31 Aug 2012

Friday party!

Charge the poor to subsidize the rich

Last December I criticized a proposal to implement "postage stamp pricing" across ALL areas served by investor-owned water utilities in California. One big reason: people in one area would have to pay for service or investments in another area.

Well, truth is stranger than fiction. A proposed decision for water rates on Catalina Island (water utility owned by So Cal Edison) allocates $19M of additional costs to 4.8 million mainland electricity customers, i.e., people who will not see even a little tiny bit of additional value for that money. Read the discussion [pdf] from p 51.

Bottom Line: Rich people on islands should pay for the water that comes from the taps or into their pools. In fact, people EVERYWHERE should pay for their water. Subsidies invite waste and corruption.

30 Aug 2012

Dutch Deltaworks

The Dutch are famous for their water management (windmills,dikes, polders, etc.), but the Delta works [More] -- a series of interlinked projects protecting the southern Netherlands from storm surges and floods -- are their greatest achievement.

The Dutch started building them after the 1953 Zeeland floods killed nearly 1,900 people, inundated 1,365 km2 (9 percent of Dutch farmland) and killed tens of thousands of animals.

I visited the Maeslant barrier [more], which operates by swinging two arms together (like top and bottom teeth) to block water from flowing up the New Waterway towards Rotterdam. Each arm is 240m -- taller than the Eiffel tower.

I also saw Haringvliet dam [more], whose SciFi sluices open and close to allow water to flow by.

The Dutch are now pursuing a strategy that relies less on hard infrastructure (barriers and dikes) and more on natural structures, i.e., allowing "room for the river" to flow. They are spending 100 billion euros over 100 years to implement that plan.

29 Aug 2012

Real greens consume less (of EVERYTHING)

Speed blogging

  1. Increasing block rates (in electricity) can fail [PDF] to promote either efficiency or equity.

  2. Aquadoc tracks down the real water footprint of paper newspapers with vigor. He could spend his time sipping ale and playing fetch with the dog if we priced water for scarcity!

  3. My essay on the value and price of water is now at Growing Blue. Bottom line:
    Water is necessary for our economy; we have different values for water; allocation mechanisms do not always consider these values; and – most important – the price you pay or cost of water may not reflect the value of water to you or others.
  4. Yes, investors are making GOOD money on water, mostly through shares of companies delivering services to improve water management, not in raw water (although investing in crops before drought hits can be profitable).

  5. Speaking of which... interesting tales of how farmers and normal folks are coping with drought. Interesting to see that some consider it an aberration, others as a change of life.
H/T to DL

28 Aug 2012

Rates, consumption and utility revenues

(via MG) "On 30 Aug, 25 prominent economists and rate experts will hold a national gathering or “summit” to discuss the root causes of the current problems with water utility rates and revenue collection, outline progressive steps for reform and produce a white paper [PDF overview]."

I am Burning Man, so here are my answers to their main questions:
  • Identify and discuss the problems with current water rate collection, particularly when water efficiency programs can lead to under-collection of fixed costs.

    Current rates mismatch fixed and variable revenues with fixed and variable costs, putting too much weight on variable revenues. In water-rich areas, match them up; in water-scarce areas, add a surcharge on consumption and rebate the (resulting) excess revenue per meter. Oh, and forget increasing block rates.

  • Parse out the root causes of utility under-collection of revenue. What proportion is due to the recessionary economy, to relocation of industry out of the service area, or to inflation and other cost factors? What has been the impact of the plumbing standards and codes on lowering nationwide consumer demand and therefore revenue? What has been the actual role of implemented water conservation programs?

    Utilities need to charge the full cost of water service, i.e., water resource charge, operations & maintenance, and capital expansion & replacement. Water is neither a charity nor a human right. It's a service that should be paid for.

  • Evaluate the pros and cons of rate decoupling such as has been done in the energy utility sector.

    Rate decoupling is a terrible idea. It may remove a utility's incentive to sell more water, but it also removes the utility's incentive to reduce costs and the customers' incentive to use less. Sell water like you sell gasoline -- per unit -- and raise prices if you want to reduce consumption AND increase revenue without initiating a "death spiral."

27 Aug 2012

Monday funnies

This comes via RM:

A priest was seated next to a little boy on an airplane and he turned to him, placed his hand on his leg and said, “Do you want to talk? Flights go quicker if you strike up a conversation with your fellow passenger.”

The little boy, who had just started to read his book, brushed his hand away and replied to the total stranger, “What would you want to talk about?” ” Oh, I don’t know,” said the priest “How about God, Heaven and how you will burn in Hell if you sin?

“OK,” he said. “Those could be interesting topics but let me ask you a question first. A horse, a cow, and a deer all eat the same stuff – grass. Yet a deer excretes little pellets, while a cow turns out a flat patty, but a horse produces clumps. Why do you suppose that is?” The priest, visibly surprised by the little boy’s intelligence, thinks about it and says, “Hmmm, I have no idea.”

