what you do with carabinieri (they seem to get involved in bribery, beatings and the mafia a little too often).

I got my cappuccino, put 2€ on the counter and then waited for my change. The barista (no, Starbucks didn't coin the word) said "cappuccino?"I replied "Si." He then rang 2€ into the register and gave me a receipt.

I replied with "Cappuccino era 1.30€ ieri. Perche due euro oggi?" [Cappuccino was 1.30€ yesterday. Why two euros today?]

He listened, shrugged, and gave me the 70 cents he had tried to steal.

I didn't tip.

Regardless of the Italian version of honor, I miss their cappuccini. At work, I can get a "cappuccino" for free (as an employee), or pay one euro. Both come from machines, neither is very good. (Can you tell which one below is free?)

27 Jan 2011

IID's general manager is "separating"

...from the irrigation district (the largest agricultural water user in California) that he led for three years. Did he jump or was he pushed? Why?

Speed blogging

26 Jan 2011

Tea party fail

Some politicians in California's Central Valley oppose higher taxes (or fees) on ground water consumption, claiming that people "cannot afford more taxes."

Other farmers want taxes to rise, to reduce water consumption. They are right.*

Higher taxes on consumption can be rebated back to members of the community, after they've served their purpose (in reducing demand). The money doesn't have to be spent. Of course, that requires that politicians don't spend the money on crap ideas!
* SW sent a good example:
County Board Chairman Dan Cronin... said the tax receipts have come to "subsidize" unrealistically low rates now paid by the system's customers. He thinks conservation will be a beneficial side effect of the rate hike.

"Frankly, I think if people paid at a rate consistent with what it costs, it would motivate many to conserve water," he said.

Rent seeking unions harm society

From the Economist:
Public-sector unions enjoy advantages that their private-sector rivals only dream of. As providers of vital monopoly services, they can close down entire cities. And as powerful political machines, they can help to pick the people who sit on the other side of the bargaining table... the American Federation of State, County and Municipal Employees was the biggest contributor to political campaigns in 1989-2004... such influence is more decisive in local campaigns, where turnout is low, than in national ones.

Even if they fail to elect “their” candidates, public-sector unions have a relatively easy time negotiating with politicians. Private-sector bosses are accustomed to playing hardball with unions because they know they can go bankrupt if they don’t. Politicians have no such discipline: they can always raise taxes or borrow from future generations. Those who have challenged the unions have often regretted it.


Do the public exist to serve public-sector workers with their high pay and inflated benefits, they ask, or do public-sector workers exist to serve the public?
Bottom Line: Unions protect workers from exploitation by employers, but greater power means that they can turn the tables and exploit employers us. Read the story if you want to see why American schools are so bad.

25 Jan 2011

My webinar on water management this Friday!

Date and time: 28th January 2011 -- 4:00 p.m. (GMT) / 11:00 a.m. (EST)

Presenter: David Zetland - economist who blogs at aguanomics and the author of the book, "The End of Abundance: A guide to the new economics of water scarcity."

The success (or failure) in provision of public water supplies to municipal and industrial customers is NOT determined by technology or money, but by good (or bad) management, as overseen by politicians and regulators.

In this webinar, David Zetland will give a brief overview of these facts, before discussing the reasons for success and failure in two or three locations worldwide.

Listeners will be encouraged to offer their own observations and diagnoses and cases for success and failure...

Cost: Free!

Register for the webinar here.

Anything but water

  • Damn: "A university degree has never been more essential for securing good employment. Graduates earn 54% more on average than those who never graduated, yet only a quarter of Americans between 25 and 34 have a bachelor’s degree. Nearly half of the 3m people who enroll in university in America drop out within six years (among wealthy countries, only Italy has a worse rate)."

  • Art Carden says scrap the TSA and Department of Homeland Security and start over. Bravo.

  • (via RM) Should economists disclose their conflicts of interest? Yes. (I list consulting clients on my CV [pdf].)

  • Find out when to wake up if you go to bed now (not so good for jetlag :)

  • In Norway, Start-ups Say Ja to Socialism. Why are entrepreneurs willing to pay half their income in taxes? Because they agree with the mix of public services. Americans are not united on invading countries or funding healthcare. I only get 63% of my gross pay in the Netherlands (health insurance and sales taxes are extra), but I prefer to pay 37% in the NL than I am paying 21% in the US.

