28 Sep 2012

Friday party!

(via CC) It's getting real [silly] in the Whole Foods parking lot.

Did you bring your cup?

People with cups get coffee faster!
Burning Man runs on what's called a "gift economy" -- people give what they want to who they want, without expectation of anything in exchange (smiles help!). Within the gift economy it's considered good manners to make it easier for the person giving the gift, by bringing your own cup to get free coffee, for example.

Cornelia and I volunteered to give away coffee at Cafe de la Fin du Monde in the French Quarter. Many people brought their cups (see photo), but others arrived as if they were walking in Starbucks -- not just asking for soy milk (hippie!) and decafinated coffee (horrors!) but also for cups. For that we had a simple answer:
Yes, we can pour your coffee into this communal cup. Please bring it back when you are done.
After hearing this and looking at the dusty and unwashed cups on the serving counter (water is too precious to waste on washing!), many people "suddenly" found that they did indeed have a cup. Others just drank from the communal cup.

Bottom Line: Incentives matter.

27 Sep 2012

Webinar on environmental water TOMORROW

Tomorrow at 9am Pacific/18:00 Netherlands (get the time in your location), we will discuss chapter 9 of The End of Abundance -- Water for the environment.

We will cover the use and abuse of cost-benefit analysis, subsidies (other people's money), and the path dependency resulting from poorly-planned infrastructure.

You MUST have Flash working on your computer. Check your microphone and video if you want to be active in the discussion (test here).

We'll meet at this URL. The archive of past webinars is here.

Bleg: Money meets power

Premise: US state capitals were put in "secondary" cities to separate political from financial power, but the return to lobbying has grown with government power.

Hypothesis: Flights from the business capital to the political capital of a state (e.g., Los Angeles to Sacramento) have increased disproportionately as political power has increased (i.e., share of state budget in state economic activity).

Bleg: Does anyone know where to find panel data on flight frequency (not necessarily passenger volume) among cities in states?

Are subsidies more efficient than price signals?

Alex Trembath of the Breakthrough Institute sent this last week:
The lure of a carbon tax coming from several corners of Washington may be tempting, and the poor optics surrounding clean tech subsidies might make their forced expiry an attractive sweetener for lawmakers hoping to pass a carbon tax through Congress. But if advocates hope to sustain the remarkable progress the United States has made in deploying zero-carbon energy technologies in recent years, they should think twice before trading today's clean tech deployment subsidies for a carbon tax.

I recently co-authored a Breakthrough Institute analysis that found direct subsidies offer a stronger incentive for zero-carbon energy deployment than would a carbon tax alone. The methodology we used is simple: by multiplying the value of the subsidies for clean tech by the CO₂ emissions factor of competing fossil energy sources, we calculated the "implicit carbon price" of today's subsidies. And we found that subsidies like wind energy's production tax credit (PTC) and solar energy's investment tax credit (ITC) reliably offer higher implicit carbon prices than would current proposals for a carbon tax. For instance, while Rep. Jim McDermott (D-WA) recently proposed a carbon tax of $15/ton CO₂, the PTC imposes an implicit carbon price signal of $55/ton CO₂ when wind is competing against natural gas.
In other words, Alex and is colleagues are saying that a targeted subsidy for wind or solar will produce more wind or solar than a carbon tax. That makes sense, but it's not necessarily more efficient than a carbon tax, since a carbon tax -- in addition to encouraging the development of wind and solar technologies -- will ALSO:
  • Encourage people to use carbon-rich fuels more efficiently (techniques).
  • Encourage innovations that get more energy from carbon-rich fuels (technology)
  • Encourage innovations in non-wind and non-solar sources of energy
  • Raise revenue that can be used to reduce other taxes -- as in British Columbia
  • Provide a clear price signal in proportion to the carbon content of ALL energy sources
I think that those effects are pretty useful, but Alex appears to think that governments are better at choosing who and what to subsidize. I've seen many mistakes in that area (e.g., negative prices for wind power), so I do not share his faith.

We're going to debate these ideas -- and more -- next Tuesday (9am Pacific), so join us to hear his points, ask your questions and learn a little more about how ideas translate into policies.
Ed Dolan makes these points with characteristic clarity.

26 Sep 2012

Capcha wars

Many readers complain about the "capcha" that makes it difficult to leave comments on the blog. I took off that "feature" on Friday and then got 42 spam comments on blog posts within 24 hours. I do not, unfortunately, have the time -- or the bandwidth -- to cut off so much spam.

So, back to the capchas. Thank the spammers for making life tough for you and me.

ps: if you can't type the capcha very well, then just email me the comment and I can copy/paste it for you...

Speed blogging

  • An interesting history of ignoring the environment for the sake of economic activities (i.e., exporting water from the Delta) in California. On a related note, another study recreates the "pre-human" (wetlands) ecology of California's Central Valley.

  • You may have seen that over 100 people have died in "fighting over water and land" in Kenya. The blame -- according to locals -- lies with feckless politicians, not missing means to reconcile competing demands.