To which the little boy replies, “Do you really feel qualified to discuss why there is a God, or Heaven or why I will burn in Hell if I sin, when you don’t know shit?” The little boy then went back to reading his book.

Speed blogging

  1. Heard about the Phnom Penh "miracle"? A public utility that extended service with full cost recovery in one of poorest, most corrupt countries? One factor driving success was bonuses for good employees and the axe for those who underperformed. Read all about it here [pdf] -- I met the author a few weeks ago in Berlin :)

  2. India's mismanagement of energy is similar to -- and connected with -- its mismanagement of water.

  3. Shale gas drilling near your house? Good news if you get proyalties, bad news if you have a private well (in terms of property value, but I'd say that it's hard to separate perception from actual water contamination).

  4. A discussion of toilet-to-treatment-to-tap, to turn waste- used water into something useful.

  5. Obviously? "This first, rigorous evaluation of a WASH project... finds that the water point intervention had a sizable impact on the use of improved water sources and on the health of young children while sanitation training had a strong impact on latrine ownership and on the health of both adults and older children" in Mozambique.
H/Ts to ML and RM

24 Aug 2012

Friday party!

Wow. No wonder kids in the 50s got all excited about math and science

Link to Donald Duck 1959 Math playlist

Watch Donald. He's worth your time.

Too much sun in Aridzona?*

A few months ago, ML sent me this agenda item [PDF] with this comment:
The Central Arizona Project (CAP) is embarking upon a massive water purchase in the 300 million dollar range to monopolize the water transfer business from the private farms to the CAP then to the cities to keep the competition and prices down.
Now, I'll take ML's comment at face value (CAP wants to control who gets water, rather than allowing market allocations that it can neither control nor distort by buying high and selling low), but the actual agenda item has even weirder language:
The Central Arizona Groundwater Replenishment District (CAGRD, part of CAP) is required by law to [1] replenish excess groundwater delivered to member lands and member service areas... An estimated 125,000 AF/yr of [2] new water supplies will be needed by CAGRD in addition to its existing water rights to meet statutory obligations... CAGRD commissioned Montgomery and Associates and WestWater Research to conduct an analysis of the Arizona Water market. The study involved updating and expanding existing inventories of potentially available water supplies, estimating their economic value, [3] developing an acquisition strategy and a plan to implement the strategy
So I am not sure if I get this, but it seems that CAGRD wants a [3] strategy for [2] acquiring water to [1] replace excess water that it delivers to member areas.

I have two questions:
  1. If it's "excess" why does it have to be replenished?
  2. If it's NOT excess, then why is it being taken from the ground and then replaced from water from elsewhere? It seems like CAP should either NOT deliver it, or deliver the water from elsewhere, leaving the original water in the ground.
Or is the sun so hot in Aridzona that people lose control of their thinking?

I'm going to Burning Man today, so I'll ask people there what they think. Maybe CAP policy makes more sense in 100+ degree heat (that's 40+ for everyone lucky enough to avoid the US system :)

* Can I claim trademark on that name? Guess not.

23 Aug 2012

I'd call this bad news

Check out this comparison (JPG) if you want more bad news :(

Anything but water

  1. Nightmarish "unintended consequences" from carbon offsets.

  2. Congress could kill ethanol in a flash, since it is "detrimental to the economy and environment of the US," but Archer Daniels Midland owns Congress. Sad.

  3. A brutal critique of Paul Ryan's crony capitalistic policy proposals. Was the VP-nomination his reward?

  4. A fascinating demonstration of effective (Baskerville) vs silly (Comic Sans) fonts.

  5. Psychologists (and other quantitative academics) are biased in their reports of "significant" results.
H/T to RM

22 Aug 2012

Like this blog? Like my book?

If so, then please nominate me as an "influential writer on California water issues."

The deadline is 30 August. Details here.


No, Mr. Kightlinger. You're part of the problem.

RM sent me this bit of propaganda. I'll just point out fix some flaws.

Op-ed: In search of reliable water future
By Jeffrey Kightlinger
Pasadena Star-News

August 12, 2012

For years experts have known that the state's biggest water challenge is in Northern Southern California, where the rivers of the Sierra Nevada merge into the vast Sacramento-San Joaquin Delta people without enough water live on water taken from elsewhere. State and federal water projects draw supplies from the Delta that sustain the California economy unsustainable businesses, urban sprawl and grass lawns in the desert. Yet the Delta ecosystem has deteriorated over the years for many reasons lack of water. So in turn has the reliability of this vital water supply managers who promised unlimited supplies in 1952.*

The problem has defied a solution because of an inability to find common ground and get something done everyone wants to use more water for free. The Delta is a policy thicket of different stakeholder views, different regional perspectives and different water rights. The status quo is in no side's politicians' [PDF] best interest, nevertheless no new proposal will please everyone.