Craig Wilson is wrong about ag water use

Wilson is the water master for the Delta. He's a lawyer, and he's brought the propaganda that farmers can be regulated into efficiency (see this and this, via RM).

Yes, of course, it's true that you can tell farmers to use less water, but the Soviets proved how inefficient and unjust such command and control regulations are.

The Pacific Institute's flawed reports (and Peter Gleick) are cited as sources for these ideas, so let me remind everyone that:
  1. Farmers with water rights will use less when it's profitable.
  2. Most conservation measures (drip irrigation, for example) do NOT reduce waste if the water would have gone back into the ground or irrigation canal anyway.*
  3. Subsidizing farmers to install efficiency gear (as PI advocates) merely penalizes taxpayers.
  4. The best way to may conservation profitable is by allowing farmers to sell (consumptive) water that they do not use to other farmers, environmentalists and urban water managers.
Bottom Line: Wilson's water efficiency idea is about as smart as cutting off your leg to lose weight.
* (via MM) The Supreme Court is examining prior appropriation in Montana vs. Wyoming and finding that the combination of first in time, first in right with quantified diversions (not consumption) is resulting in shortages for junior water users. In this case, Montana is getting less water as Wyoming farmers use "high efficiency" irrigation that reduces return flows. Time to quantify rights in terms of consumption.

24 Jan 2011

Are Riverkeepers and Waterkeepers doing well?

A reader asked about Riverkeepers and Waterkeepers and their role on efforts to restore the Chesapeake Bay and tributaries.

Any advice (pro or con) on these organizations?

As usual, you can comment anonymously :)

Monday funnies

WH send this bit of buttered-up humor:


Well, a Girl Potato and Boy Potato had eyes for each other, and finally they got married, and had a little sweet potato, which they called 'Yam'.

Of course, they wanted the best for Yam. When it was time, they told her about the facts of life.

They warned her about going out and getting half-baked, so she wouldn't get accidentally mashed, and get a bad name for herself like 'Hot Potato,' and
end up with a bunch of Tater Tots. Yam said not to worry, no Spud would get her into the sack and make a rotten potato out of her!

But on the other hand she wouldn't stay home and become a Couch Potato either. She would get plenty of exercise so as not to be skinny like her Shoestring Cousins.

When she went off to Europe, Mr. And Mrs. Potato told Yam to watch out for the hard-boiled guys from Ireland . And the greasy guys from France called the French Fries.

And when she went out West, to watch out for the Indians so she wouldn't get scalloped.

Yam said she would stay on the straight and narrow and wouldn't associate with those high class Yukon Golds, or the ones from the other side of the tracks
who advertise their trade on all the trucks that say, 'Frito Lay.'

Mr. And Mrs. Potato sent Yam to Idaho P.U. (that's Potato University ) so that when she graduated she'd really be in the Chips.

But in spite of all they did for her, one-day Yam came home and announced she was going to marry Tom Brokaw.

Tom Brokaw!

Mr. and Mrs. Potato were very upset. They told Yam she couldn't possibly marry Tom Brokaw because he's just.......Are you ready for this? Are you sure?

OK! Here it is! .....A COMMONTATER.


A few weeks ago, I landed in Los Angeles, got in my car and drove up to Berkeley.

On the way, I "ran into" this accident. I was about 30 second behind the girl who was driving. She was "looking at the pretty hills," drifted into the neighboring lane, and her car was crushed between two tractor-trailers. She ended up spinning across four lanes. I stopped and ran back to her car; another guy was already there (a doctor!), and she was only suffering from a scratch on her arm.

As you can see in the photo, the car was trashed.

Bottom Line: Car safety regulation saved this girl's life. I am not sure how "the market" would have saved it, since she was driving her sister's car. It's not like she got to choose her price-safety combination that morning. (It's possible, OTOH, that the manufacturer (Toyota?) sold a safe car to her sister, but few people choose a car exclusively for its safety features.)

Later on the trip, I passed a number of "Congress Created Dust Bowl" signs. Near Mendota, I saw this photogenic example of Farmer Created Dust Bowl.

Sprinklers are cheaper to operate than drip irrigation, but they use a lot more water. I guess that these farmers have lots of cheap water to apply to their dusty lands, eh?

Bottom Line: Shortage results when demand exceeds supply. Farmers need to get their own house in order before they point fingers at Congress an overstressed supply system.