  • This post on "the high cost of free water" covers familiar territory -- and cites my book as a source of solutions, e.g., raising the price.

  • Imperial Irrigation District is trying to fallow land, to "free up" water. IID, unfortunately, is naming both a quantity target and price to hit it, which guarantees failure to meet their goals. Someone send them an Economics 1 textbook!

  • Yep. "Urban sprawl generates business opportunities and tax revenues for state and local governments in the short term, but if groundwater overabstraction leads to land subsidence, financial risk is transferred to the federal government through increased risk exposure from federal housing loans and government-backed residential lending."
H/T to DL, RM and TS

25 Sep 2012

Anyone out there? Help please!

As readers probably know, I am constantly trying to find new and better ways to communicate "aguanomics" to people. According to the poll that's now running on the sidebar, 72% of the 18 people who voted (a biased group) prefer to learn about aguanomics via this blog. Others like my book, academic papers and the webinars.

Well, the webinars are NOT going so well. I waited 10 min for someone to show up today, to ask questions about privatization and/or outsourcing, but nobody did, so I quit. The same thing happened last Friday, for the webinar on Chapter 8 of the book, but I did that one because I had prepared material to present.

This is not sustainable for me, since -- as much as I like to talk -- I like to talk to PEOPLE. In other words, I am not interested in talking when nobody is interested in listening.

I know that it's hard to get people to watch a webinar in front of their computer at a particular time and day, but I rationalized that they would watch archived webinars [here and here].


Views of recorded webinars are NOT on a good trend
So,  I've got a few thoughts:
  1. Please tell me if I can improve some aspect of the webinars (timing, technology provider, theme, topic, etc). Should I make them shorter? Should I have more guests? Help!
  2. I will finish chapters 9-12 of the book, since I want to review the materials for TEoA 2.0. Please DO show up if you are interested in the environment, climate change, human rights or conflict over water (the topics of those four chapters).
  3. I'll TRY to do a few more "discussions" on Tuesdays. I'll be talking to Alex Trembath next week about government's role in innovation. I hope to get a few more guests on.
Bottom Line: I am trying to find the right ways to communicate with you and the world on these ideas. I know that I can just blog my ideas and opinions, but I want to have more interaction, so that I can learn more from you, get new perspectives and create a larger group of people actively debating these ideas.

Burning Man 2013: Spontaneous order

Last week, I worried that the changing economics of Burning Man threatened to turn it from an amazing experience in human cooperation into a class-based society where money buys access and tourists spectate instead of participating.

Although my worries many never be realized, there are still ways for the Burning Man organization to turn the world upside down, to help us appreciate what community and cooperation really mean.

To this end, I suggest that they use "spontaneous order" the theme of Burning Man 2013.

This expression is borrowed from Hayek (and predecessors), and it refers to the way that people can use prices to coordinate and cooperate in the creation of goods and services of value. Also note that spontaneous order is compatible with non-priced goods and services that can be gifted instead of commodified, in ways that reflect the relationship between giver and receiver.

Here's how it could work at Burning Man:
  • Camps would be placed according to their bids for space ($/square meter). Bids would be ranked from highest to lowest. Higher bidders would get "prime" locations, but their money would go to lower-then-median bidders who would then have more money to spruce up their camps in the "ghetto."
  • Everyone would be encouraged to bring whatever they want to sell on the playa. These "suppliers" would then need to set or negotiate prices with "buyers" -- whether it was for food, massages, or entrance to a dance event. Bacon is considered the most important food in the desert, but anyone can make bacon. What about ice cream? On the flip-side, low prices for bad poetry or shitty drinks would reflect community values.
  • Everyone should bring cash, but barter or exchange is also allowed (why not?). Very few people understand how to set prices according to supply or demand (most of us are "price takers" in the market for food, jobs, cars, etc.) Such a process will require many face-to -face interactions and a real discusion of what's worth what.
Some people may scoff at this theme, for its obvious embrace of commodification, but remember that most human societies, and most of human history, has been dominated by exchange. Also note that exchange is the foundation for cooperation among humans [pdf]. Then think of the mission of Burning Man: "You're here to build a community that needs you and relies on you." If they need your goods and services (at the right price), then they need you. If they do not, then you need to find a way to be useful to your fellow humans. Burners are always going on about how they want to export their experience to the default world. That will not happen for as long as Burning Man values cannot mesh in the default economic system. This experiment makes that process easier.

Bottom Line: The best way to enlighten humans to the importance of their fellows is to highlight our interdependecies. "You didn't build that" is not the message. "You built that" with the help of customers, employees and a social infrastructure is the message. Learn it.

24 Sep 2012

Let's talk about privatization!

Tomorrow at 9am Pacific (get the time in your location), we will discuss privatization and outsourcing -- in the water sector and other parts of the economy.

FYI, this page has an archive of past discussions.

You MUST have Flash working on your computer. Check your microphone and video if you want to be active in the discussion (test here).

We'll meet at this URL.