[Here comes the filler...]

Fortunately, there are encouraging signs that the Brown and Obama administrations are breaking through the gridlock. Over the last six years, they have worked with stakeholders and the best scientists and brightest engineers. This public process is developing the Bay Delta Conservation Plan, a bold set of water system and ecosystem improvements that are good for both the environment and water supply.

The Delta ecosystem needs restored natural habitat. Hundreds of miles of man-made levees have converted the Delta from a shifting labyrinth of marshland into a static set of tenuous islands. Nearly all the original wetlands are gone. To address this, the state and federal administrations propose to restore tens of thousands of acres of habitat in a manner that poses the least conflict to Delta communities and agriculture.

California water supplies need protection, too. These same levees could collapse in a predicted and inevitable moderate earthquake that could submerge numerous islands and cause salt water from San Francisco Bay to rush further inland. Climate change offers another long-term threat.

Transporting the water supply through a separate system - two proposed water tunnels under the Delta - would protect the quantity and quality of supplies. Public water agencies stand ready to pay for this solution, not the state or federal treasuries. The cost will be much less on a per-capita basis than the water investments of previous generations.

[This is just voodoo economics, an excuse to spend billions to MAINTAIN marginal supplies rather than reduce demand. Worse, most of the water will go to politically-connected farmers.]

Despite these clear improvements imaginations, the administrations are hearing skepticism from a vocal minority. Polls show an overwhelming majority of Californians people responding to polls that we like prefer a carefully conceived compromise. Six years of planning based on the best available science and engineering have gone into this proposal. In addition, hundreds of public meetings have been held. All sides have been heard. Now it's time to finish the studies and finally get something done.

Bottom Line: Let's ensure that our water supply stays reliable and that the Delta is on a path to ecosystem recovery to ensure the resurgence of California's vital economy. Let's stop taking water from where it belongs and move towards the sustainable self-sufficiency that will protect our environment, match our lifestyle to our resources, move businesses to practices that make sense, and favor local water managers over managers of large water-importing enterprises that have no purpose other than delivering promises they cannot keep for fat revenues.

Jeffrey Kightlinger is general manager of the Metropolitan Water District of Southern California.

* Page 32 of my dissertation says:

On December 16 1952, Jensen issued the Laguna Declaration in which MET guaranteed
Southern California's water supply:
The District is prepared, with its existing governmental powers and its present and projected distribution facilities, to provide its service area with adequate supplies of water to meet expanding and increasing needs in the years ahead. When and as additional water resources are required to meet increasing needs for domestic, industrial and municipal water, the District will be prepared to deliver such supplies.

Taxpayers and water users residing within the District already have obligated themselves for the construction of an aqueduct supply and distribution system. This system has been designed and constructed in a manner that permits orderly and economic extensions and enlargements to deliver the District's full share of Colorado River water and State Project water as well as water from other sources as required in the years ahead. Establishment of overlapping and paralleling governmental authorities and water distribution facilities to service Southern California areas would place a wasteful and unnecessary financial burden upon all of the people of California, and particularly the residents of Southern California.
Bold text was added to the original Declaration, which is now Section 4202 of MET's Administrative Code.

21 Aug 2012

My TEDx talk: Water policy for the people

Here, after some considerable delay, is my TEDx Wageningen talk.* In it, you will see and hear:
  1. My greatest fail when starting a talk.
  2. My plea for more choice in an age of water scarcity.**
  3. A few clear examples.
  4. Chocolate.

* It starts at 1 min and 5 seconds because the MC's introduction rambled for too long. You will also note that the talk is of "sub-TED" quality due to a massive A/V screw up (no HD); I'm lucky to have any recording. That basically kills my chances to make the TED home page, but the message is still important. Here are all the talks from TEDx Wageningen.

** My subtitle: "Citizens pushing for better water policy may as well be pushing on a string."

20 Aug 2012

Monday funnies

Why do swimmers spit water?
When swimmers compete at the highest level, the lactic acid that burns throughout their bodies creates an imbalance of of blood, saliva and other necessary fluids. Olympic pools are fortified with more than chlorine and muriatic acid in order to make up for this deficiency. Operating as a sort of oral mouthwash, the vitamin-enriched pool water is swished around by swimmers and absorbed into their bloodstream through a membrane in the cheek. It is then expectorated in a spraying fashion in order to disperse the broken down chemicals into the water. The additives are made by the same company that distributes Flintstone vitamins. Thus, the pool at London’s Aquatic Centre tastes like a red Wilma.

Join us for today's webinar: Water for energy

Topic: Chapter 6 ("Water for energy for water") from The End of Abundance.

Time: 10:00 - 11:00 Pacific Time (19:00 in the Netherlands) today.

Click here to join the meeting.

