30 June 2011

The Nitrate Problem

At the EEA, we discussed a good measure of water quality:

"What about nitrate levels in the water? We can measure those."

"Sure, but nitrates don't matter if they are carried into an area where abundant water dilutes it. We care about eutrophication that's caused by too many nutrients in the water feeding algae that take all the dissolved oxygen and kill aquatic life."

In other words, we care about impacts, not inputs (or outcomes, not outputs).

Why is this important? Because a goal of reducing nitrates may lead to the construction of water treatment plants that remove harmless nitrates or inaction on the other contributors to eutrophication.

Bottom Line: It's important to get incentives right, because what gets measured gets managed.

The Politics of Privatization

Italian citizens just voted against a government plan to allow private investment in water systems. This cut-off-your-nose-to-spite-your-face action has been presented as a victory of the little people against mega corporate interests, but really means that Italian taxpayers (they exist! really!) will have to subsidize water services for users (often companies) with political connections. The Sicilians may think it means more money from Brussels or Milan, but they may be in for some shocking service disruptions.

This event is just one battle in a war that some people think is worth fighting.

The people at Food and Water Watch are in this category, and they are working hard to prevent water customers and managers from accessing outside money and expertise. They think it's better to have subsidies from central authorities (at least in theory) and want to prevent pricing that would reduce water waste.

This (pro-private) article offers some community responses and rejections of FWW's "help," e.g.,
On May 26, 2011, in the Township of Franklin, NJ, Councilman Phillip Kramer wrote a rebuttal to the published statement of Food & Water Watch Executive Director Wenonah Hauter, “Franklin Township Rejects United Water Privatization Proposal,” taking exception to its multiple distortions of facts. Councilman Kramer went on to say that Hauter was out to make people believe that her group’s role in the decision-making process was favorable when in fact, “uniformly Council members that spoke of Food & Water Watch did so in a negative manner." While defending the group’s right to participate in free speech and the public review process, Councilman Kramer finds that Food & Water Watch is “a group that is unencumbered by the truth” and says he “cannot however defend their use of scare tactics, exaggerations and outright distortions." Finally, he asks them to “kindly remove your signs illegally placed in our town, especially those placed on open space property," calling their posting disgraceful behavior toward the planet.
I was interested to see this statement (and others like it) in the article, since it reflects my experience: FWW and Hauter "interpret" facts in a way that makes them either crazy or liars.

During and after our debate in Berlin, Hauter claimed many things that made no sense or undermined her arguments. For example:
  • I am "dismissive of the government's role in providing water" when that role is at the center of most of my work and writing.

  • WaterHealth International and its "investors were making piles of money selling water in villages in Africa and India."

  • We can subsidize water service to the poor by taxing global capitalism.

  • Ad nauseum.
These two examples are only recent: FWW has been been wrong in nearly everything I've read from them.

Bottom Line: FWW is now too boring, wrong and predictable to waste my time (or your time) on this blog.

29 June 2011

Bleg -- Bottled water property rights?

DB asks:
I am trying to figure out if bottled water companies are considered overlying owners or appropriators under California groundwater law. I have read that groundwater users that extract water and use it on land they own are overlying owners, but does bottling water for export count as using the water?

I have read unclear accounts that discuss when a bottler extracts from point A and bottles it at point B, and is thus not an overlying owner, but the discussion was in reference to TX, and regardless, I am still unsure if a bottler's physical act of bottling counts as a "use" and thus would also be a overlying owner if they extract and bottle at the source.
My first response is that beneficial use of groundwater ON a property is allowed, even if that water is then exported in bottles. Can you divert it to a distant, non-contiguous property? Doubt it, since this is not a matter of prior appropriation rights.

Any opinions (or, better yet, facts) on this question?

Anything but water

28 June 2011

Bleg -- Talking water in SF or DC?

I am going to be in the States next month (as guest speaker in two settings).

While I am there, I will have some "free" time. I'd love to talk to folks (media, students, organizations, companies) about water policy (and promote my book :).

If you have any ideas, then please email me or comment here.

Looks like I will have some time in San Francisco on Monday, July 11th, and Washington DC on Friday, July 15th.

Tasty yogurt, toxic regulators

The Economist covered a small yogurt maker's battle with California food regulations a few weeks ago (one catch-22: they were told to re-pasteurize pasteurized milk, which is illegal).

In a letter to the Economist, Karen Ross (Secretary of California Department of Food and Agriculture) makes herself and department look even sillier:
We are committed to supporting innovation among the growing number of artisan food producers. But illegally produced foods, regardless of the craftsmanship they may embody, present a significant risk of food-borne illnesses, a risk that would be much greater without safeguards.

Food producers and consumers alike rely on government to give the safety stamp of approval. The deaths of several dozen people in the Los Angeles area in 1985 because of unpasteurised milk used by a cheese manufacturer is a grim reminder why.
Karen needs to read her own letter. First, she's the one who decides what's legal or not. Second, she fears unpasteurized milk, which is not even being used.

Bottom Line: Regulatory righteousness (deaths!) and myopia (me right, you wrong!) serve neither customers nor businesses.

27 June 2011

The End of Abundance on Kindle

Now available for $9.99 at Amazon.com.

Monday funnies

I know some of these people (and try to avoid becoming one of them!):



Related (but serious) description of why you should not go to graduate school.