Monday funnies

I got these from an old album at my dad's house. I am not sure of the mix between my native interest and the influence of others, but the effects of early ideas appears to be persistent :)

...seems like people are still arguing over that answer.

... and I did my bit: no research meat for me!

Blocking change

From the New Yorker:
Two decades ago, the economist Albert O. Hirschman published a historical study of the opposition to basic social advances; “the rhetoric of intransigence,” as he put it. He examined the structure of arguments -— in the eighteenth century, against expansions of basic rights, such as freedom of speech, thought, and religion; in the nineteenth century, against widening the range of citizens who could vote and participate in government; and, in the twentieth century, against government-assured minimal levels of education, economic well-being, and security.

In each instance, the reforms aimed to address deep, pressing, and complex societal problems -- wicked problems, as we might call them [like health care today]. The reforms pursued straightforward goals but required inherently complicated, difficult-to-explain means of implementation. And, in each instance, Hirschman observed, reactionary argument took three basic forms: perversity, futility, and jeopardy.

The perversity thesis is that the change will not just fail but make the problem worse. The futility thesis is that the change can’t make a meaningful difference, and therefore won’t be worth the effort... The jeopardy thesis is that the change will impose unacceptable costs upon society -— that what we lose will be far more precious than what we gain.
Note that all these arguments rely on fear and uncertainty. They can be countered by using small pilots to demonstrate reforms or borrowing lessons from implementation of reforms in other places.

21 Sep 2012

Friday party!

Combine hula-hooping girls at Burning Man with a GoCam and you get this awesome:

Listen to me on climate change tomorrow

Steven Spierer and I will be talking (and taking questions) from 10-11 am (PT) tomorrow at talk radio one.

Anything but water

Trees age differently from humans animals!

Fahrenheit measurements of temperature are even screwier than you think!

Marginal Revolution University is coming soon. Free to use, easy access.

Organic food isn't more nutritious but may have lower residual pesticides. Is it worth paying more to save washing time?

Good news in the battle against corruption: "Resource companies listed on American stock exchanges, which make up half the global industry by value, will be required to publish all payments to foreign governments above $100,000."

20 Sep 2012

The aguanomics of infrastructure TOMORROW

Tomorrow at 9am Pacific/18:00 Netherlands (get the time in your location), we will discuss chapter 8 of The End of Abundance -- Dams, pipes and pumps.

We will cover the use and abuse of cost-benefit analysis, subsidies (other people's money), and the path dependency resulting from poorly-planned infrastructure.

You MUST have Flash working on your computer. Check your microphone and video if you want to be active in the discussion (test here).

We'll meet at this URL. The archive of past webinars is here.

Notes from EAERE

The European Association of Environmental and Resource Economists (EAERE) held their annual conference a few months back in Prague. I took some notes:
  • Any cost-benefit of biofuels versus fossil fuels needs to consider the displacement of food crops (a cost) from increased biofuel production as well as the reduction in byproducts (a cost) from reducing fossil fuel refining. My current view is that biofuels are not economical to produce (subsidies and mandates keep them going); fossil fuels are not good for the environment, but that negative impact could be reduced with taxes on carbon and other pollutants as well as the removal of subsidies to consumers. Note that these subsidies mostly go to the richer people in developing countries (Indonesian government spending on subsidized fuel is nine times its health care spending).

  • Biodiverse ground cover is good for water quality, timing of runoff (fewer floods) and for biodiversity/ecosystem services.

  • The "green left" may be an oxymoronic movement if its embrace of a carbon tax -- or pristine environments -- also harms the poor. I know that "exclusionary parks" are bad for displaced people who are removed from their homes and traditional "foodsheds" but carbon taxes need not harm the poor if the revenues are used to improve public services. Iran's removal of fossil fuel subsidies, for example, was acceptable because half the savings were diverted to the poorest 80 percent of Iranians.

  • General note: A paper with a model but no empirics or policy recommendation is just a fancy (illustrated) opinion.

  • Ian Bateman (UK) gave an excellent keynote on "economic analysis for ecosystem service assessments," i.e., how to integrate science and economics into environmental policy. Watch it.

  • I also STRONGLY recommend listening to Gerlach, Mace and Moldan (the other speakers are also fine) on this panel on Rio+20. It's good to hear from ecologists and policy types taking about environmental economics.

19 Sep 2012

Bottled water vs fountains

I've worried about the displacement of water fountains by water vending machines at airports for some time, so it was refreshing (pun!?) to see this little bit of competition (sorry for the blur) at LAX.

Too bad the vending machine was out of order -- people only had access to FREE water from the fountain

The changing economics of Burning Man

This portrait is accurate. I can't shut up!
Burning Man (BMan) highlights human creativity, sharing and community (People photos here and here. Satellite view and aerial tour). It takes place every year in a dusty hot place where everyone is expected to be "radically self sufficient" at the same time as they gift various items to others (from each according to his ability desire, to each according to his need luck) in the tradition of radical inclusion [BMan's 10 Principles]. The image at right was a particularly appropriate gift :)

This was my sixth year, and every one of my years has had over 40,000 "[radical] participants," but the nature of participation is changing as BMan becomes more popular.