Winning the subsidy battle

I suggest this strategy for convincing politicians to stop subsidizing special interest groups:
  1. Look for the "small players" in the same industry who do not get the subsidies, e.g., small-scale farmers or fishermen who get little compared to industrial operations.
  2. Find some of their retired folks, the ones with gnarled hands, worn clothes and too much experience.
  3. Send these representatives -- in waves or sequence -- to personally tell politicians how subsidies to the big guys hurt them, their families and their communities.
  4. Argue for an END to subsidies, not for additional subsidies.
  5. Give statistics on workers, revenue per worker, profits, etc. for big and small players. Also measure the size of direct/indirect subsidies.
  6. Do all this on video, with responses from politicians recorded and highlighted.
It's hard to break into an industry-lobbyist-politician lovefest, but this may be the most telegenic, emotional and economically rational way to do so.

It worked (via GG) when West African farmers were brought to testify against subsidies to US cotton farmers at the WTO in Geneva. It can work again.

If wishes were horses*

Bob Muir (Press Office Manager, The Metropolitan Water District of Southern California) send this to Wayne Lusvardi (CalWatchdog):
If CalWatchdog is going to continue to rely on Wayne Lusvardi to write about California water issues, it would be nice if he was required to verify his facts. His latest piece incorrectly reports that Southern California ratepayers would pay for 75 percent of the Delta conveyance fix. This is blatantly wrong. The cost breakdown, which has yet to be finalized, would put that number closer to 25 percent. CalWatchdog would be better served if it sought confirmation from BDCP rather than citing an inaccurate blogger for the information.
Wayne forwarded it to me, asking for a comment, and this is what I sent back to him and Bob:
It's nice to know that MWD has such a good memo-issuing mechanism, but I'd prefer to see MWD spend more time fixing its dysfunctional water and cost allocation mechanisms.

I understand that MWD prefers to claim that it will pay only 25-28% of costs for the Delta "thing," but I think that stand is misleading for a few reasons:
  1. Farmers are surely NOT going to pay for 72-75% and Federal/State taxpayers are broke, so the expense is likely to fall on MWDSC, since the project is -- according to MWD -- NECESSARY for the survival of SoCal. Just curious, but what % of lobbying and study costs has MWD paid, compared to the farmers?
  2. Some agencies are proposing per capita cost allocation, as Jeff has discussed
  3. MWD has a LONG history -- an addiction even -- to underestimating project costs and paying more later (as discussed in my dissertation). This is not a big deal for MWD managers, of course, since ratepayers pay for failure.
I will post these points on my blog as part of my continuing effort to explain how MWD is pursuing an unsustainable infrastructure disaster that harms rate payers, the environment, and the citizens of California and the US.
...and I haven't heard a thing since.

I win.

* Press officers would ride!

17 Aug 2012

Friday party!

This is BRILLIANT. Wow.

Join us for today's webinar: Food and water

Topic: Chapter 5 ("Food and water") from The End of Abundance.

Time: 10:00 - 11:00 Pacific Time (19:00 in the Netherlands) today.

Click here to join the meeting.

Just a thought

Drugs (from coffee and cigarettes to heroin and LSD) are great, but you need to be balanced BEFORE you take drugs, since they are all about unbalancing yourself intentionally.

People without balance should not take drugs, but that's no reason to ban drugs to all people over 18.*

The big issue is, rather, why people are imbalanced in the first place. I'd begin by looking into family and community function and go from there...

* ...or however many years it takes to get perspective. I started smoking pot when I was 25 and have tried other drugs since then. I've had good results, I think, because experience and maturity help me stay balanced.

16 Aug 2012

Anything but water

  1. James Surowieki defends Bloomberg's ban on large sodas. Hint: reference points.

  2. A fascinating article [$] describing the effort to eliminate mosquitoes with genetic engineering. Best part: etymologists entomologists agreeing "there's no ecological loss from the extinction of mosquitoes."

  3. The federal government is abusing the concept of "irrational consumers" to justify new regulations. This post goes even further in exploring the move from trusting citizens to know what they want to trusting regulators to tell citizens what they want.

  4. Michael Giberson highlights the economic failures of alternative energy: the federal solar power subsidy does not pay for itself and wind power fail: one and two. Here's some accounting on the nightmare payback periods for wind power: 56 thousands of years!

  5. Dan Ariely describes how a "few little lies" can turn into a failed nation. Greece is there. Italy is there. The UK has problems, but the US may be further along that path -- via lying political attack ads, Faux news, etc.

Join us for today's webinar: water for profit

Topic: Chapter 4 ("Water for profit") from The End of Abundance.

Time: 10:00 - 11:00 Pacific Time (19:00 in the Netherlands) today.

Click here to join the meeting.

Higher costs or higher prices?