My talk at the European Environmental Agency

A few weeks ago, I was part of a small session at the EEA in Copenhagen. We were exploring the meaning of "efficient water use" and how the EEA would approach the question.

There many interesting speakers, but it was an off-the-record event, so I only recorded my own talk.*

Here are my slides [PDF] and talk [30 min 14MB MP3] There is some interesting discussion at the end.

My main point was that regulators should pay more attention to outcomes and incentives than outputs (or particular technologies) and rules. I talked about markets for quality and quantity, of course, but my emphasis was on addressing the Knowledge Problem by maximizing decentralized decision making.

Bottom Line: The EU is looking for better ways to manage water quality and quantity.
* Two interesting facts: (1) 80% of the irrigation water used by Spanish farmers goes to crops with a value of less than 0.25€ per cubic meter of water. (2) Average energy consumption per person in the EU is 570 watts per day, of which 6 watts (1 percent!) is used for wastewater treatment.

25 June 2011

Flashback: 19 -- 25 Jun 2010

A year old and still worth reading...

The Moral Sense -- The Review -- a fascinating and expert discussion of our moral senses.

Poll results -- the blame game -- 81% of you blamed BP for the Deep Horizon spill. I blamed the federal government (19% of you agreed). One year later -- and deep into the debate on fracking -- I wonder if any more of you see the importance of regulatory decisions on extraction practices. Another post puts theOil Spill in Context

Dead Pool -- The Review -- a good update on Cadillac Desert discussing federal infrastructure mismanagement.

24 June 2011

Friday party!

Anything but water

  • Economists can learn from ecologists; they describe evolutionary traits in terms of function, history, mechanism, and developmental context. The same categories could be used to understand the evolution of human institutions.

  • Robert Reich explains US economic failure in just over 2 minutes (he covers revenues but misses the importance of wasteful spending and poor regulation). Along the same lines (government for sale), he bashes the military-congressional complex. Good excuse to cut defense [sic!] spending.

  • Semi-related: this interesting article compares the lifestyles of the "middle class" in Liberia, Indonesia and the Netherlands. This Berkeley-based blogger describes how he worked for five years and then retired as a thirty-something who wanted to live life more than work it.

  • Thomas Sowell explains why bankers have more incentive to serve society than teachers (hint: competition).

  • Happy trees: California revokes a rule requiring telecoms to deliver phone books for white pages; now we need an opt-out for yellow pages.
H/Ts to RM and HZ

Good news bad news

JK Rowling pushes self-publishing and eBooks WAY ahead with Pottermore. (I'd love 0.01% of her sales!)

The US, Brazil and China block proposals to reduce subsidies to biofuels or lower export restrictions on food. Ag Secretary Vilsack (Voldemort?) says ridiculous things like ethanol program creates jobs and US program (diverting 40% of corn into biofuels) has minimal impact on world markets. I wish he'd just admit to taking bribes from farmers and ag processors to screw poor people and the environment.

23 June 2011

The longest day

...started yesterday and finished 10 minutes ago.

Yes, I managed to re-format my book for a Kindle version.

Interesting process: unreliable software coding, reformatting tables and figures, and trying to figure out how to use references and footnotes without page numbers (!).

Should be available in the next few days :)

Speed blogging

  • The US President's Council on Environmental Quality has released a draft report (Draft National Action Plan: Priorities for Managing Freshwater Resources in a Changing Climate) for comment by 15 July. I wrote this:
    Market tools and prices (e.g., insurance, water trading, scarcity pricing) will lower the cost of adaption and facilitate flexible responses among groups with varying degrees of preparation for climate change. These are described in my book on water policy: The End of Abundance: economic solutions to water scarcity (2011).
    Ya think the Prez will buy a copy?

  • The first draft of a report on Economic Sustainability in the Sacramento Delta is out.

  • China's water managers are failing on a colossal scale: mismanagement of dam releases, irrigation, urban water and the environment. (New competition for the Soviet model of fail?)

  • "The IDB [Inter-American Development Bank] with its partners launch the Inventory of Water and Adaptation Actions in the Americas (WaterAAA) as part of the Regional Policy Dialogue on Water and Climate Change"

  • Tracy Mehan's writes [PDF] "A Symphonic Approach to Water Management: The Quest for New Models of Watershed Governance"
H/Ts to DL and RM

Crazy California

I moved to the Netherlands to distance myself from water mismanagement, but some of these stories are too surreal to pass up. To wit:
  1. The State Water Resources Control Board will have a public hearing on August 22, 2011 to determine if it should approve a petition [PDF] for long-term transfer of 10,000 acre-feet of water from the Department of Water Resources to Westlands Water District. WTF?

  2. Rep. Nunes and two other co-sponsors of HR 1837 (The Batshit Crazy Give Me Water Act of 2011) did not attend the hearing where opponents of HR1837 spoke. I guess they were out drilling wells in Fresno County?