First, there's been a shift to tourists. The 2011 sell-out of tickets raised BMan's profile with the "must do" crowd -- since it's obviously cool to attend sold out events. Some of these people are willing and capable of joining the burner community, but others are more interested in posting cool facebook updates (the arrival of wifi on the playa was perhaps the beginning of the end). At their worst, they join "turnkey camps" that provide food, shelter, water, etc. for a fee. Although there's always been a tension between burners who sleep in tents and those who sleep in RVs -- an argument over whether heat, dust and noise is more "authentic" -- those tensions were pretty minor when tent and RV people camped together, helped each other in dust storms, etc. Turnkey campers tend to be autonomous, separated and protective of their "hired" spaces; they are not "radically inclusive." Tourists shift the ethos from participation via interdependency to participation via payment.

Second, the "arms race" among creators of art, theme camps, costumes and gifts has resulted in a need for more money to create ever-larger, ever-more-elaborate pieces, but money comes with strings. Thus, we have seen an increase in the importance of sponsorship via donations (kickstarter, etc.) and the emergence of privileged classes. This year I camped in the French Quarter for the first time, in an amalgamation of 18 camps offering everything from coffee to burlesque to a farmers market. Most of these camps gifted in the usual BMan tradition -- free stuff to anyone who passes by -- but other camps had "special access" to designer dinners, cocktails, baths, etc. Others explicitly reserved "suites" for donations payments. The arms race has changed the flavor of BMan by separating participants into privileged patrons who get the "full" BMan and hoi polloi peeping over the wall. The arms race has also changed the nature of interaction: heavily-funded camps overshadow poorer camps, reducing traffic to those camps and the recognition and interaction that repay their hard-work. There were examples, I am sure, of a loud sound camp overwhelming less-amplified neighbors who will not bother to set up next year.* As an economist, I am all for competition and survival of the fittest coolest, but a line has been crossed. Camps with heavy funding and a mission can overwhelm "old-fashioned" self-funded camps.

Why does this matter? Because BMan's new coolness means that a "good show" on playa is now talked about in the "default world" of money, commodification and transactions. We've known for many years that "gifted" art installations often mean commercial success for artists off the playa, but that link is getting stronger. The fantastic display of human creativity on the playa is less and less about "how neat is this?" and more and more about "here's an advertisement of what I can do for you," which may explain why installation budgets are skyrocketing.

This year, I was invited to talk about the future of BMan with the six founders and others, and I saw at this meeting that the BMan organization faces a choice between growing fast with the risk that BMan's culture will be diluted and growing slow as the culture evolves organically. My impression is that the organizers favor the fast route; they have the faith (of ex-hippies) that the message is strong enough to endure.** I am not so confident, mostly because I see how "veteran" burners are eager to move to a two-tier economy, happy to accept donations to express their burner cred, and willing to cede the public areas to the tourists and patrons providing money and advertising eyeballs.

I advised that group to look for ways to transform BMan from a consumption event (spend time and money on a great party for a week) into a production lifestyle (change the nature of exchange and cooperation, all year round).*** It would take massive resources and effort to transform the BMan experience into a default world modus operandi (I drew parallels to organized religion, e.g., the Mormons), and I am not sure that the organizers (several of whom want to retire) or core burners (most of whom are better at self-expression than keeping appointments) are up for that task, but I may be wrong. Watch the Burning Man Project to find out what happens.

Bottom Line: The commodification of Burning Man as an "experience" instead of a community signals a shift from radical inclusion, self-expression and self-reliance to exclusion, store-bought cool, and dependency. I will suggest how BMan can reverse this trend -- via spontaneous order -- next week.

* Read "Is Google Evil?" [pdf] for my thoughts on winner-takes-all dynamics from a few years back. Also read "Why create when you can panhandle" in this magazine [pdf].
** They may also be willing to embrace a more monetized BMan because they themselves are "cashing out" as BMan converts from an LLC to a non-profit.
*** Read this for some perspective on the changing social interactions at BMan.

18 Sep 2012

Bleg: Evaporation rates behind dams?

Does anyone have data or a formula (surface area times average temperature?) for evaporation rates for water held in reservoirs?

Department of water resources FAIL

Deirdre Des Jardins sent this email to me and some others a month ago:*

Subject: The Department of Water Resources and increased drought risk.

DWR held a meeting last week to receive comment on their draft outline of a Climate Adaptation Strategy for water resources.

The draft outline covers floods and sea level rise, but did not mention drought risk anywhere. It's ironic, because the meeting was held in the middle of one of the worst worldwide droughts in over a hundred years, that most scientists link to global warming; see map below.

Projected average future worldwide drought conditions under A1b scenario (Palmer Drought Severity Index.)

