31 Jan 2013

Bakun dam and corruption in Malaysia

These stories were published in the Borneo Post. In the first, a local politician says that voters should give the ruling party a 2/3rds majority "to keep the nation united and on course" Voting for the opposition would destroy the nation, of course.

In the second, Mr. Wan Junaidi says that opposition leaders "bad-mouthing government... are seeking troubles for themselves and the country."

Remember that the Malaysian government imprisoned Anwar Ibrahim for several years on false charges, so "themselves" is no idle threat.*

Why does this matter?

The comments on "internal affairs" and "Tasmania Hydro" refer to the Bakun Dam in Sarawak, a dam that appears to have broken every record for terrible environmental, social and economic design, i.e., the dam flooded nearly 700km2 of tropical rainforest (the size of Singapore or 90% of New York City), displaced many indigenous peoples, and generates power for which there is no demand. Although I could not find a total cash cost for the dam, I expect it to be around $1 billion. Most of that money appears to have gone to the Malaysian construction mafia -- and probably to corrupt politicians.**

Why do I say corrupt? Who would spend $billions of public money on a project for which there is no demand? We know that these projects are for the benefit of special interests, not for the people of Sarawak or people of Malaysia (e.g., their education system is a mess).

Bottom Line: Malaysia is not going to "develop" while it quashes free speech and builds megafailure dams to nowhere that are all cost and no benefit.

* That's also why I am publishing this from Amsterdam.
** I can say the same about the US, and I have have have have have!

29 Jan 2013

Improving utility performance #pdftribute

Just over a year ago, I gave a talk, "creating utility competition via performance-focused insurance" that was based on this paper.

One of the editors of an IWA publication, Water Utility Management International, asked me to write a version that would be easier for his readers to understand. After a considerable delay, I gave them a shorter and crisper version.

The article was published about a month ago, but it came with this annoying note:
Please find attached your article from the December issue of Water Utility Management International. Please be aware that this should not be made available for download.
That was the first time I heard that my paper would cost $38 to download.

I was also a bit upset that they had typeset my wording (with little editing, no peer review and a few typos) and then turned it around for sale via an outlet that few water geeks have even heard of, let alone people in the wider world. Thirty-eight bucks basically means that NOBODY is going to read my article, so I asked WUMI for a change:
FYI, my policy on publications is the following:
  1. Either I publish for free but post the piece on my website
  2. Or I get paid and do not (unless given permission).
Since this is a case of (1), I posted it on my personal website and will send it to people who need to see these kinds of arguments.
To this, the editor replied:
(1) can apply, but it should be your text only, not the PDF we prepared.
Although I did not sign away my copyright and feel quite annoyed that WUMI has basically locked up my work in the PDF they prepared, I decided to take the high road. So I spent three hours (yes, that's how unproductive this system is) to prepare my own PDF (some words have slipped into different columns, but I fixed the typos).

So here's your free copy [pdf]:
Zetland, David (2012). Performance insurance: rewarding managers for better service. Water Utility Management International 7(4):13-16.

Abstract: Water utilities need to improve their performance in ways that are transparent and obvious to customers. David Zetland explains how performance insurance can improve outcomes for customers, ease the workload on regulators, and reward good managers.
FYI, you can download ALL my academic work and popular writing for free. Only my book will cost you ($10-20), and you can even read its first chapters [pdf] for free.*

Bottom Line: Authors want people to READ their words and debate their ideas. Authors can charge for access to their work, but publishers have no (moral) right to charge for access when authors do not want them to. Aaron Swartz was is right.

* As in beer [previous posts on open access], but I am VERY much into free speech :)

Aaron Swartz, RIP

Few of you have perhaps heard of Aaron Swartz, a "data liberator" who committed suicide three weeks ago at the age of 26. Swartz was one of the creators of RSS and worked on the WWW before we know what it was (yes, he was a prodigy).

I met him in late 2006 at a hactivist meeting in San Francico. He didn't work with me on my version of wikileaks, as he was busy with getting Reddit started, helped found Creative Commons, and releasing public documents from behind paywalls that had nothing do with information flow and everything to do with (unearned) monopoly rents.