DW sent me this response to my question ("how do you know you're making a difference?"):
You’ve been explaining that higher prices will result in lower demand. That’s exactly what has been happening here in Southern California. The local water districts have basically doubled water rates over the last few years and customers are finding ways to use less. You could use LADWP, or the City of San Diego’s water dept. as examples of price driven efficiency in your speeches if you wanted to. They are increasing prices incrementally to try to avoid outright water customer revolt, but prices are steadily going up, so your arguments haven’t been in vain. Whether that increase efficiency in use will be enough to avoid disaster as our population growth crushes available water supply, I don’t know, but it will be interesting to watch.
Here's my "good news, bad news" comment:
Good point, except that those prices result from supply-side actions that raise costs that must be recovered in price; they are not pre-emptive signals to use less water. Good news is that water use goes down; bad news is that all that money is GONE -- to the plant expenses (the engineering-industrial complex). I prefer higher prices that lead to a fall in demand while leaving surplus revenue that can be rebated to customers.

15 Aug 2012

An end to The End of Abundance on Facebook?

I have a "fan page" for the book here. 99 people have liked it. Woo hoo, but wait -- I've no idea what that means or why I should care. Can anyone give me a reason to keep it?

Poll results -- this blog's readers

There's a new poll (are polls a good idea?) on the right sidebar ===>

Here are the results from the most recent poll:

Where do you work?
Academic water/environment 15%15
Academic other 7%7
Government water/environment 18%18
Government other 5%5
NGO water/environment 13%13
NGO other 4%4
Industry water/environment 21%21
Industry other 17%17

These statistics are quite interesting to me, as they show readers (who vote) to be 22% academic, 23% government, 17% NGO and 38% industry. Those last two numbers surprise me, since I'd expect that NGO types would be more interested than industry types in policy discussions, but perhaps NGOs "know all they need to know" and industry types are looking for good ideas? Just a thought.

Bottom Line: It's great having readers with a variety of perspectives.

14 Aug 2012

Join the discussion!

The first aguanomics discussion will start in 55 minutes!

Start Time: 08/14/2012 11:00 AM (Pacific)

URL: http://meet15266574.adobeconnect.com/aguanomics1/

Make sure your computer supports Adobe Flash.

Bring questions. The mike will be open for comments.

I am already preparing a few comments on water and politics in India, water in Jordan and useless NGOs and the human right to water :)

A birthday gift for you!

Earlier this year, I took a "wildly expensive" trip to the Shetland islands (see photo) in keeping with my tradition of doing something cool for my birthday, which is today :)

Since you were not able to join me in that noble endeavor, I am gifting you something more useful (as well as more timely), i.e., a clear "master post" for recurring ideas on this blog. This post will replace the multiple links under "sticky posts" on the sidebar of the blog.

I recommend that you read all of them. These ideas are central to this blog, but they also clarify the politics and economics underlying failures in managing natural resources and the environment -- and how to redress thsoe failures.

All about aguanomics has the most recent data on visitor numbers to the blog and an updated description of why blogging is better than academic writing for reaching professional, academic and lay audiences.

The key to understanding politics links to a four minute YouTube video in which I auction $1 for $1.50, using an "all pay" structure in which every bidder pays. This structure reproduces the dynamics -- and social losses -- of political lobbying. I ran the auction during my 2009 Environmental Economics and Policy class at UC Berkeley. Click here to listen to all the lectures on MP3s or watch them on YouTube videos -- with captions in 50+ languages.

For some insightful background, read how Baptists and Bootleggers can form an "unholy alliance" to enact a law or regulation that sounds good on paper but ends up harming society. Recall that environmentalists (baptists) and corn traders (bootleggers) both lobbied for corn ethanol -- a product that made fat profits for a few, drove many to hunger, wasted water resources, and damaged the environment

Also read Hayek on how to use prices to aggregate knowledge, the most important paper ever written in economics. Hayek explains how the invisible hand works, how central planning fails, and why water footprinting and other "quasi-indicator" labels and rankings are inefficient failures compared to a functioning price system.

If you want to know more about how water managers fight and cooperate over the distribution of costs and benefits within an organization (thereby wasting public resources without penalty to themselves), then read my PhD dissertation on the Metropolitan Water District of Southern California.

Over the years, I simplified the solution I proposed in chapter 7 of my dissertation into an all-in auction for water that can be used to reallocate water rights or flows among urban, environmental and agricultural users (separately or across sectors).

This post explains the basics of water pricing and metering. Although I used to recommend an increasing block rate system (some for free, pay for more) that would match variable and fixed costs to variable and fixed revenues, I now favor uniform volumetric rates for their clarity and simplicity.

I've also thought quite a bit about indirect ways to improve water utility manager performance (auctions promote direct improvements), this post describes how regulators could drive that process by requiring utilities to buy performance insurance.

Scaling up still more, I recommend that you check out the non-profit project that I started, a Water Data Hub that makes it easier to find ANY water data. The Hub is a "crowdsourced" site (like wikipedia) where anyone can add new data. Add a new link on the Hub if you've got data!