21 Jan 2011

The bright side of depression and failure

I agree with this:
If someone told me that I could live my life again free of depression provided I was willing to give up the gifts depression has given me -- the depth of awareness, the expanded consciousness, the increased sensitivity, the awareness of limitation, the tenderness of love, the meaning of friendship, the appreciation of life, the joy of a passionate heart -- I would say, "This is a Faustian bargain! Give me my depressions. Let the darkness descend. But do not take away the gifts that depression, with the help of some unseen hand, has dredged up from the deep ocean of my soul and strewn along the shores of my life. I can endure darkness if I must; but I cannot live without these gifts. I cannot live without my soul."
From David N. Elkins's Beyond Religion

Advice from a 40 year old man to the 20 year olds

From ever-awesome Reddit:
  1. Just because an employer wants you to be loyal, does not mean that they will be loyal to you.

  2. People lie, a lot.

  3. If you wondering about the motivations of others you are detecting deception, more often than not.

  4. Never date a woman who cares about the looks of men or about what you drive.

  5. Never fall in love with a woman you can't have a conversation with.

  6. If you are trying to make a decision about someone's character, watch them make a tough decision.

  7. Never, ever lend friends money. Give it or don't give it.

  8. You are responsible for your own success and career. No one will make it for you. Anyone who wants you to believe differently is exploiting you for professional gain.

  9. Anyone who is advocating a belief system to you is not your friend.

  10. Most people who are trying to convince you of something are many times trying to convince themselves.

  11. People are weak but always plan to be strong. Always assume this first.

  12. Do whatever you can to keep money from being a major influence in your life. It will control you. It allows others to control you.

  13. Don't worry about the meaning of life. The meaning is to wonder, live and find something you love more than yourself.

  14. Chasing sex is a waste of time. It is wayyyy overrated. Don't let your hormones rule you.

  15. If you don't know who you are, you are attracted to the wrong mate.

  16. How you handle risk and pressure will determine most of your life's outcomes and rewards.

  17. Dreams are made in bold strokes but lost in shades.

  18. Never expect a conservative thinker will ever invest money in anything for any reason.

  19. Everyone has a wound they are trying to heal whether they realize it or not.

  20. Nothing anyone else ever does is about you. It is about them and only them, no matter what they say do.

20 Jan 2011

Something from the Scots

IHP-HELP Centre for Water Law, Policy and Science featured my comments on Scottish laws (from my book) in their Featured Research from our Network (FRETWORK) sector:
In some parts of the world, indigenous green grass survives on rainfall. That's the way it is in Scotland, where men have spent centuries learning how to exploit the rolling hills, rocks and deep turf. Besides being a great place to make whisky and raise sheep, Scotland is also a great place to play golf. Fairways and greens are everywhere. Sand traps, water traps, sheer cliffs, stubborn trees and strong winds make it a challenge to move from here to there, let alone here to there while bashing a little rock with a stick.

The trouble came when those Scots (and their English cousins) went overseas...
Continue reading on the FRETWORK homepage (and check out the many resources there...)

An example of regulatory crazy

Anonymous sent me this interesting opinion on a little bit of regulatory crazy:
In the past you have blogged about the inefficiency of RUBS* as a conservation mechanism for tenants. Mandating per unit metering will eventually serve to end RUBS. One of the major driver for using RUBS currently is that some properties are plumbed in a way that all of the water used in a unit cannot be measured by a single water meter (and "point of use" meters aren't approved in CA--yet). One of the opponents of the legislation was the CA Dept. of Weights and Measures (W&M).

W&M has jurisdiction over anything which involves a weighing or measuring device. From taxi meters to berry baskets to gas pumps. They are not a fan of RUBS (but they do not have jurisdiction because a measuring device is not utilized). This does not stop W&M from trying to convince County District Attorneys to go after multifamily owners for utilizing RUBS. As I stated above, mandating metering would serve to end RUBS in the future, so why does W&M fight against the mandate? The primary reason is their ability to test meters prior to installation.

California is the only state in which W&M must type approve and test all or some meters prior to installation. In every other state, AWWA/NIST certification is acceptable. Each county has a W&M office which operates independently from the state agency.** This includes interpreting W&M regulations as they see fit. Each county has a test bench for meters. Many of these benches are no longer accurate. Our meter manufacturing partners use sophisticated laser testing to verify accuracy prior to shipping to CA. Typically, more than half of those same meters fail the county W&M testing. One interested party portrayed this as having a third grader (W&M) check a computer's ability to do math.