    What would that bill do? Lloyd Carter has a few interesting excerpts:
    “H.R.1387 limits the amount of water that one group must provide and thus shifts the burden for additional water to everyone else. Now everyone else just happens to be all of the superior water right holders in California so that in-Delta diverters, upstream diverters on the rivers, area of origin people, all will now be subject to decreased water supply because the junior most parties are limited, if this passes, in what they have to contribute. That’s a monumental change in both California law and state and federal policy. It completely undoes the water rights system in California,” Herrick [Counsel and Manager of the South Delta Water Agency in Stockton] said.
    The upshot is that junior water users will take water from senior water users. If that's not a Fifth Amendment taking (by the government, to favored parties), then I will eat my hat. I guess that property rights don't matter to Westlands and Paramount Farms when they are doing the taking.
Bottom Line: Political reallocations of water favor the powerful and corrupt over social interests and economic efficiency. H/T to RM

22 June 2011

Saving ocean fisheries

PERC's video explains how property rights help fish and fishermen.

Some for free, pay for more

I met Mike Miller of South Africa last week. He was kind enough to send this interesting paper [PDF] on free basic water in South Africa. His discussion of the political and economic tradeoffs is particularly useful.

Abstract: The South African government’s policy decision in 2001 to provide a basic amount of water free of charge to all citizens has been controversial. Traditional policy advice was that all water should be paid for, even if some costs were subsidized. A review of the implementation of the new policy suggests that the flexible approach adopted ensured wide applicability, although it has been criticized for defects of both exclusion and inclusion. However, it has helped not only to achieve social equity but also has supported the broader objectives of conservation and environmental sustainability. The political legitimacy conferred by the approach has enabled water supply organizations to recover their costs and achieve the economic objective of financial sustainability. South Africa’s experience with free basic water thus demonstrates that addressing social and environmental dimensions together with economic dimensions can lead to more effective and sustainable policy.

21 June 2011

Speed blogging

  • There's another Colorado River in Texas, but Texans have their own problems with the end of abundance: rice farmers under attack for wasting water, energy plants without adequate cooling water, and cities that want more for their populations.

  • Lots of information on Canadian water policy.

  • Explore climate change data for California via Cal-Adapt.

  • "Working with Ernst & Young, Severn Trent Water has developed proposals for water trading which could be implemented across England and Wales by utilising existing regulatory processes. Our proposal is a simple, low cost, low administration approach designed to maximise the benefits water trading."

  • "Underwriters Laboratories... has become the first laboratory approved to conduct water testing services in all 50 states and Puerto Rico." Time for UL to test and compare bottled and tap water? That's what I suggested in my book.

  • TheWaterChannel has released a 6-DVD set on "Water Management in Motion" on six themes: IWRM; Climate Change; Water Pollution, Water Quality and Waste Water; Rainwater Harvesting, Recharge, Retention and Reuse; Groundwater Management and Water, Sanitation and Hygiene. The DVDs are available FOR FREE to individuals and organizations engaged in water education.
H/Ts to DL and TS

Portland's water managers need to grow up

"Apparently the "End of Abundance" hasn't hit Portland yet," says HG in the email that brought me this story:
For the administrator of the Portland Water Bureau, the decision Wednesday to drain 7.8 million gallons of drinking water from a Mount Tabor reservoir comes down to six words:

"Do you want to drink pee?" David Shaff asked.*

About 1:30 a.m. Wednesday, water officials say, a 21-year-old Molalla man was caught on camera urinating in one of Portland's uncovered reservoirs -- one that provides water to a majority of Portlanders.

From a gross-out perspective, that's enough to make residents wary of turning on the tap.

"I think I'm going to have a Coke with my lunch today," said city Commissioner Randy Leonard, who oversees the Water Bureau.** The bureau recently began work on an $80 million project elsewhere to comply with federal rules to cover city reservoirs.

But does tossing out so much water -- at a cost of more than $36,000 -- make sense from a scientific or health angle?

Urine is pretty sterile chemically speaking, said Dave Stone, an assistant professor in toxicology at Oregon State University who specializes in chemical contaminants in water.

"It's inappropriate behavior. But how many animals are doing that or birds?" he said. "I don't want to second-guess the city, but I can't think of anything chemically that would have me be concerned."
*Shaff (the Administrator -- or general manager -- of PWB) and ** Leonard (PWB's Commissioner) should know better. They are basically implying that the reservoirs are full of Evian when they are full of water that's going to be treated anyway. They claimed that people in the area "may" have thrown objects in the water, but those people were questioned. Seems like they were more interested in finding an excuse to drain the water.

The pity is that people are NOW going to think their reservoirs are super clean (not!) and that water recycling is way too gross (not!).

I just finished Charles Fishman's Great Thirst (review coming soon!) and similar public anxieties have lead to very bad water supply decisions (piping water over long distances, at triple the cost, to avoid water recycling).

Bottom Line: Fail in Portland.
Addendum: Clay Landry et al. also lament Portland's wasteful use of "slightly soiled" water.
Addendum 2: Apparently water in that reservoir goes straight into customer pipes without treatment but maybe with filtering. Wow.

20 June 2011

Nice endorsements of TEoA

Enviroboys: "David has been great and his writing has certainly helped shape my perspective on water policy, planning, governance and management."

Environmental Economics: "You've got to admire David's spunk [for dropping UC Press in favor of self-publishing]. I would have done whatever UC Press wanted me to do."

Great Lakes Law: "David's preference for market-based solutions to managing water demand makes sense, especially when tempered with mechanisms for fairness and meeting basic human needs."

Thanks folks!

Monday funnies

Jon Stewart loses his shit when Sarah Palin and Donald Trump abuse pizza.

