17 Feb 2012

Values and markets

In my book, I spend a lot of time discussing the importance of our "subjective, personal values" on water management.

Part I is called "personal water choices" because reasonable policies result in efficient and fair outcomes that reflect and reconcile our personal values without impinging on the values of others. Part II is called "social water choices" because our choices affect each other.

That means that I am really annoyed when people want to measure or manage values when it comes to urban, agricultural, and other uses in Part I. Their mission to measure these values is not just a waste of time in terms of operations (compared to mechanisms that reconcile values without knowing what they are) -- they are impossible to carry out. I can't find out how valuable a shower is to you (you may not even know yourself!)

There's an EU project, for example, on measuring "water use efficiency" -- something you can't measure without knowing values!

For Part II choices (environmental water, etc.), its also impossible to measure values, but those values are reconciled via social/political mechanisms -- in the same way that we decide how to manage other social or public goods.

Bottom Line: Values can't be measured; they can be marketed or managed (choose the right tool).


  1. You're right; "value" is a relative, even subjective term, not an absolute. If it were, we would not have markets in art, securities, and most other things. The term is a useful rhetorical tool for people on one side of an argument, who can accuse their opponents of waste. Interestingly, there is generally more consensus about what "waste" is (given the circumstances) than what "value" is.

  2. Please define value in context it's used above Monetary value?

  3. Agree, but here's a hypothetical. If I could and did offer to pay you to NOT take your average 5 minute shower (or to reduce it in half) each day for a month, and we reached a mutually beneficial price voluntarily (i.e. a mini-market of two), would then your personal water use not have abstract, measurable value? Would not the act of negotiating a price put a value on said shower (quantifying the efficiency savings of water + energy + waste treatment + emissions), a price that is communicated to you, to me, and to anyone else with whom we shared this data?

  4. @Chris -- not sure what you mean.

    @Jamie -- you have a market transaction based on values WITHOUT knowing what the values are, i.e., value of shower foregone is less than price paid to not take is ALL that matters...

  5. @ David, okay thanks for bearing with me. I'm getting there. But then, isn't it then true as a corollary that everything I buy during a day -- a Big Mac, a Best Western hotel room, a Coke, a Mission Impossible movie -- is based on values without knowing what the values are, other than they are less than the price I pay for them? Is it the lack of a process surrounding water or the semantic word used, "value," that is flawed?

  6. David, you certainly raise interesting concepts, and a couple other factors that come into play, of course, area a) available of water and b) relative cost of water.

    The moral value of water might be less in a place where it's plentiful, like in the Pacific Northwest. It's higher say, here in Colorado, because it's drier, so people can still afford to waste plenty of water on pointless green lawns.

    In much Africa, where there's poverty and little water, the values change once again...

    Claudius Jaeger,

  7. It is not up to others to say whether watering a lawn, washing a dog, or keeping goldfish is "pointless". If water is priced according to demand (over and above some minimum necessary for basic functions) each user can determine their own value.


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