W&M has acknowledged for many years that it needs new test benches. Instead of revamping the benches, they have decided to attempt to convince the District Attorneys in a few counties that criminal liability for the meter manufacturer should attach when meters which do not pass W&M testing are submitted to W&M. This theory rests on an expanded reading of what "placed into service" means in the W&M regulations. W&M prefers to ignore the established understanding of "placed into service" as being installed, sealed and used in a commercial transaction, in favor of "submitted to testing." The Dept. of Ag's counsel attempted to disabuse W&M of this theory but they indicated that they will continue to pressure the DA to file criminal charges. Needless to say, this made meter manufacturers alarmed. Most of them will not do business in CA. Meanwhile, we succeeded in passing an ordinance in San Diego with the mandate and there is a good chance of passage on the state level so they will have to test a lot more meters.

I think you can sense my frustration. County W&M personnel have justified the current stance because:
  1. There isn't a regulatory framework which protects tenants in CA.

  2. They are certain that tenants are being overcharged or unfairly charged by unscrupulous owners.

  3. They have a budget problem and hope to recoup some funds from owners by issuing violations. Recently they have been issuing violations at RUBS properties to "highlight the issue" for county DAs and the Los Angeles County Sealer sent an email to several District Attorneys outlining their theories on RUBS with the salutation of "Happy Hunting".
Opinions differ on the fairness of RUBS. However, metered billing has a proven track record of conservation. We are on the cusp of metering a large segment of water usage (and reducing the electric consumption from pumping) and there is a rogue agency doing its best to protect territory that is arguably redundant.***
Bottom Line: Bureaucratic monopolists can do what they want, whether or not it makes sense.

* Ratio Utility Billing System means that tenants in an apartment building share the water bill, by dividing the cost of water at the master meter by the number of units (and occasionally on the number of occupants) in the building.

** "Each county has its own test bench. Seriously. True story, back in 2004 W&M did not differentiate between hot and cold water meters. A meter manufacturer built a hot water meter. W&M (state) had no bench to type approve it so the manufacturer worked with Utah State university to build the bench to type approve the meter.In 2005 W&M pushed the DAs in LA, Santa Clara and SD counties to investigate apartment owners who were using only cold water meters but billing for all water usage because it was an "estimate". But, during the statutory period, there was no hot water meter to measure all water. W&M lot tests the meters at the county and knows how they will be used and released all of the meters. Just insane. The owner settled and ended up $4M out of pocket. http://www.signonsandiego.com/. We told them to dig in and fight but they took the certain way out.

W&M is petty but they've been hostile toward our industry going way back. We now have owners and developers who are choosing not to install meters and forgo the 20-35% reduction in water usage just because it may take months to get all of the meters through the county W&M. The people W&M are trying to protect--residents--ultimately pay more through RUBS or in rent adjustments. It is completely backward."

*** I asked anonymous "why doesn't W&M want to replace RUBS with subunit meters? They get rid of RUBS and get more work, no? Sounds skitzo," who replied: "I agree. Doesn't make sense. They simply state that resident billing, whether rubs or metered has the capacity to be abused by unscrupulous owners but never go into why the proposed tenant protections are inadequate. They don't like RUBS. Don't like non-utilities doing any billing of residents. When the proposed legislation came up with the mandate, they decided that their ideological dislike of landlord billing trumps the added revenue/work they would get. Also, their setup with the state W&M dept and mini-fiefdoms in each county allows both sides plausible denial with the illusion of local control."

19 Jan 2011

Whatever happened to global warming?

A nice lesson on the difference between weather and climate:

Anything but water

18 Jan 2011

We are social animals

David Brooks writes in the New Yorker:
People who were securely attached as infants tend to have more friends at school and at summer camp. They tend to be more truthful through life, feeling less need to puff themselves up in others’ eyes. According to work by Pascal Vrticka, of the University of Geneva, people with what scientists call “avoidant attachment patterns” show less activation in the reward areas of the brain during social interaction. Men who had unhappy childhoods are three times as likely to be solitary at age seventy.