Me Lover's Pizza with Crazy Broad

WaterHealth International

While in Berlin to debate in favor of full cost recovery as the best way to get water to the poor, I  heard a presentation by Sanjay Bhatnagar of WaterHealth International. WHI is a for-profit company* that installs turn-key facilities in 2-3 weeks that deliver purified drinking water to communities. These facilities are "technology agnostic" because WHI will use whatever technology gives the best water at the lowest price. Each facility delivers 20 to 100 m^3 of water per day (enough to supply 4,000 to 10,000 people). WHI also operates the facilities for their 10-15 year contracted life, using revenues from water sales to cover operating costs.

WHI has 450 facilities operating in India, Philippines, Ghana and Bangladesh and plans to open 200 facilities in 2011.

Water from the facilities is VERY clean ("WHO quality") and sold at cost -- about $0.07 for 20 liters in India. (I saw the same volume being sold for $1.50 in Jakarta; those prices are also normal in India, where bottled water cost -- as I remember -- about $0.25 for ONE liter.) WHI tests its water frequently and allows villagers to compare water sources using a microscope that will show parasites and other pollutants floating in their existing water sources (from mains or natural water bodies).

Sanjay told the story of a 2010 cholera outbreak in an Indian village where three people died and 16 people fell ill. The only water that was safe to drink during the outbreak came from WHI's facility, not local wells or taps.

Some people worry about WHI's for-profit status, but WHI faces competition from other water vendors or any company that tries to emulate its model. More important (to me), WHI presents a much more serious competitive threat to municipal water providers who fail to provide safe water to their customers.

WHI's financing model is also very interesting:
User fees for treated water are used to repay loans and to cover the expenses of operating and maintaining the equipment and facility. WaterHealth hires members of the communities we serve to conduct the day-to-day maintenance of these “micro-utilities,” thus creating employment and building capacity, as well as generating entrepreneurial opportunities for local residents to provide related services, such as sales and distribution of the purified water to outlying areas.

And because the facilities are owned by the communities in which they are installed, the user fees become attractive sources of revenue for the community after loans have been repaid.
This model means that up-front costs covered by loans, donations or local sources are repaid by sales of water over 10-15 years. This makes it easier for poor people to "get what they pay for" (no water sales, no revenue) according to their use of the facilities. In Sanjay's words:
The Poor consume goods and services just like anyone of us. When we have the mindset that there should be no profits from the poor then we have subscribed to the mindset that these people deserve aid and cannot be productive members of society and earn their livelihood. Some people fall into this category, and they need our help and will be aid recipients.

But there is a very large group of people who can earn a living and can afford to pay for food and water, if affordably priced They should be treated like customers and not aid recipients. So for these people we need to do the following: provide them goods and services at an affordable cost so that they are then free to pursue their work and increase their earning power rather than spend many hours a day procuring water or falling sick due to waterborne disease and not being able to work. That is what waterhealth is trying to do.
Bottom Line: WHI offers an economic source of clean water to the world's poorest with a business model that forces informal and municipal providers to compete in sustainably delivering better water at lower prices. Win.

* Wenonah Hauter makes some ridiculous and baseless claims about WHI at HuffPo (no fact checkers there, I see). Several commentators (including me) call her bluff, and she does not reply.
Addendum: Some more information from Sanjay:
Q: What's the cost of a WH center?
A: Cost of a waterhealth center depends on the location and the size. The smallest center in India processing about 20,000 litres per day is about 10lakhs or 20K but that includes cost of equipment, the superstructure or shelter for the operator and equipment and the full civil plus mechanical construction work. I lay that out because sometimes people compare that number to only the cost of the equipment on a skid that some equipment suppliers sell in the market, for obvious reasons that is an apple and oranges comparison.

Q: Is WHI for profit?
A: For profit, not possible to get leverage as a non profit and get access to private funds. Grants from foundations is not a way to scale the company to be able to make impact and serve 100 million people which is possible in a 5-10 year timeframe with our systems.

19 June 2011

Happy Father's Day!

I was reading this thread -- "What's the best advice your father ever gave you" -- and thought of two pieces of wisdom from my dad:
  • If you envy someone, make sure you envy every part of their life
  • If you are choosing between the $8 widget and $10 deluxe widget, then you're really asking yourself if the deluxe features are worth $2. (Thinking on the margin!)
Love you, daddy-o.

Flashback: 12 -- 18 Jun 2010

A year old and still worth reading...

More war at MWD -- from what I understand, San Diego is still battling MWD. When will they read my dissertation and adopt its recommendations to end this pointless battle?

Travelblog: Fiji environment (went to Fiji; didn't drink Fiji Water).

The Limits to Growth -- The Review -- a book that every politician (and citizen) should read -- if only to understand the relations between resources and the environment.

Crude World -- The Review -- great book on the politics of oil. This week's Economist notes that oil "benchmark" prices are starting to disagree (supply! demand! politics!)

16 June 2011

UK water utilities and regulation

I attended (and spoke at) SBGI's utility regulation seminar on 9 June in London.*

I was interested to see the regulators and regulatees in the same room, each side presenting their case for serving the public -- the real customers who were not in the room.

(The UK has one of the most open utility sectors in the world; most utilities are privatized. Ofwat regulates the 25 water/sewage companies in England and Wales. Ofgem regulates natural gas and electricity. There's more, but I don't get it all.)

