07 June 2012

Green week, pricing and footprints

I spoke on water pricing at the EU's annual "Green Week," which had water as a theme this year.

Here's an MP3 of the entire 90 minute session [63 MB], which had two other speakers after me as well as some interesting questions and debate about halfway through. Here are my slides [PPS].

In addition to that exciting event, I witnessed a few other discussions on policy. Some were so bad (in terms of useful policies) that I was forced -- FORCED, I tell you! -- to tweet my objections in real time. Here are some highlights (oldest at bottom) by topic:

Regulations and prices
24 May: WIN: Cyprus water minister "poor people pay the same for water as anyone else. We give them income subsidies"

24 May: FAIL. EU water guy talking about water policy in future (supply and demand) without mentioning prices and markets.

23 May: Scatasta (EIB) nails it: "need prices for cost recovery AND prices for water as a resource"

23 May: My Q: what about price & reg tradeoffs? EurEau rep fumbled A: "we need prices, but we first look at what regs apply" :(

23 May: CC uncertainty means that you NEED flexibility and regs are less flexible than markets/prices.

23 May: Q: why not binding EU regs on water and energy efficiency? A: don't need binding targets if water/energy priced right!

22 May: EU needs to get religion on incentives to use/waste water. It's not all about "do the right thing" or regulation.

22 May: Can DK tell EU what to do when their water costs 10x the price of water in Italy? They have money; Italians are broke!

22 May: I wonder if all the EU-crats here are going to talk about tradeoffs as regulations increase cost of business? No free lunch!

24 May: FAIL: FR Ag lobbyist telling stories about himself, pretending all farmers are like him. Also playing food security card :(

24 May: FAIL: Cyprus Water minister: "no room for water trading in water poor area, but ok in water rich areas like Australia [sic]."

22 May: OMG! Ag lobbyist: "farmers only make 60% of average income in EU-27" so we need more subsidies.

22 May: EU farmers and US farmers say pay us if we do OR don't. What ever happened to "pay us for delivering food to market"?

22 May: Ag lobbyist says reward farmers (subsidies) for "going beyond" regulations. That's like paying someone for voluntary actions.

22 May: If you want to target the environment, take (buy) water from farmers (and regulate pollution), don't subsidize them

22 May: Ag lobbyist (Copa-Cogeca) says farmers "need" water for business and "deliver" environmental outcomes. More subsidies, please.

I have no idea why this topic was given disproportionate prominence by the "communications" team -- over the objections of the policy team -- but some attendees appeared to think that footprinting was going to become official EU policy. If that happens, then we are going to see many happy (but useless) consultants and the possibility of mismanagement on the scale of corn ethanol/biofuels.

24 May: WIN: Kevin Parris (OECD) says "waterfootprinting not useful for policy b/c ignores other input costs and comparative advantage."

24 May: FAIL: Ruth from WFN: "OECD doesn't understand footprinting, which should be used to connect policy sectors" (no, that's price).

24 May: OECD says waterfootprinting is unclear and not useful for policy.

24 May: waterfootprinting: good for water flows, but an indicator (like restaurant rating) is NOT a policy tool (restaurant food, prices, chairs)

23 May: Beate Werner (EEA) on footprinting: useful to raise awareness but says NOTHING about sustainable water management. Yes!

22 May: "use footprinting in water policy discussions" Kill me now.

22 May: "Is water use fair? EU footprint is higher so EU taking more than their fair share" Ridiculous! Same with wine consumption!

22 May: "WFN is studying water use for production in different parts of the world" May as well analyze salt put on everyone's lunch!

22 May: Footprinting is NOT the way to find/accomplish efficient water allocations. You need scarcity-adjusted mechanisms.*

22 May: Mathews wants mandatory footprinting. Oh shit. Waste of money and resources

22 May: Definitely an advertisement for WFN consulting. This NOT a high-level policy talk!

22 May: "Footprint is measure of humanity's pressure on water resources"? Not! Look at supply and demand

22 May: She claims it's global and needs to be measured. Hope this is not an advertisement for WFN consulting!

22 May: Ruth Mathews from Water footprinting network. This better be good.

Bottom Line: It's sad to see people pushing their interests (farmers wanting more subsidies) or preferred solutions (footprints for all!) over ideas and policies that maximize the social benefits from our water.

* Scientific American (via RM) published this graphic and text:
A vast amount of water is used to produce the food and products... Certain countries, such as India and the U.S., also export significant quantities of water in the form of food and products, despite their own robust consumption. Populous nations that have little land or little water are huge net importers... Those insights come from engineers Arjen Y. Hoekstra and Mesfin M. Mekonnen of the University of Twente in the Neth­erlands. Over the long term, net exporters may want to alter trade policies to avoid creating their own water shortages or raise prices to reflect the cost of increasingly scarce water resources. Inefficient water nations might improve agricultural practices. And net importers might lower exports to save water for domestic use.
Besides that one dose of reality (local management -- via bureaucracy or prices/markets -- that balances supply and demand), there is too much engineered "lowering" of exports or alterations of trade policies. Those policies rarely work in practice (politics) even if they could be based on sound measurement -- which they are not. For more on footprinting and virtual water, I recommend this essay by an Indian water expert over at the Global Water Forum.


Anonymous said...

Hi David,

the link to your slides does not seem to work.

David Zetland said...

@Anon -- slides posted. Sorry!