“I guess I used to think of myself as a lone agent, who made certain choices and established certain alliances with colleagues and friends,” he said. “Now, though, I see things differently. I believe we inherit a great river of knowledge, a flow of patterns coming from many sources. The information that comes from deep in the evolutionary past we call genetics. The information passed along from hundreds of years ago we call culture. The information passed along from decades ago we call family, and the information offered months ago we call education. But it is all information that flows through us. The brain is adapted to the river of knowledge and exists only as a creature in that river. Our thoughts are profoundly molded by this long historic flow, and none of us exists, self-made, in isolation from it.
Read the whole thing.

Speed blogging

H/Ts to JC, DL and RM

17 Jan 2011

Monday funnies

THIS is a river in flood

(via RM) From our cousins down under. Never seen cars get washed away like that.

14 Jan 2011

Best practices award

Anyone want to nominate others for best practices in urban water management or communicating about urban water management issues?
The United Nations Office to Support the International Decade for Action "Water for Life" 2005-2015/UN-Water Decade Programme on Advocacy and Communication (UNW-DPAC) and the UN World Water Assessment Programme (WWAP) are pleased to invite you to submit your application for the 1st edition of the "Water for Life" Best Practices Award.

The purpose of the Award is to promote efforts to fulfill international commitments made on water and water-related issues by 2015 through recognition of outstanding best practices that can ensure the long-term sustainable management of water resources and contribute to the achievement of internationally agreed goals and targets contained in the Millennium Development Goals (MDGs), Agenda 21 and the Johannesburg Plan of Implementation.

The prize is awarded yearly in two categories, one in best water management practices and another one in best participatory, communication, awareness-raising and education practices.

Every year, special emphasis is being put on the theme selected for next World Water Day. In 2011, special focus is given to the topic "Urban Water Management". The prize will be awarded at a special ceremony on World Water Day, 22 March.
The deadline to submit is 30 Jan 2011.

I'd like to see a "worst practices" award go out too. I think there are a few competitors for that one.

The shooting in Tucson

The guy's crazy, of course, but he was inspired by a delusional culture (cf., Bowling for Columbine).

Here are interesting reactions:

Coyote (libertarian who lives in Arizona) worries about legislators further distancing themselves from citizens.

The Economist (classical liberal) and OC Register (right wing) debate the significance of other's speech.

Jon Stewart has a measured response:


13 Jan 2011

Bleg: CA Integrated Water Resource Management

TS asks:
I am taking a grad course this semester on planning for water resource management...

In terms of California (a state riddled with water management and planning challenges), are there any readings you recommend? Do you think California would be a good case study to discuss in terms of the lack of IWRM?
Anyone? Anyone? Buhler?

Poll Results -- Cha cha cha changes!

Hey! There's a new poll (leaving on an airplane) on the right  ------>
In 2010, I changed...
someone else's opinion on an important matter 10%4
my own opinion on an important matter 19%8
both 60%25
neither 12%5

Very interesting results! I wonder what kind of examples you had that were so memorable. Further, I wonder if you always know when you change someone's mind? Surely not.

Bottom Line: As social animals, we are only successful when we can interact and affect each other.

12 Jan 2011

Prize competition for cool water technology

Seems like this a form of acquiring clients, but maybe you want to be famous for 15 seconds?
The Artemis Project* Top 50 identifies the most promising water technology companies worldwide and supports their entry into full-scale markets. There is no cost to participate in the competition. The deadline for applications is January 15, 2011. For more information about the Top 50, visit the Artemis Project or email info@theartemisproject.com.
* "Run by a boutique consulting practice dedicated to helping companies thrive in a world of increasing water scarcity."

Can we just leave Earth or do we have to fix it?

I am swamped with work and moving to Amsterdam, but here's a beautiful video about exploring new frontiers.

I doubt that we will colonize other planets, but we sure won't get anywhere if we destroy this one.

11 Jan 2011

Scholarly communication

In a recent podcast, Russ Robert and Peter Boettke discussed Ludwig von Mises (famous for Austrian business cycle theory, among other things). They then compared Mises to Hayak, saying that "Mises was a 19th century economist who communicated via books while Hayek was a 20th century economist who communicated via journal articles." To me, the next step is obvious: 21st century economists communicate via blogs.

That said, I use books, articles, blog posts, op/eds, emails, twitter, audio, video and live conversation to get the message across -- there's nothing wrong with using as many channels as possible.

(Posted @ 11:11 on 11 Jan 2011 :)

Brisbane facing floods

I visited Brisbane in the rainy season last year, but this year has had much more rain. What's amazing is that Brisbane experienced exceptional drought just a few years ago, leading people to cut water use AND build a desalination plant that's now mothballed.