Several themes emerged:
  • Some politicians are pursuing policies that customers do not want. This causes regulators to impose costs on customers (and companies) that are unpopular.
  • Companies want financial security from regulators, but that security can be tricky to negotiate and detracts from good performance.
  • One-size-fits-all regulation is not delivering efficiency, but regulators prefer it.
  • Regulators are struggling to reduce their reliance on output-based performance indicators (in favor of outcomes), but they are still in love with asking companies for "well-justified business plans" and then pretending that they can hold companies to those plans.**
With the brilliant exception of Alistair Buchanan (head of Ofwat Ofgem), I was disappointed with regulators' statements: most platitudes could not be turned into manageable or measurable action.

One summary: "Government has two attitudes towards policy: complacency or panic."

Presentations from the seminar are here.

In addition, I made recordings of several presentations:

Regina Finn (chief executive, Ofwat): talk [21 min 8MB MP3] slides [PDF]

Tony Ballance (director of strategy and regulation, Severn Trent): talk [17 min 7MB MP3] slides [PDF]. Severn Trent is a large water/wastewater utility (about 8 million households).

Tony Smith (chief executive, Consumer Council for Water) talk [19 min 7MB MP3] slides [PDF]. CCW represents consumers in front of the utilities and regulators.

I spoke on "bad ideas and rad ideas" for water regulation. In my talk [17 min 7MB MP3] slides [PDF], I spoke against regulation targeting returns on capital (CapEx ROI) or "stakeholders" (too subjective) and called for more market incentives, via all-in-auctions and performance insurance.

After my talk, one audience member asked Hannah Nixon (Ofgem) if they were looking into alternatives such as mine. She fobbed off that question, saying that "there are many factors to consider, these things can't be rushed, etc."

The lowpoint (or reality check?) of the seminar was when Regina Finn said (paraphrasing): "We don't need to do cutting-edge regulation; we can just wait to see what Ofgem does and adopt what works."***

This response (as well as the general silence in response to my question of which international practices UK regulators admired), left me feeling that regulators are not as interested in advancing customer interests as much as punching the clock.

I address this problem in Part II of my book, of course, but it was sad to see it front and center in one of the "most dynamic" regulated utility sectors in the world.

Bottom Line: Regulators serve customers when (1) they feel like it or (2) they are pushed. Utilities have a stronger incentive to serve customers (they need to pick up the phone in the customer service department AND get paid), but poor regulatory incentives can lead them off track.

* SBGI (formerly the Society of British Gas Industries) has members from all regulated utilities.
** Ofwat's guidance document for annual reporting grew from 90 to 900 pages over 20 years. Companies spend massive resources filling them in (and responding to exact incentives), but few people know what to do with the data. That process is going to end (yay!), but the replacement is still standards-driven. FYI, prices are set every 5 years, after 3 years of negotiation!
*** One of her staffers responds to my critique with "I think the comment you refer to was in response to a question about the water sector learning the lessons from energy, specifically in terms of retail markets and Regina was suggesting that we were in a good position in the water sector because we are somewhat behind energy and can learn from the process they went through. If you have a look at the publications on our website you’ll see that we’re exploring some interesting (cutting-edge?) approaches for the future. The challenge is getting political support in the face of opposition in some areas from companies." To this, I said "I think she should have emphasized more of the water-specific innovations that Ofwat is pursuing and less of the "we're watching what energy does" conventional wisdom that I've heard, oh, 20 times :) So, it's not like I don't admire what Ofwat's done. It's just time to take ownership of progress and good policy. Politicians need to be told the same ("we know what we're talking about, now get with it")"

15 June 2011

In Copenhagen

Talking with people at the European Environmental Agency on how markets may be more efficient than regulations for allocating water (quality/quantity).

Nice place too!


The automated metro was DKR36 (about $7) to get into town (15 min) but it's got a great view!

Water scarcity in England?

You betcha!
(from a presentation I saw last week)

Economic reform and local institutions

Bill Easterly says [at about 1 hr 3 min]:
The art of economic reform is really figuring out a way in which you apply Econ 101 to local conditions, where you need to have someone who's really knowledgeable about local conditions.
The End of Abundance says [page 10]:
Good water management requires that one understand local customs and solutions while looking for outside ideas that can be modified and implemented with a creativity that drives at the goal while bending to social, economic and political realities.
and [page 150]:
Prices rise with scarcity and fall with abundance, reliably matching supply and demand. Local conditions determine the exact means of slaking thirst, but the underlying mechanism of adjusting prices has worked for millennia.
I'm glad to be in such good company. You can be too. Buy the book here :)

14 June 2011

Water will not help Mendota's unemployed

Deirdre Des Jardins of California Water Research Associates argues that fallowed land around Mendota (the town famous for its 40% unemployment) is the result of salinity build-up, not a lack of water for irrigation.

Westlands has argued that places like Mendota are suffering without water and cited "high" unemployment and fallowing as a reason to export more water from the Delta to Westlands. That argument is hollow, since more water would not help Mendota. It would help farmers in other places, but they are not suffering as much from unemployment and fallowing. (They probably want to switch to water-intensive tomato production.)

Speed blogging

H/Ts to AR and JW

13 June 2011

The End of Abundance is for sale!