DWR's 2006 and 2009 Climate Change Impacts Assessments showed no increase in the frequency of droughts in California --- but only because their modelling used the technique of mapping monthly streamflow perturbations onto the historical record -- which implicitly assumes the historical frequency of wet and dry years. DWR's own reports have noted that this is a serious shortcoming.

Contrast this position to studies released by the California Climate Change Center as part of the 2009 and 2012 California Climate Change Assessments that project a huge increase in the frequency and severity of droughts in California, consistent with studies for other regions around the world. The frequency of dry and critically dry years in California is expected to increase by 42% from 2000-2050, and more than double by the second half of the century. There have also been several previous independent studies which showed an large potential increase in drought frequency and severity.

The set of global climate models used in the 2009 and 2012 California Climate Change Assessments also project significant drying in California, especially under the higher greenhouse gas emissions scenario. DWR has criticized this set of models as too dry, pointing to the overall trend of increasing precipitation in the state over the last century, and so has discounted most of the results of studies sponsored by the California Climate Change Center.

However, if you look at regional precipitation, there has been an overall reduction in precipitation in Southern California since 1975. The reduction in Southern California is in agreement with projections by a giant ensemble of models that was used by the Bureau of Reclamation in their 2011 Westwide Climate Risk Assessment. The assessment also predicted significant changes in precipitation in the Southwest, and that that there will be a statewide reduction in precipitation in California by 2070.

All of these new studies and the recent droughts around the world should really be a wakeup call to DWR. Unfortunately, even the modelling for BDCP has questionable assumptions. Looking at the slight statewide increase in precipitation over the last century, the BDCP modelling assumes that wetter and drier futures are equally likely. It partitions the space of all global climate models into wetter and drier models, and weights both equally in projecting reservoir inflows and outflows, and water deliveries. This could greatly overestimate future flows and future deliveries, and greatly underestimate the potential risk from climate change.

I submitted a report (Incorporating Drought Risk From Climate Change Into California Water Planning) to DWR on their outlined climate change adaption strategy that included detailed critiques of their climate change modelling. I believe that it is essential that DWR do a better job of incorporating drought risk into their modelling, and especially for the SWP Delivery Reliability reports that water agencies rely on for planning.

* My response to them was:

I had no idea that DWR was so incompetent. You'll be interested to know that I attended a managers' meeting at MWDSC (18 Aug 2006) at which they got a VERY sharp view of the effects of climate change on CA water from a top guy @ California Climate Change Center. Seems that DWR may be the last organization on earth to realize that stationarity is dead (e.g., see this work on climate change and water rights in California). Too bad they influence water policies and flows!

Bottom Line: DWR can be lazy and/or incompetent if they lack internal incentives or external pressures to manage water for highest and best use, now and in the future.

17 Sep 2012

The economics and logistics of self-publishing

Tomorrow at 9am Pacific (get the time in your location), we will discuss self-publishing books. I will draw from my experience with The End of Abundance. (Read the microeconomics and macroeconomics of publishing for background.)

We'll also talk about any other topic of interest to listeners.

FYI, this page has an archive of past discussions.

You MUST have Flash working on your computer. Check your microphone and video if you want to be active in the discussion (test here).

We'll meet at this URL.

Monday funnies

People can fool themselves so easily

The Sahara is not in a drought

...but the US is in its worst drought in a long time (H/T to RM).

The drought means less water on the supply side and more demand for water from humans and ecosystems under heat stress.

The drought will not be a problem where supply and demand are in balance, but it will expose areas of imbalance.

What's the solution? In ecosystems, there is death and displacement of "wet" species by "dry" species.

In human systems, there are choices:
  • Change habits, e.g., let lawns die
  • Make do with less, e.g., don't overwater lawns
  • Continue with business as usual (BAU), e.g., overdraft groundwater for lawns 
In my experience, people don't mind using less, but they are happy to carry on with BAU when there are no social or financial signals that change is necessary. They are least likely to change their habits because such changes take more effort or entail higher costs in the short run.

The relevant question, then, is whether drought is a long-run or short-run event. Is the US experiencing a temporary heating and drying -- a dry summer before normal winter rains -- or a permanent shift to hotter summers and drier winters?

My understanding is that climate change is going to give us more heat AND more rain, but those rains will be in the wrong places, in the wrong volumes and at the wrong times. That means that we will have a hard time benefiting from stronger hydrological flows and that we may not be able to use "extra" water to reduce the damages from higher temperatures.

Bottom Line: We'd best prepare for an age of permanent drought deserts.

14 Sep 2012

Friday party!

If that's not enough, then check out this one on STIs.

Poll results -- Polls!

Surprise! People who vote in polls love polls! Oh, and there's a new poll (accessibility!) on the sidebar ===>
Are polls useful on this blog?
Yes -- and I vote in them 76%37
Yes -- but I don't vote in them 4%2
No -- but I vote in them 14%7
No -- and I don't vote in them 6%3
49 votes total
But seriously folks, I need some new questions for polls. What are you curious about? Where are the fault lines in our discussions of water.