Bottom Line: I hope that you can find, understand and use the ideas on this blog.

13 Aug 2012

Monday funnies

Hitler discovers that climate change is real (via RM):

Aguanomics discussions

I have decided to try a "video webinar newshour" to further my goals of expanding the reach and improve the value/impact of the discussions we have here on the blog.

The first "Aguanomics discussion" (need a catchier title!) will be TOMORROW, Tuesday August 14th (also my birthday :) at 11:00 Pacific (14:00 eastern, 20:00 Amsterdam).

You can join us at this link. Make sure you have Adobe flash working (test link).

It will last for 60 minutes, during which time I will comment and then open the discussion on 2-3 topics. I am also looking for a guest comment of 10-15 minutes, so email me your topic and short bio if you have an opinion on something like, say the Sac-SJ Delta, desalination in Gaza, bottled water in India, etc.

10 Aug 2012

Friday party!

Happiness comes from consumption is easier than you expect!

Join us for today's webinar

Topic: Chapter 3 ("Lifestyle water") of The End of Abundance.

Time: 9:00-10:00 Pacific Time (18:00 in the Netherlands) today. That's one hour later than last week!

Click here to join the meeting.

Anything but water

  1. We should have been talking about The Social and Psychological Foundations of Climate Change years ago! Now we have to deal with the impacts of CC on food production (and vice versa) and it's NOT looking good.

  2. A nice post on blogging vs "traditional" publications for economists.

  3. Krutilla and Alexeev explore the reality in allocating costs and benefits:
    This article [PDF] shows how to modify benefit-cost analysis to reflect political behavior... Assuming a project's conventionally measured net present value (NPV) is positive, the relevant question to ask ex post is whether the monetized value of the project's political costs are sufficient to tip the accounting into the negative range.
  4. Alexandros Maziotis recently completed his PhD with studies of economies of scale and scope and performance efficiency in the UK water industry. Read this paper [PDF] to get a survey of the literature on scope/scale. Read this paper [PDF] to see why "the steady decline in average price performance, gains in productivity and relatively stable economic profitability after 2000 suggest that Ofwat is now more focused on passing productivity benefits to consumers and maintaining stable profitability than it was in earlier regulatory periods."

  5. Prepaid phones (even iPhones with data) are cheaper for consumers, but phone companies don't want you to know that!
H/T to TL

9 Aug 2012

Water conservation

I just wrote this draft entry for an encyclopedia. I'd love to get your corrections/additions/comments. Here's a Word doc if you prefer to mark that up -- by 15 Aug please!

(You may want to read it before tomorrow's webinar on "lifestyle water" at 9am Pacific)

Water conservation (First draft -- 1,155 words)

Water conservation can be encouraged with price or non-price instruments.

Water prices are more often directed at cost recovery than water conservation. They vary with location and use. A farmer pays one price to receive water from an irrigation ditch, a family pays a different price to receive drinking water at its tap, an organization might pay a variety of prices to buy water that is then left to flow in-steam for environmental purposes. Prices may be found in an auction, determined by the average cost of utility service, or set through an administrative procedure. An increase in price often results in a reduction in demand, but the elasticity of this response varies with the price level, use of water, availability of substitutes, and incidence of water prices. This last factor is driven by political or regulatory decisions that explain the existence of block prices, social tariffs, sectoral cross-subsidies, regulatory exemptions, and other “adjustments” that distort consumption decisions and conservation investments.

Privacy, efficiency and the police state

Watch this video to understand why citizens need to be far more vigilant in protecting their privacy, as technology now makes it much easier for governments to track you and trace your activities.

Then consider a political battle to require that voters show "state-issued" ID before they can vote in the US. This policy, ironically, is NOT aimed at providing more information on citizens to the government but at increasing the cost of voting, to make it harder for poor citizens to vote.

But both of these examples touch on an interesting topic: how much should the government know about us? In the US, there's a long-standing policy of minimizing government knowledge of citizens that's based on:
  1. Paranoia that the State will track us and harm us.
  2. An historical dislike of a strong central government
  3. Religious beliefs that identification numbers signal a return of the anti-Christ (!)
The real facts contradict each of these fears:
  1. The US government already tracks us -- not for our "safety" as much as their control. Recall those articles on the size of the "secrecy-industrial complex" and read Seeing like a State.
  2. The US federal government is not as "strong" as European governments, but those governments often have stronger privacy laws and protections.
  3. The Bible (and other religious books) are works of man, neither truth nor prophesy.
I've often heard the story of how the Dutch system of registration and identification made it easy for the occupying Nazis to track down and kill Jews during World War II, but that story does not apply to the US for several reasons:
  • Nobody has invaded the US in over 200 years.
  • The government is tracking us already. What we need is protection from THOSE practices.
  • Laws (for privacy or banning identification) do not work with incompetent or corrupt politicians.
  • We already have way too much information available and vulnerable to abuse. Just follow the news on password and privacy breaches at various websites.
This situation leads me to conclude that
  1. Privacy should be a form of property that we control. Neither the government nor business has the right to our information without our explicit permission.
  2. National identification numbers are STILL a good idea, as they make it easier to open bank account, register for welfare, vote, etc.
  3. The penalties for abuse of privacy should be huge: millions of $, jail time, etc.
Bottom Line: We are people, but we need to be able to interact with strangers. State-issued national identification makes legitimate interactions easier, but it also facilitates abuse. We can only prevent that with institutions that put citizens' rights ahead of the incursions of the State.