There are permanent links on the right sidebar. I won't make too many more announcements like this (assuming you buy all the available copies  :)

Go here for a description of the book, sample chapters, videos where I discuss the book, blurbs, discussion forums, etc.

Go here if you want to buy the paperback on Amazon ($20) or my online store ($18). You can also buy a PDF version of the book for $10.

I should have Kindle and ePUB versions ready by 25 June.

If you're looking for some fun, then click here to browse and search the book via google.

Monday funnies

or not so funny?
Middle-Class Suburbanites Fail to See Irony in Their Lives...

...suburbanites were asked if the frequently cited justification of “wanting to provide my children with a better life” stood in contrast to working seven days a week to accumulate money. Despite the ever-widening gap between parents and children, and the skyrocketing divorce rate resultant from a lifestyle focused not on family but on careers, all those polled responded, “I have no idea what you’re talking about.”
The Onion is more perceptive than most media...

A little help for Pat Mulroy?

In this interview (via RM), she twists and turns between praising and damning Colorado River management:
I think taking apart the 1922 compact is a total waste of time [bad!] because, as you know, the compact was ratified by every legislature signed by every governor approved by Congress, signed by the president. There isn’t a legislator in any of the states that would quote lose supply that would get reelected having agreed to that kind of a regimen. Having said that, however, the compact is flexible enough [good!]. I mean its foundation is that seven states can do whatever seven states can agree to do. Now I believe I stand by that statement that the whole western premise of first in time first in right has lost its usefulness [bad!], particularly in relationship to community to community, city to city, state to state. I mean when you stand back and you look at that shortage regimen, if I have shortage let’s say I have to cut, and this is hypothetical, 100, 000 acre feet of use. If I can spread that 100,000 over the largest possible base, everybody’s share of the 100,000 becomes manageable, but if I take that 100,000 and try to offload it on my neighbor--at that point the burden becomes unbearable for him, and the political reactions start occurring.

It takes me full circle back to what a said before. I think there are enough flexibilities in this that we can overcome these first-in-time, first-in-right provisions that we hang on to so dearly [good!]. I mean, for example, we are paying the state of Arizona 350 million dollars to store their unused water in their groundwater basins for our future use. We’re covering their cost. That allows us during shortages, to the extent that Phoenix, Tucson, their cities aren’t shorted [sure about that?], to be able to take water out of that groundwater basin. During Metropolitan's shortage period all the water we were conserving in southern Nevada we were giving to southern California with the understanding that one day when we needed it we would get it back [sure about that?]. It’s that kind of relationship that will start blurring and muting the negative effects of the first in time first in right doctrine.
Here's an idea Pat:
  1. Put all the Colorado River water into an All-in-auction, with rights owned by 1922 claimants and shortages allocated according to seniority.
  2. Auction the water to the highest bidders (Vegas!), with the money going to net sellers (farmers!)
  3. Stop wasting money on Drop-2 reservoirs, desalination in Mexico, water grabs in Utah, water swaps with AZ and SoCal. 
  4. Use all the time you save negotiating and politicking to improve your golf game and collect awards for sustainable water management.
You know where to find me if you ever want to get serious about managing shortages on the Colorado.

12 June 2011

Flashback: 5 -- 11 Jun 2010

A year old and still worth reading...

Potable water used to fill LA's lakes -- who pays for that water (besides customers)?

Anyone want to review a draft of my book? Outdated! (You can buy the finished version)

Travelblog: New Zealand resources (pretty photos AND some economics)

Supply or demand? Should more books be read or be written?

10 June 2011

The End of Abundance is available!

Yay!!

Click here for more on the book (sample chapters, etc.).

You can now buy paperback ($18) or PDF ($10) formats (Kindle and eBook soon!).

Yay!!

Friday party!

Holy shit.



H/T to CC

Addendum: It's an advertisement for Gillette (but a good one :)

Agricultural water update

  • Colorado Supreme Court upholds limits on transfer of water rights [consumption only, boys]

  • California's DWR attempts to gut legislation requiring farmers to measure (!) their water diversion. I didn't think it would get worse, but DWR comes through with even more FAIL.

  • Europe (and the Netherlands) is in drought. Bad for harvests AND the environment.

  • Extensive modifications to the Mississippi (to "control" floods and facilitate navigation) mean that Louisiana is shrinking. Not good for wetlands, fisheries, or soil fertility.

  • China is also destroying agriculture and the environment as it moves water to high priority ($ and politics) uses.

  • India (home of the License Raj that strangles businesses in red tape) is planning to put regulators in charge of water prices to farmers. That may be a better alternative to politicians, but it's not nearly as good as setting prices in water markets (100% accurate and guaranteed to balance supply and demand!)

  • Increased diversions of the Nile (in Ethiopia and Sudan) threaten agricultural output in Egypt. Seems like Egypt needs to (1) start to manage its water more wisely and (2) make a deal with neighbors who control its water supply.
H/Ts to DL, RM and MV

09 June 2011

All-pay auctions for Bon Jovi

Yes, *this* JBJ
Cristie wrote me with this fascinating application of all-pay auctions:

I am winning a Bon Jovi contest right now. The link to the contest on his website is here. If you scroll down, on the right you will see a pic of me and you can click on the Tour Manager For a Day / Referral contest.

I am trying to apply some game theory to this and after reading your link [more] regarding all pay auctions, I think that there are some similarities.