On a more serious note, take this as an example of a constituency speaking out in favor of its preferences. Do we know that those preferences are of the majority? No, since we asked neither the population, nor a random sample, but a self-selected sample.

Bottom Line: A few people are not representative of all the people.

13 Sep 2012

Who manages your water and do they perform?

Tomorrow at 9am Pacific/18:00 Netherlands (get the time in your location), we will begin discussing Part II of The End of Abundance with Chapter 7: Managers and politicians.

We're now getting to the juicy part of water management, in which political and social influences play a bigger role. We will cover the theory and practice of regulation, principal-agent theory, and how customers benefit and suffer from trusting their representatives.

You MUST have Flash working on your computer. Check your microphone and video if you want to be active in the discussion (test here).

We'll meet at this URL.

Like reefs? Do you dive?

... then please complete this survey for Sabah, a colleague of mine, who wrote the following:

What data do I need to collect?

Complete entries on the online survey (in English, French or Spanish) for recreational divers only.

Why do I need your help?

Our environment is fragile and under threat of climate change. Your response to this survey will better the research of economic benefit of coral reefs to our communities and the associated socio-cultural-economic losses by climate change.

Where occupy and the tea party failed

I've been thinking about this topic for some time, but I was not alone:
Burn Wall Street is a very political piece that stems from a neutral point of view. We see the Tea Party and the Occupy movements as very similar. They are both well-intentioned groups of Americans that know that things must change.[1]

Unfortunately, one group has been hijacked by Right-wing extremists and the other by Left-wing extremists, and both groups have been used as pawns through the use of political wedges to keep each other from the actual goal of reforming Wall Street and saving our economy.[2]
On these words, I have two comments:*
  1. Both groups were mad that the government expanded to bail out Wall Street. The original Tea Party was upset that this bail-out meant higher debt and taxes. The original Occupy movement was upset that the bail out took money from average citizens and gave it to rich bankers.
  2. Both groups failed to reverse those bail outs because they lost sight of the main point (let Wall Street fail) and ran after a much too ambitious agenda (taking over government for their own purposes).
In my mind, both sides could have cooperated to limit the damage of Wall Street's excesses on Main Street. Instead, both groups indirectly supported the growth and expansion of government when they fought to expand and take over a government that they wanted to use to target different goals.

Although neither movement took over the government, both sides ended up contributing to an expansion controlled by "leaders" who were not only friends of bankers, but also abusers of greater powers that they used to pursue their pet projects -- everything from drone strikes to subsidizing boondoggles to bailing out farmers.

I would have preferred to see a smaller government concerned with the provision of public goods (everything from pollution controls to migration rules), leaving citizens to tackle local and individual issues in their own ways.

My preference is nothing new. I have the same reaction to the failure to "solve" water issues at global meetings that are convened at the wrong scale. Water problems need local, not global, solutions -- but you won't hear that from delegates flitting from one subsidized reception to another!

Bottom Line: Government exists to help the average citizen overcome collection action problems, not to transfer private resources from the majority to special interests. The Tea Party and Occupy Wall Street lost their chance to help average citizens when they sought to pursue their own prejudices instead of the public good.
* Wanna see the burn? Here you go!

12 Sep 2012

Speed blogging

All of these links come from the ever-diligent Daniel Lippman:
  1. Drought (plus rising sea level) means that more of the Mississippi is salty. Bad for ecosystems; bad for people.

  2. Yemen may be the first country to REALLY run out of water, forcing people to abandon cities and land for places with water (provided by desalination?). The reason? Poor governance means that water demand is outpacing supply.

  3. Speaking of failed water policies: Shortages are good news for companies in the desalination business, even though their "solutions" are 10x more expensive.

  4. Academics claim that feeding nine billion people on limited water means that people will need to switch to vegetarian diets. That's not going to happen: Rich people will pay for meat; poor people will pay more for less -- ending up hungry.

  5. Methane in groundwater due to fracking? That's possible when wells are badly drilled.

11 Sep 2012

Is government better at R & D?

Research and development are the twin drivers of the innovation that improves our lives, pushes out the productive frontier and delivers profits to those with the foresight, luck and perseverance required to bring better mousetraps to market.

What role should government play in this process?
I drove past Solyndra's Fremont, CA plant a few weeks ago.
It was for sale, but taxpayers will not get their money back
In general, I think that government is useful in promoting (but not necessarily providing) education from kindergarten through to PhD and funding basic research. I do NOT think that government needs to be involved in developing research ideas into marketable products and processes.* For-profit companies can do that quite well -- especially when they are subject to competitive pressures.**

This preamble leads us to the question of whether government should take credit for the fracking revolution that is currently seen as a "good thing." Alex Trembath and his colleagues at the Breakthrough Institute think so, but I disagree, and here's the comment I left on their site:
I continue to see flaws in the claims that (1) "public support for fracking" made the difference in its development and (2) public R&D money is well spent.

On (1) see Philpy's comment in the article, i.e., " I think your article overstates the role that the Federal Government played in the Barnett Shale development."

