17 February 2011

Irrigation 100 years ago

Katharine Coman's 1911 article, "Some Unsettled Problems of Irrigation" was just republished (open access).* Coman concentrates on the problems of property rights and allocation of infrastructure costs in the Western US, commenting that
The irrigation district can only succeed where cost of construction is light, and where soil and climate render the lands highly productive, as in southern California. Western men were becoming convinced that if the homestead law was to have any meaning west of the hundredth meridian, government must come to the aid of the settler, first in the adjudication of water rights, and second in the construction of the more costly irrigation works.
This statement is put into an interesting context
... much of the reclamation work remaining to be done is beyond the scope of private enterprise. The federal government alone is able to undertake construction on the scale necessary to convert the great interstate watercourses such as the Missouri, the Big Horn, the Yellowstone, the Snake, the Grand, the Green, and the Colorado to their highest efficiency as irrigating systems.
Thus we can see that private groups were able to complete projects that were economically efficient, but that the government would have to develop other projects, because
the government can afford to wait decades for returns on capital invested, water right charges can be gauged by what the settler can afford to pay, and considerable leeway allowed before cancelation of entry. A private company would be ruined by so generous a policy.
Others might interpret these words to imply that projects would only be built if the government was willing to give them away below cost (using Other People's Money to fund them), which is in fact what happened with most Reclamation projects; see Dead Pool for Reclamation's early failures (I'll be blogging on Boswell's cotton operations and Westlands Water District soon).

The article totally ignores the current problem -- how to reallocate water from irrigated agriculture to urban or environmental demand -- which is simultaneously not a surprise and a sign of how difficult it will be to rejig the system.

Bottom Line: We knew 100 years ago that most irrigation infrastructure in the western US was not cost-effective, but we built it and proved it was not cost effective, a Pyrrhic victory. Now we face the difficulty of reallocating water in the face of changing demand, as well as rising costs from environmental destruction that were never included in the cost column of the political ledger.

* Several contemporary economists have written updates on these issues:

5 comments:

Eric said...

Pyrrhus would be sad about the use of his name. He got a victory at unacceptable cost. The water folks do not have a victory.

Mister Kurtz said...

The vast irrigation systems created by Miller & Lux and other private investors in the 19th century were much more extensive than people realize today. They worked quite well, are still in use. Projects of this size were still far smaller than the ones the government built. Since their scale was so much smaller, they could have adapted much more nimbly to changes in public attitudes about the environment. And the users would have had to figure out how to price water and pay for things, instead of becoming government wards.
Ain't stimulus projects (for that is what the big projects were, championed by the same people who brought you the TVA) grand! Technocrats always know better than us, because they are better and smarter than people who actually do things. They remind us all the time.

California Farm Water Coalition said...

It is difficult to predict today what will happen in 100 years and, in reference to Katharine Coman's 1911 article, there is no way that she could have foreseen the problems that confront California's water use today. Because government stepped forward in constructing the projects that still supply water today, California has developed both economically and socially. Your definition of a Pyrrhic victory ignores the incredible economic growth brought about by water development including water project-created new tax revenues that exceeded the original cost of the projects as far back as the 1980's, according to the Bureau of Reclamation.

Mike Wade
California Farm Water Coalition

Damian said...

What's the citation/source of your claim Mike? I would be curious to read it...

California Farm Water Coalition said...

Damian,

A booklet, titled “A National Investment,” produced by the National Water Resources Association in the early 1980’s and based on Reclamation data stated that from 1941 through 1979 federal tax revenue attributable to Reclamation projects totaled $28.4 billion. Annual tax revenue in 1980 was estimated to be $3 billion as a result of the projects. The cost of construction was listed as $10.5 billion of which $6.8 billion was scheduled to be repaid by “repayment contracts, power sales and water service contracts.” To be fair water and power users have not yet repaid all of those contract costs but they are on schedule to be paid off by 2030. The remainder of the $10.5 billion investment included $2 billion that had already been paid by 1980 and $1.7 billion that were nonreimbursable costs attributable to “flood control, fish and wildlife habitat, salinity control and recreation.”

Furthermore, at the Association of California Water Agencies Conference in Anaheim on May 17, 1989, USBR Deputy Commissioner Joe D. Hall had this to say as part of his address to the conference attendees:

“Let me share a few additional payoffs from Reclamation projects. Since records were first kept in 1940, we show that our projects have generated some $45 billion in federal tax revenues. This total has not been adjusted to reflect inflation over the years. If stated in today’s dollars the amount would be even more impressive. Annual federal tax revenues are about $3.7 billion, and state and local revenues are not included in this total.”

All told Damien, I think taxpayers have gotten a pretty good deal from water project investments over the years.

Mike Wade
California Farm Water Coalition