Facts:
  1. As of now, I am at 115 referrals (fan club memberships) and the girl just under me is at 73.
  2. The contest ends on June 26 (it began in September of 2010)
  3. There are prizes along the way (at 15, 25 and 50 referrals) ... but then the person with the most referrals wins the big prize.
  4. After 50 referrals, all referrals are in an effort to win the grand prize, so I have to assume that this girl is trying to win as well.
  5. Anything over 50 referrals is a sunk cost; this is why I liken it to the all pay auction.
  6. I am in it, to win it.
My strategy so far was to put up a big number quickly to try to dissuade competitors (so I had 70 or so by the 2nd week of the competition). I have also had a goal of having at least a 40 referral lead over the next closest person (so that I had time to add more and would be able to see her coming after me).

Who could resist?
At this point I am buying the fan club memberships for folks and I have at least another hundred ready to go in... but I don't want to spend the money if I don't have to. That being said, I don't want to play it so close that she has an opportunity to blitz me at the end.

This is all probably so silly to you ... and as Joshua would say "The only winning move is not to play the game." Yet, here I am... looking for war strategy, not wanting to lose the game by giving her an edge.

If you find the time to respond (without too much laughter at my decadent mid life crisis contest), I would be very grateful.

By the way, the grand prize is a a weekend flyaway thing (for two) to the final Bon Jovi concert of 2011 where the winner works backstage as a tour manager for the band all weekend. AND ... you interview Jon Bon Jovi for his fan club website.....so, it is flights, hotel, food, great tickets to the show, and the priceless component of the tour manager / interview component.

My response:

Wow. What a fantastic (and useful!) application of game theory!

There's DEFINITELY the risk of a last minute push, but the further ahead you get, the more expensive it is for others (also beware of people below #2).

It may be a good idea to get another 20+ sign ups one week before the end (use the ones that are cheapest to you) -- more intimidation (and cost) for others EARLY enough that they see it and have to think about it.

Cristie's response:

I will likely increase my minimum lead to 50 or 60. She is probably deciding right now whether it is worth coming after me or not. In all honesty, because I do have such a lead and such a sunk cost, if she (#2) thinks that I will give that up, she is incorrect.

So happy that you had a good chuckle; at least you can use this funny example to augment your "dollar for sale" lessons!!

Thanks for blogging this. My referral link is here.

Bottom Line: Academic auction theory applies in the real world and it's useful for getting fans together with their rock 'n' roll idols :)

08 June 2011

Poll results -- who should regulate?

Hey! There's a new poll (net losses?) on the right sidebar ===>
The people charged with regulation and oversight of water agencies (urban, agricultural, etc.) should be
100% elected 13%9
75% elected & 25% technocrat 7%5
50% elected & 50% technocrat 35%24
25% elected & 75% technocrat 30%21
100% technocrat 14%10
69 votes total

This distribution makes a lot of sense to me. Over 70 percent of people are "in the middle" on regulating and oversight. Unfortunately, most regulators are either elected (political overseers of municipal utilities) or technocrats (PUC staff overseeing investor-owned utilities).

Can anyone describe situations where oversight is 50/50 mixed? This case may exist with an actual partnership of equality, or perhaps it's the de facto case where political overseers rely on their professional staff to carry out oversight.

Your observations and stories of success and failure welcomed!

Bottom Line: Water management involves both political/social and economic/technical criteria. Regulation and oversight needs to take all dimensions into consideration.

07 June 2011

Book update

The PDF version of The End of Abundance is ready.

The paperback has a layout/pagination error. I need to redo the proof before I can make it available on Amazon. Totally annoying (and my fault!)

Hold tight. They should be available in the next 7-10 days.

Kindle version after that :)

Speed blogging

  • Git yer discursives ready! "This special issue will focus explicitly on instances of “water grabbing”, where powerful actors are able to reallocate to their own benefits water resources already used by local communities or feeding aquatic ecosystems on which their livelihoods are based, as well as processes of contestation and resistance." Abstracts due 30 June.

  • More details on China's move to "full stupid" in shifting water to the North (can someone tell them about the demand side?) Don't listen to me. Listen to Jim Rogers (a partner of George Soros), who says that China's number one problem will be water.

  • Jamie Workman explains the death spiral -- "If you voluntarily reduce use I must protect my revenues by punishing you with higher rates per unit" -- and how to escape it.

  • The 2010 Water Integrity Network report on corruption in the water sector covers 13 countries and appears to be stakeholder- and milestone- driven. Does it accomplish anything? In totally related news, there's Water and Sanitation Services in Europe: Do Legal Frameworks provide for "Good Governance"?. Someone needs to compare the findings of these two reports!

  • Spanish farmers are taking desalinated water and public subsidies and STILL overdrafting groundwater. Why? "agricultural usage continues to rise, driven by increased cultivation of thirsty crops and inefficient irrigation practices encouraged by access to virtually free water resources."
H/Ts to DL, RO and JWT

06 June 2011

Monday funnies

The end of nuclear will NOT be like this.