On (2) one must measure success not by a single case (even that's debatable) but by comparing Gov't spending against ALL returns on that spending (while controlling for non-Federal financing and personnel).

From what I've found on the interwebs, federal funding has been found to (a) increase salaries but not effort and (b) not be more efficient than spending in other rich countries, even if it has won awards [pdf] in areas where research may have been done -- or not -- without DoE/Federal interference/crowding out.

In short, Breakthrough has provided evidence that "government investment in innovation can, over time, commercialize and deploy technologies that make yesterday's less-efficient, dirtier, and more expensive technologies obsolete," but it has provided NO evidence that "can" means "must." The government, in other words, is sometimes useful but not necessary for research. Breakthrough needs to work harder or make more realistic claims.
Bottom Line: Government should stick with activities that the private sector cannot execute, not displace private sector activities by pursuing politically popular programs (case-in-point).
* Development agencies drilling deep wells for drinking water in Bangladesh were so enthusiastic that they drilled thousands of wells before realizing that the water had harmful levels of arsenic. Now it's too late to go back and millions are being poisoned by their only water supplies.

** Businesses can screw up, as American Airlines found out when passengers used its "lifetime first class" pass to the limit. AA, sadly, tried to void their agreement rather than keep their word.

H/T to JW

10 Sep 2012

Aguanomics discussion #2

Tomorrow at 9am Pacific/18:00 Netherlands (get the time in your location), we will discuss security, governance, and whatever other topics are on your mind.

You MUST have Flash working on your computer. Check your microphone and video if you want to be active in the discussion (test here).

We'll meet at this URL.

Monday funnies

This (via RM) is silly, but funny:

Speed blogging

  1. Ron Griffin's "Origins and Ideals of Water Resource Economics" [pdf] has some interesting history of US water policy and the economic thoughts that underpinned -- or contradicted it. He describes how politicians continuously expanded subsidies to farmers (who paid 20% of cost), how the federal government crowded out entrepreneurs, the danger of dams that convert small 1-in-10 year floods into large 1-in-50 years floods, the abuse of benefit-cost analysis [often covered here], the problems with "third party" impacts, and the legal and institutional barriers to economic (good) policies. This statement justifies this blog:
    Water economics will have to redouble its contributions, largely through repeated applications of existing tools.
    Read it.

  2. Some of Africa's poorest farmers have restored their environment and raised productivity by using natural features to gather water.

  3. The EPA is modifying the way it enforces clean water regulations, to make it easier for localities to address their specific challenges.

  4. Too much regulation plus christian activism plus free water equals lawsuits in Aridzona.

  5. Businesses are interested in sustainable water, but there are competing -- and sometimes misleading -- standards on local conditions and appropriate corporate responses.

H/Ts to DL and PW

7 Sep 2012

Friday party!

This was at Burning Man. Note that it takes cooperation to get going...

Anything but water

  1. With ContextBot, you know if you have first world problems.

  2. Great paper (mentioned here years ago -- academics are not in a hurry) on how unbalanced costs and benefits can undo an attempt to reform fishery licenses.

  3. What we are learning from online education (it's not just a podcast!)

  4. Yes, you get less wet if you run -- rather than walk -- through the rain.

  5. "Market-based instruments (MBIs) are very useful for encouraging land managers to participate in natural resource management... this section of the site provides introductory information on designing and implementing MBIs."
H/T to MY

6 Sep 2012

Waiting for a Dutch Armageddon

In the Netherlands:
  • Health insurance is mandatory.
  • Everyone has a national ID number
  • You can possess and smoke marijuana
  • The drinking age is 18, 16 for beer*
  • Gasoline is about $9 per gallon
  • Plastic and aluminum are not recycled in most areas (low consumption of soda!)
  • The VAT (sales tax) is about 20 percent
  • The postal service is privatized
  • Pancakes are VERY thin
I've been looking for signs of chaos and destruction, but nothing so far. I'll keep you posted.
* Cornelia was told that the Dutch will tolerate behavior if it's profitable, doesn't harm anyone and is done quietly -- close to what I wrote awhile ago.

5 Sep 2012

Open access is not free access

I got this offer from the publisher of my forthcoming paper:*

Although I understand that publishers want to get paid, $3,250 is not a "fair" price for open access. First, because it's a price they are charging me, the author with the highest willingness to pay -- thereby generating monopoly rents in excess of the competitive price. Second, because they sent me this "release" a day after I signed over the copyright, in exchange for $0. Funny how their typesetting is going to make the paper that much more valuable!

Bottom Line: Journal publishers are doomed, in the same way that record companies were doomed by their failure to embrace digital files, file sharing, single releases, etc. [earlier post]

* You can read the free version here [pdf], and I'll update it to my "fair use personal copy" ASAP :)

Costs, benefits, politics and corruption

This -- from an email I wrote to someone -- may clarify what I'm trying to do:

Most of my work focuses on water policy, which determines who gets access to bulk water or water service and who pays to build and maintain water systems. Although the economics of system efficiency or benefits from water use may be clear, it's in the political sphere that the distribution of costs and benefits from water is determined.* In an efficient and fair system, costs and benefits would be aligned; in a corrupt system, they will be distorted to favor special interests. These distortions can be accidental, but they are more often the result of intentional action, either due to corruption or personal preference of the policy makers.

