4 Apr 2011

A note to California

I'm seeing a lot of stories and op/eds about how CA needs more storage, or more water, or less demand, or fewer farmers or dead fish.


What CA needs is a system for balancing supply (drought to flood) and demand (people to farms to fish).

That system is known as a market.

If you want to know how it works, check out the gas station on the corner, then imagine the supply chain and complicated set of demands that interact at that point.

A water market would be easier to run, but it would requires that a whole bunch of special interests (from politicians to DWR to enviros to subsidized farmers) face the real supply and demand of water.

Scary, sure, but a fact's a fact.


  1. Viewpoints: A market solution for treatment plant costs

    Special to The Bee


  2. Allow more water transfers By David Festa and Spreck Rosekrans

    Fresno Bee


  3. The reason I read Dr. Zetland's fine blog is his advocacy for water markets.

    However, I have some questions on his market solution for solving California's water problems without creating more water storage as Dr. Zetland also advocates.

    The storage to flow ratio for the Lower Basin user's of the Colorado River is about 4 to 1. In other words, they can withstand a 4 year drought with their existing storage capacity.

    If you total up the storage in the State Water Project and the Central Valley Project and compare that to the annual allocation of water for all users you end up with a flow to storage ratio of about 1 to 0.5. In other words, California can only withstand a half year drought.

    Even with water markets better allocation scarce supplies, how would that solve the state's water problem WITHOUT adding more water storage?

    Or do you presume that markets will create more water storage magically in what is a socialized water system? And if so, why are so many opposed to the new reformulated Cadiz Water project which would created a private market for water and add water capture and storage?

    I look forward to anyone's answers.

  4. @PP -- storage is useful, but not necessary for a market to function. Markets, in fact, reduce the need for storage, since they make it easier to manage smaller or more irregular supplies. If there were a market AND a need for more (unsubsidized) supply, then surely a for-profit concern could build it. Comparisons with existing, overbuilt, loss-making storage capacities are invalid when it comes to economic or environmental efficiency.

  5. Thanks, David. I'm going to add water markets to my list of things to study. although given our cumbersome legal system, we can expect decades of litigation if it's implemented.

  6. In a state like California with environmental impact reports, any private acquisition of land for a reservoir could end up in lost investment by lawsuit.

    You would have to give private enterprises eminent domain power and get rid of environmental impact reports to create a private sector alternative to water storage.

  7. @PP -- who mentioned eminent domain? The private guys would have to BUY the land. Capitalism right? EIR -- like all regulations -- would also be necessary. Let's obey the laws...


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