How (and why) to raise prices

I hosted a table at GWI's Berlin event to discuss "the politics of raising prices." We had a lot of interested people, and agreed on a number of good ideas for explaining why prices should rise (to cover higher operating, capital or scarcity costs). Among them were:
  • Convince people that "this time is different."
  • Get all stakeholders in the room to reconcile demand and supply, revenue and costs.
  • Advertise so that people understand the changes in demand and supply.
  • Base prices on an objective index (free of political interference) that addresses costs and scarcity
  • Set high prices and rebate excesses (water misers will vote for rebates!)
Got other ideas?

One of the more-interesting stories came from an engineer working in Saudi Arabia. He said that prices in Riyadh were only a few cents per cubic meter for water (a subsidy of over 90 percent). Low prices meant the government had to subsidize the system, but high water demand exceeded supply. Their solution was to supply water for one day in four or five (Jeddah is one day in nine!). This method of "preventing" shortage is harmful for equipment and inconvenient for customers who need to use water tanks during service cuts.

Riyadh is the capital city of nearly 5 million people in a country with a per capita income of $16,000, but it's crippled by an unsustainable, populist, inefficient policy that promises gold and delivers rubbish. I don't know whether to laugh or cry at this level of stupid.

Bottom Line: Poor water management wastes time, money and water. Better to have fair prices that cover service costs and prevent shortages.

04 June 2011

Flashback: 29 May -- 4 Jun 2010

A year old and still worth a read...

Unsustainable hypocrisy -- did the American Power Act do any good for the environment or was it just wasteful spending?

BEST: Regarding oil -- some profound thoughts (by someone else!) on the tradeoffs between lifestyle and environment. Speaking of which, here's an interesting discussion of The environmental impact of countries

Water chat with Tom Lauria -- bottled water is a consumer product not the end of civilization.

BEST: Water chat with Jay Wetmore -- a wide-ranging discussion on infrastructure policy.

Insuring against nature (as in volcanoes)

03 June 2011

Friday Party!

Neat technology and cool music :)

Anything but water

02 June 2011

Sad but funny

The 5 Apr version of The End of Abundance was 292 pages.

The 2 Jun version is 293 pages. :-/

No, it didn't take me two months to type an extra page!

Water service and mobile phones

Chandran Nair (Global Institute for Tomorrow) gave an interesting talk at GWI's water summit in Berlin.

He made the interesting point that fewer people lack access to mobile phones (~1.9 billion) than access to clean water and sanitation (884 million and 2.5 billion, respectively)*

He used that point (as I recall) to lament the failure to deliver water to the world's poorest, but I saw it in a different way -- as a challenge to a monopolistic, decrepit industry that's less interested in customer service than leaving the office at 3pm.

It's easy to see why mobile phone use is far outpacing access to water and sanitation, even though both technologies reply on high fixed cost/low variable cost technology to deliver a "utility" that customers say they want.
  1. Mobile services compete for customers.
  2. Customers pay for good service.
  3. Government regulation of this "inessential" service is light.
  4. International aid for such a "luxury" is non-existent.
I'll let you fill in the counter-points prevalent in the water industry.

Bottom Line: Incentives matter, and the water "business" needs more business-like incentives if it's going to serve its putative customers (instead of donors, politicians, regulators, unions, etc.)


* It's also interesting the UNICEF gives suspiciously-accurate numbers on water, but mobile phone numbers are not only approximate but listed on Wikipedia. That 884 million number also WAY under-estimates the number who have DRINKABLE water [crap. Freakonomics lost my post on this..]

01 June 2011

Israeli water technology -- part 2

Part 1 is here.
Water scarcity? Not here! (Tel Aviv)

Netafim drippers
Drip irrigation was "discovered" in the 1950s on an Israeli kibbutz, when a farmer noticed a very healthy tree. Digging into the root causes (pun! pun!), he found a leaking pipe. Decades later, Netafim is the world leader in drip irrigation. We had tour of their factory, which is based on high-technology (you should see THESE drippers) and low costs.

Netafim's execs were slightly-embarrassed to note that their most enthusiastic customers were NOT poor farmers in water-scarce areas, but wine growers who wanted precision technologies to deliver water, fertilizers and other grape-enhancing substances.

Sorting waste with water
We also saw an amazing waste-sorting facility (run by Arrowecology) that separated plastics, metals and organics using water (!). Plastics floated, metals sank and organics were suspended in the water, which was then directed to digesters that took out methane and produced a "dry sludge" that could be used as fertilizer. Neat.

Whitewater Security turned me off with their American-style terror talk, but they had an interesting, real-time sensing technology for water quality (according to my notes, they won a contract to install 20 sensors in Akron, Ohio's, system -- at a cost of $3.5 million).

Miltel seemed to be a typical smart meter vendor. Their system for 25,000 meters cost $1 million to install and $50,000 per year to operate.

CO2 to algae
We also saw a neat process for converting CO2 into algae, as a means of reducing CO2 emissions. unfortunately, the technology is about 100 times too expensive.

I told many people that demand for technology could be artificially increased or reduced by policies that distorted incentives. I can see how changes in policies might put these firms out of business. For example, Israel is increasing tipping fees to increase recycling rates (based on OECD targets) even though it has adequate space for landfill.

As usual, I propose getting policies right first, and THEN looking for technology solutions.

Nearing the end

Update: The text for The End of Abundance is complete.

I am doing the index, waiting for the final cover art, and preparing the sales channels.

I am hoping to have the paperback and PDF available in the next week (Kindle and eBook soon after).

Stay tuned.