8 Aug 2012

Speed blogging

  1. The Bureau of Reclamation is "studying options" for balancing supply and demand in the Colorado River Basin. Although just about every option possible is listed, I wonder why BurRec is even bothering. Why not establish a cap per state and then let states figure out how to limit their demands (with potential side trades)? Or does someone think that BurRec can "manage" the millions of separate demands on the River?

  2. Floods in Beijing (like last year's floods in Bangkok) are worse when "traditional" flood control infrastructure is replaced by urban development.

  3. Disgusting. Politicians in Malaysia are creating fake water shortages to change election outcomes.

  4. Aquadoc muses on "When Is Building Dams Called Rainwater Collection?"

  5. "Have the French shown that water privatization is dead?" No, I say, but the comments are interesting.
H/T to DL

Watershed Movie -- the review

I just watched this movie, which portrays the views of some people who live on or near the Colorado River. Robert Redford and his son produced the 57 minute movie; that means it has good production values and marketing, but I feel it lacks direction or a point.

The movie consists of a series of interviews with people who are (justifiably) concerned with the declining "health" of the Colorado River. They discuss how bad things are and how they propose to improve matters. These interviews, unfortunately, are not representative of the people who use the Colorado (the guy from LA may be the only one in that city who commutes with his family on bikes), and that means that the movie's tone is simultaneously biased and optimistic.

Although I am not one to worship at the feet of "experts," I felt that the uninformed opinions offered by people in the film undermined its credibility. Those opinions -- in the absence of a decent discussion of why the Colorado is dying or options for change ("hope" is not an option) -- left me frustrated and annoyed.

Bottom Line: I give Watershed TWO STARS for its nice footage of locations in the Colorado watershed. Watch Running Dry if you want to understand the forces affecting water supply and demand in the region.

7 Aug 2012

Take control

Making money off bad policies

I'd expect to see this kinda of rhetoric from a check cashing business in the 'hood, but no, it's from Wall Street:

The sad/ironic thing in this advertisement (published in The Economist) is how shallow it is. Why is water access "expensive"? Why would foreigners invest in "places you may never have considered"? Because governments everywhere support inefficient policies (build another treatment plant instead of raising prices) and practices (do not charge the full cost of water service) that screw customers they are supposed to "help."

(I put "help" in quotation marks because some politicians are misguided while others are corrupt.)

6 Aug 2012

Monday funnies

Anything but water

  1. Grinzo has a detailed -- and scary -- post on how unlikely it is that we will reduce GHG emissions (no flying? no A/C?). The upshot is that, yes, we are in the fast lane for trouble (in a follow up post, he ponders the relevance of climate activists). How will YOU adapt?

  2. Two great (short!) videos: Who Exploits You More: Capitalists or Cronies? and The Free Market and Morality (still wise from 2008!)

  3. How to suck at religion (funny and insightful)

  4. Where can you get $10 cups of coffee? How about hotel conference centers in DC. Why? Because attendees and organizers are spending other people's money!

  5. Great post pointing out how big ag uses subsidies to produce pollution and terrible food.
H/Ts to LK and KO

3 Aug 2012

Friday party!

Moby is speaking to "musicians" but this wisdom applies to every person and every profession.

Join us for today's webinar

Topic: Chapter 2 ("Dirty water") of The End of Abundance.

Time: 8:00-9:00 Pacific Time (5pm in the Netherlands) today.

Click here after 8:00 to join the meeting.

Speed blogging

  1. A paper [PDF] using field experiments to explore self-organized complex irrigation systems.

  2. Some progress in California:
    The Mokelumne Watershed Environmental Benefits Program is a model of how farmers can voluntarily work together with other land stewards to improve the quality of freshwater supplies while lowering the costs of water supply to downstream users. By creating a framework where environmental services are tracked and traded, the program substantially increases both the amount and effectiveness of environmental stewardship.
    Read more [PDF]

  3. Here's a really great paper [PDF] examining the impacts of institutions and transaction costs on water trading in the Columbia River basin. Conclusion: "Efficiency is not free, you need to invest in the institutions to get the payoff of water trading, and measuring transaction costs helps reduce bottlenecks."

