14 August 2012

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.

1 comment:

Anonymous said...

Actually the origin is Wetland, but during the process someone used a French keyboard, which resulted in Zetland.