The floods will be worse to the extent that the river going through the city does not have room to flood, because buildings are in the way.

Bottom Line: Build huge dams to buffer floods and droughts, or just give nature room for both and keep demand to levels consistent with drought.

Government Failure and Over-Government -- The Review

This book, volume 5 in the collected works of Arthur Seldon, argues that government can just as easily be part of the problem as the solution.

Seldon was one of the co-founders of the London-based Institute for Economic Affairs, where Hayek (and 11 other Nobel Laureates) was welcomed, and Margaret Thatcher learned her free-market economics.*

The book has six chapters, reprinted from works published between 1978 and 1998.
  1. "Change by Degree or Change by Convulsion" argues that [p. 3]
    "confrontations" in the market are small, and solved by higgling and haggling over price, the peace-maker. In a state economy or state industries, decisions are centralized to planning boards, committees, commissions, councils, government departments, that nominally "represent" the very much larger number of workers, managers, and consumers who will benefit or suffer. Change is therefore more likely to be opposed, repressed, inhibited, postponed. When it takes place it is contrived, jerky, discontinuous, lumpy, convulsive. Disturbance, dislocation, disruption are large-scale. Friction is inflated.
    He goes on to point out that representative government can be distorted by lobbying of special interests. This may be an unavoidable cost when the government is producing public goods, but it's inefficient and unfair when the government is providing private goods (heath care, food, housing) through overreach.

  2. "Individual Liberty, Public Goods, and Democracy" extends this point with the additional observation that the size of government (as a % of GDP) should fall, not rise, as citizens grow richer. Citizens with more money are better able to buy "necessities" (such as transport) that the government previously provided. Seldon points out that governments frequently expand with GDP, in ways that can be both inefficient (wrong products) and unfair (favors to politically-powerful lobbies such as trade unions, businesses and bureaucracies).

  3. "Avoision" describes how unhappy citizens will try to pay less taxes, in ways that are simultaneously legal (avoidance) and illegal (evasion). Examples include barter, cash payments, purchases at garage sales and flea markets, and (now) shopping on the internet.

  4. "The Dilemma of Democracy" laments the expansion of government into unsuitable and inefficient areas such as "public" utilities (water, energy, etc.), "welfare" services (education, health care, etc.), and local government functions (libraries, pools, etc.) that can be supplied by private, for-profit or non-profit organizations. Governments do this without evidence that the market has "failed" to
    provide these services, prohibiting competing services and subsidizing costs ("free!") with tax revenues. Seldon notes that we vote for politicians every few years, but vote in markets daily. That means that markets are more responsive to our needs as consumers. People in government counter that they "fairly serve the public good," but such self-serving claims do not hold when we are able to make head-to-head comparisons of private vs. public services. Seldon laments the decline of charitable societies that began in the 19th century and notes that citizens who try to work the system in protecting their interests as producers (barriers to trade or worker job security, for example) collectively do much more harm to themselves as consumers.

  5. "Public Choice in Britain" quotes Keynes: "Government should do only what people could not do at all, not what it could do better than the people." Yes, that's J.M. Keynes, the one whose name is invoked by politicians claiming that government should "stimulate" the economy (see this and this). This idea makes a lot of sense, because it means that citizens and businesses will compete to provide -- and improve -- services, leaving "impossible" services (defense, laws) to a smaller, more efficient government. In this chapter, Seldon complains about manipulative language [p. 157]:
    The insinuation is that "public" means selfless or benevolent whereas "private" means selfish or greedy... The politician who wants to sell a doubtful policy he cannot explain or justify calls it "in the public interest" -- or by the nebulous "fair."
  6. The short sixth chapter wasn't particularly interesting :)
Bottom Line: Seldon is right, in so many ways, about the root causes of poor government: Bureaucrats crowding out services that for-profit and non-profit organizations could provide; politicians taxing citizens to provide these services (and other favors) to special interests they favor. These problems often fall under the heading of the Knowledge Problem (from Hayak) and the problem of Public Choice (from Buchanan and Tullock). Russ Robert and Bruce Caldwell discussed both recently in this podcast. FOUR STARS.