  4. Bottled water consumption in Mexico is high due to advertising, untrustworthy suppliers, and government's failure to extend water service.

  5. Some southern California water managers argue that the San Diego Water Authority should spend more time controlling its costs and less time suing the Metropolitan Water District of Southern California. My reply:
    SDCWA is seeking "independence" because Met's governance structure is neither efficient nor fair (as discussed in my dissertation on Met). Met needs to reform its management structure and the distribution of water, revenue and costs if it is ever going to hope to serve ALL the people of Southern California.
H/T to DL

2 Aug 2012

Anything but water

  1. A great article ("Crowdsourcing is transforming the science of psychology") shows that some people have skewed views of reality:
    Some people think research projects which pay [voluntary] wages of less than $2 an hour are exploitative — even though that is the going rate for other Turker activities. Conversely, according to Karen Fort, of France’s Institute of Scientific and Technical Information, at least one university has already prohibited the use of grant funds for this sort of study, for fear that Turkers could claim status as employees.
    WTF, bureaucrats?

  2. Fail: "by the agencies’ own analyses, regulations have only a negligible effect on greenhouse gases, and the environmental benefits are vastly outweighed by the costs of compliance."

  3. In this TED talk, Frans de Waal discusses moral behavior in animals.

  4. The economics of gasoline, via Exxon, gives some useful insights.

  5. Essay mills deliver crap for $200. Good news for good students; bad news for lazy cheaters.

H/Ts to CD, EF, MG and RM

The battle for green growth

Some people consider the phrase "green growth" to be an oxymoron. Others (like me) see it as an outcome of good economics (i.e., internalizing externalities).

The World Bank has an interesting report on the topic that lists a few barriers to green growth:
  1. Existing stocks of capital goods, intellectual property, culture, etc. create path dependency. The costs and benefits of a move to a "greener" option may be distorted by these stocks, such that suboptimal decisions result.
  2. People consuming for social and/or competitive reasons may do so regardless of costs or greenery (think of teenagers smoking or racing their cars to be cool).
  3. A past of cheap prices on "brown" consumer goods may lead to consumption habits that will persist, even in the face of price changes to reflect "green" choices.
Bottom Line: The shadow of the past lies heavily on present changes in policy that are designed to move us to a better future.

1 Aug 2012

I am Hosni Mubarak*

Editor's note: James Workman taught "Unlocking the Real Worth of Water" as a visiting professor at Wesleyan University last semester. He told his students that they -- like all people -- needed to be "water resource managers" because water allocations are increasingly driven by subjective individual values, not top-down planing. The students addressed these ideas from different perspectives (local utility, energy/water nexus, and water and food trade); each choose one essay to post here. Please tell them what they got right or wrong.

Brent Packer writes...

Last year I watched the Arab Spring explode from Tahir Square, Cairo. This year I realized protesters’ rage was unwittingly directed at me. How did I cause their problems? It was President Hosni Mubarak who oppressed rights, boosted unemployment, and ignored poverty.

True. But it was me who literally poured the fuel that caused Egypt’s hunger to ignite.

Each day in Pennsylvania, my spread-out suburban town forced my daily drives to last longer than 30 minutes. I filled up my car with gasoline mixed with 10 percent of a corn distillation, called Ethanol. Multiply this amount by the 7.9 million cars on Pennsylvanian roads, and we’re talking nearly 660,000 bushels of corn.

A bureaucratic victory over the needs of the poor

LK posted this on a water list:
As you might know, the UN declared yesterday (July 2nd) that the MDG on water has been met, i.e. the number of people without access to safe drinking water and sanitation has been halved.

Our research reveals that the number of non-functioning water points in Pakistan are different to the number reported in the JMP [Joint Monitoring Program], which leads to the following unanswered questions: Will we be happy in 2015 to report progress that was never there for a country of 180 million people? How do we get out of the fix? And how sure are we of our MDG7 ‘guesses’?
In response, I wrote:
Nearly 4 years ago, I noted that the changed definition in MDG7 (from "access to clean water" to "access to a water source") would result in a useless outcome, i.e.,
We know that thousands of well-meaning people will be spending billions of dollars to install pipes, pumps, etc. Will those pipes deliver safe and sustainable water? We can’t be sure about that result — since it’s not being measured — but we can be sure that projects that deliver pipes will get funded, bureaucrats who deliver 100 percent pipe coverage will be lauded for helping the poor, and outsiders are likely to confuse 100 percent pipe coverage with 100 percent access to “safe and sustainable” drinking water.

Bureaucrats will declare victory, outsiders will applaud, projects will wrap up, money will disappear, and those unlucky enough to have pipes with unsafe and unsustainable water will be left to their own devices.
I agree that it's a good idea to highlight reality -- that 3-4 billion people LACK access to reliable, safe water.
Bottom Line: We're not done, and the JMP should not be allowed to pretend that we are.