Most water systems are monopolies that operate "under the radar" from citizens who may see results (or lack thereof) without knowing how resources turn into those results. Insiders often have a good idea of intentional or accidental misallocations but they cannot always speak out, for fear of harassment, persecution or even personal injury. These people need protection if they are to turn into whistleblowers protesting on behalf of the public interest.

Several years ago, I started a non-profit (Rumor Mill Inc) that would run a website (Whistlesafe) that would allow anonymous, untraceable "claims" of malfeasance. This website was directed towards inclusion and transparency rather than vetting and accuracy, but it has components to minimize false claims. The website is NOT online (I have a copy of the code somewhere), but it can be recreated -- as another implementation of an online bulletin board -- with some guidance in a short time. I'm looking for help on this.
* By my definition, government should supply public goods (weights and measures, fire protection, law and order, defense, regulation) as well as tax and subsidize goods with spillovers and free riders for which ANY PERSON will be eligible at one point. That means education and pensions, but not subsidies to farmers, females or financiers.

4 Sep 2012

Tuesday funnies

I was reminded (via CD) of several US Gov't failures recently. The first was the (now discontinued) program in which the US Mint would sell dollar coins with "free" shipping. Many people used their credit cards to order coins that they returned immediately, while keeping the cash back or airline miles they got from their credit card companies. The Mint lost money on credit card fees and postage, of course.

But that's not a problem, right, if the USPS makes money on postage? Not exactly, since the USPS business model is so stuck in the past -- and a monopolistic mindset where they are begging people to use their useless services. Watch this useful parody:
If you want to see the future of the USPS, check out the privatized Dutch postal service. It sold post offices in 1993 and makes a profit (yes, a crazy word to put in the same paragraph as USPS).

Labor Day Bottom Line: You will have to work more if the government wastes your taxes.

Aguanomics discussions

The first show was... interesting. There was no video or audio discussion, but I answered typed questions on in-stream flows, opportunity costs, federal vs local control and... the difficulties of being handsome (from my dad :).

Watch it.

The next discussion -- hopefully with more attendees, questions and a guest speaker will be 11 Sep at 9:00 Pacific/18:00 Amsterdam (see the time in your time zone).

Feel free to email me interesting questions, stories, or if you want to make a guest presentation, debate a topic or suggest a speaker.

I'm planning to do this every week!

3 Sep 2012

In honor of Labor Day

Many people regret that schools do not teach important life skills -- such as how to manage money* -- that would make life easier (less labor!!). After several decades of managing my personal finances -- mostly with success but learning from failure -- I offer the following advice.**

  • It's better to be paid "less than you're worth" than be proudly unemployed.
  • If you think you can do the job, but they don't, then offer to work FREE a few days per week for a month. You will be busy (good) even as you look for other jobs; they can decide if they want to hire you. You may even be able to network inside the company.
  • Think long and hard before taking more money in exchange for a longer commute. Time is money.
  • Have savings so you can dump a shitty job. Happiness may be priceless, but you need to pay the rent.
  • Spend less than you make. That means reward yourself AFTER you get paid.
  • Remember that it's often easier to spend less than make more.
  • A tax rebate is YOUR money. It's not a gift. Put it in savings or pay off debt.
  • Try to avoid cars. They are expensive and separate you from humans. 
  • It's cheaper to pay for a health club membership than heart bypass surgery.
  • Invite friends to your house for drinks, not a bar. Cleaner floors, better serving sizes.
Savings and investment
  • Always keep $10,000 (or 6 months living expenses) in your savings, as security.
  • After that $10,000, allocate your money to cash/bonds and equities in proportion to your age, i.e., YEARS % in cash/bonds and  (100-YEARS) % in equities. If you're 30, then its 30% cash/bonds and 70% equities. As you age, you will have more cash/equities and lower variation in your portfolio.
  • Following Nassib Taleb's advice, invest in high risk (high return) equities, not a broad market index.
  • Don't buy individual shares. Buy low-fee indexed mutual funds. (I use vanguard.)
Housing and debt
  • Don't get into debt for anything except a house. School loans may be a necessary evil -- or just plain evil.
  • Remember that buying and renting often cost the same, since the value of tax deductions and/or equity appreciation are reflected in the house's price. 
  • That said, you get flexibility with a rental, stability with a house.
  • If you buy a house, then do so because you want a place to live, not as an investment.
  • Do not lend/borrow money from friends unless you're prepared to make it a gift.
Got other suggestions/ideas?

* as well as eating well and avoiding pregnancy!
** I'm not a financial adviser, etc. If you make money, buy me a beer. If you lose money, write it off as "education" :)