* Thatcher's privatization of water and energy utilities and showdown with trade unions can be traced to IEA ideas. Privatization of British Rail, the British Airports Authority, and other programs were later extensions. The recent decision to allow university fees to triple falls in the same category (fewer subsidies, students-as-customers). Most of these programs have been successful. National Health seems to be working, but the Dutch health care system (mandatory insurance, private provision) seems to be more efficient. The US health care system (before and after Obamacare) is still a disaster of perverse incentives.

10 Jan 2011

Monday funnies

Got your iPad yet?

Learning from the Dutch

I've often wondered if it's possible to improve on water management in the US (from fracking to Atlanta to the Sac Delta to New Orleans to...). I've taken a lot of inspiration from water markets in Australia, but those merely need a decent set of rules to allow self-interested farmers to trade with each other.

But what about public infrastructure projects that help one region but tax everyone? What about projects that take 50 years to implement? What about projects that take climate change into consideration?

Well, the Dutch face all those issues. They assembled a Delta Commission to "plan the future." The Commission's 2008 report [pdf] provides a national roadmap for managing water for the next 50+ years.

Read the report (the link is to the full English version) to get lots of great detail (or watch the movie), but keep these important points in mind:
  • The number one goal is public safety (from floods and water contamination). Land values and environment come second (no "co-equal goals" confusion).

  • The Dutch assign differing cost-benefit ratios, depending on the area at risk. This helps prioritize investments to, e.g., protect Rotterdam over farm fields.

  • Nothing happens until there's broad public support for long-term, heavy investments. Historic investments have averaged 2-5% of GDP; the Delta Commission's recommendations will cost about 0.5% of GDP ($1 billion/year) for the next 100 years. Funding happens across generations because benefits will accrue across them. Such a funding model (paired with gradual investments) means that it's possible to start NOW, but change path if the future is different.
It's a report like this that makes me happy to work in Holland (more details on the project soon).

Bottom Line: American bureaucrats and politicians should use this report as a reference of "how it's done," to give an indication of how well or poorly we are addressing our water management problems.

7 Jan 2011

Anything but water

H/Ts to WH and JW

6 Jan 2011

Discussion about California water issues?

MR asks:
Do you know of any public discussion processes that can engage and educate Californians on the state water issue? Any groups that are doing this?
To me, this is a complicated question, since there seems to be a few different levels of discussions going on:
  • Experts who talk among themselves.
  • Politicians and partisans who bicker with each other.
  • Citizens who are concerned but can't get information from the first group or sense out of the second group. They can turn to journalists, but there's little 2-way flow.
I try to make this blog useful to all three groups, but it's me leading the discussion most of the time, isn't it.

Any thoughts or ideas?

Why some conflicts never end

Israel and Palestine, the Sacramento Delta, the Nile, and climate change. These conflicts will not end with a settlement as long as the parties to the conflict cannot find a common ground for agreement.

In economics, this is known as a game without a "core" -- in the sense that there's no overlap between parties' range of acceptable alternatives.

I've reviewed a book about conflict over water in the Middle East where it's clear that a solution is economically feasible, but perhaps not politically acceptable.

I've published a paper [pdf] on the Sacramento Delta in which I suggest that the conflict can be solved by forcing a core (a put-your-money-where-your-mouth-is vote among alternatives).

Blake et al. have a very interesting paper [pdf] in which they use experiments to show that a Coasian bargaining outcome* will not result when there are three or more participants in the game (as is true in the Delta).

Madani and Lund have a paper [pdf] modeling conflict in the Delta as a prisoner's dilemma game (in which both sides have an incentive to defect instead of cooperate) that's evolving into a game of chicken in which the State of California is likely to be the loser. They show that it's possible to reach cooperation by changing payoffs -- a solution that's different in detail but similar in structure to mine.**

Bottom Line: Some conflicts cannot be solved without outside intervention to change the incentives. That's the role for parents, teachers and referees managing kids and players. That's the role that politicians and leaders need to play, except that they often prefer to be part of the problem instead of the solution. Plan accordingly.
* It's possible to reach an efficient level of pollution if either the polluter or pollutee are given property rights to pollute or be free from pollution, respectively.

** Madani's Game theory and water resources [$] is a useful publication for engineers.

5 Jan 2011

Price discrimination in the EU

Note the perforated tear strip for removing the price when this product (a wallet) is sold in Belgium, France and Luxembourg. The Dutch and Germans, OTOH, probably love to see that they are paying less than their neighbors. I wonder about all of the cultural and social implications of that one euro difference.

The Economics of Ego Surplus -- The Review

Paul McDonnold sent me a copy of this book, a rare example of economic fiction.

This "novel of economic terrorism" is well-written and fast paced; I read it in an evening.

The plot centers on Kyle, an economics graduate student who tries to get to the bottom of a Middle-Eastern terrorist plot to manipulate US markets. Paul does a good job at integrating economic ideas into the story, without appearing overly-didactic. (There's even a cocktail party debate over who wins and loses from free trade!)

After I read the book, I had a little Q&A with Paul:
  1. Why the title? What was an alternative?
    I did struggle over the title. I realize it’s a little enigmatic, but I felt like it conveyed that the novel was about economics and also conveyed the moral of the story, although the reader may not realize that until the last page. The main alternatives were shorter, more generic and maybe more marketable options like “The Economist” (assuming that’s not a copyright infringement). But in the end I just liked the quirky and enigmatic better. And books with such titles have been successful in the past, like “Special Topics in Calamity Physics,” or to pick a classic, “The Catcher in the Rye.”

  2. How does this book relate to the current financial mess? Or is this a timeless theme?
    I started it before this particular mess hit, so my intent is more timeless. It seems to me the business cycle is part of the psychology of a market-driven economy, so I expect financial crashes to come and go for a long time.

  3. Should we worry about home grown terrorists (Goldman Sachs?)
    Anything’s possible, but as far as big businesses go, I think the profit motive ties them too strongly to the existing environment to want to destroy it. The villain in the novel, Nash Mahir, is sort of a special case because his political views are so strong he is willing to mostly destroy the global conglomerate he built up in order to create havoc.

  4. Why use economic concepts in the book, e.g., gains from trade, when the plot centers on manipulation of the financial system. Were there concepts that you HAD to include to make the plot work? Were there ones you dropped (too complicated? Irrelevant?)
    Like the protagonist Kyle, I’m more of an econ guy than a finance guy. So even though finance was integral to the story I tried to keep the focus on the macro-economy. At one point I had more economic material in the book, such as an explanation of the trade imbalance between the U.S. and China. But it just didn’t integrate very well so I cut it.
Bottom Line:I give this book FOUR STARS as an economics novel and THREE STARS against all novels.

4 Jan 2011

Two doubles?

Two months ago, I said that I was lucky to have two of my articles published in the same volume of a journal, i.e., two home runs!

Well, it happened again. The The Economics of Peace and Security Journal just published two related articles:

"Intra-organizational conflict: origin and cost [pdf] tells the story of an organization -- the Metropolitan Water District of Southern California -- that suffers from internal conflict. The story is important not just because the organization supplies about half of the urban water in southern California, but because it highlights how conflict can arise and persist inside an organization. The key to understanding this story is the role of institutions (rules and norms), and how institutions may fail to evolve with circumstances."

"How markets can end persistent intraorganizational conflict [pdf] ... examines why internal conflict at MET over water pricing and water allocation persists and what may be done to resolve this conflict and improve the efficiency of water delivery and usage."

These articles capture the main elements of my dissertation in less than 20 total pages. I recommend them to anyone interested in how organizations, bureaucracies and monopolies work -- and fail.

I also recommend the journal to anyone interested in peace, security and conflict. Subscriptions are only $32.

Bleg: Carlsbad water consumption?

I spent 2 hrs trying to get an idea of per capita residential water consumption there.

Can anyone help with a number from a published source (annual report, etc.)?

Oceanside would do as well.

Bottom Line: We really need to get better data on water use!

Speed blogging

H/T to Env Econ and SV

3 Jan 2011

Monday funnies

XKCD captures the story of my life (aka, if I had a nickel...)

Water Chat with Veolia on water footprinting

A few weeks ago, I had a chat (via skype) with Laurent Auguste (president and CEO, Veolia Water Americas) and Edwin Pinero (chief sustainability officer, Veolia Water North America) about Veolia's water impact index, which improves on water footprinting (previous post) by including local water stress and water quality, i.e.,
In this 40 min water chat [19 MB Mp3], we discuss their index, if such an index can contribute to corporate profitability (or if it's merely greenwashing), whether prices can replace such and index, and many more ideas.

Listen in!

Bottom Line: Veolia's water impact index improves on water footprinting, but both options take a lot of time and money to produce numbers that are hard to use for making decisions. Better to make sure that water prices reflect water scarcity and quality.