Although Swartz struggled with depression, many have linked his suicide with an over-zealous prosecution more interested in enforcing (industry-written) laws against data sharing than jailing bankers for stealing billions. The scales of justice are truly unbalanced.

Bottom Line: I did not find any organized memorial in honor of Swartz, but others have suggested that academics freely release their work to the public, using the tag #pdftribute (see next post). Aaron would have agreed:

28 Jan 2013

Monday funnies

Capitalism at work :)

Speed blogging

  1. Ecosystem Marketplace is all excited about its report "detailing" $8 billion in ecosystem payments in 2012, but this Guardian article correctly draws attention to two problems: measuring the actual impact of these payments and keeping track of who benefits and who loses.

  2. In related news, there's an interesting series of reports on developing water markets. The webpage is VERY difficult to navigate, but here's the executive summary [pdf] with my [mostly critical] annotations. This was an expensive report, but it's missing a LOT of economics!

  3. I gave a talk on my chapter [pdf] on land and water grabs at the Lee Kwan Yew School of Public Policy in Singapore last week. Here are my slides [pdf] and a recording of the talk [mp3], which includes an interesting discussion on land grabs, corruption and development. This recent Guardian article describes grabs in Ethiopia, where the government is forcing people to leave land it's leasing to agribusinesses.

  4. Frank over at Water Channel has two interesting posts on informal institutions for managing irrigation and cooperating over water.

  5. "The Water Action Hub is an online platform designed to assist stakeholders to efficiently identify potential collaborators and engage with them in water-related collective action to improve water management in regions of critical strategic interest."
H/Ts to SH and DR

25 Jan 2013

Friday party!

This [NSFW = nudity] PPS may help people prioritize their water use and reduce waste.

(FYI, I think it's more funny than sexist. IMO, the politically correct crowd has aligned themselves rather too closely with mullahs who want to kill blasphemers for cartoons. The right to free speech means that someone, somewhere, will always be offended, but that's the cost of open debate and social progress. Your thoughts?)

Yes, it's time for water markets

DL sent me this article on drought in the US. I put a few "fear" words in bold:
Water use is already tightly curtailed in many states. Years of low rainfall and high heat - last year was the hottest on record for the United States, according to the National Oceanic and Atmospheric Administration - have diminished surface waters even as population and water demand expand.

As well, agricultural and oil and gas interests are pumping the precious commodity from underground aquifers at a pace that often cannot be matched by natural replenishment.

"Water has been viewed as a basic commodity, a basic right," said Les Lampe, a water expert with consultancy Black & Veatch. "You turn on the tap and water comes out and you don't pay very much for it. That has to change."

Farmers are feeling the pain of water shortages most acutely. After multibillion-dollar crop and livestock losses tied to last year's drought, they fear more losses are coming...

State officials said this month that without enough rain by spring, rice farmers could be completely cut off from irrigation, jeopardizing about 2 percent of the U.S. crop and about $1 billion for the Texas economy.

"We've got a shortage of water," said Ronald Gertson, a rice grower and chairman of the Colorado Water Issues Committee. "People are going to be both hungry and thirsty before they wake up to this problem."
Notice that you do not get these words when it comes to talking about commodities that are allocated in markets (oil, housing, ice cream, etc.) because the goods are allocated by high bidders, not by politicians. That's what we need to do with water, if we want to allocate it. Leaving to local politicians or -- heaven forbid! -- Congress is MOST likely to leave us hungry and thirsty.

Bottom Line: Allocate economic water (i.e., NOT environmental flows) in markets and stop wasting time with lobbying. All-in-auctions [pdf] will do, of course :)

24 Jan 2013

Megaprojects and Risk -- the review

Addendum (5 Jun 2015): An econtalk podcast with Flyvbjerg

I first saw this book in the hands of a student in my policy analysis class several years ago, and I regret that I waited so long to read it.

Now I have, and I think that many of you will want to read it as well.

The book, authored by Flyvbjerg, Bruzelius and Rothengatter (FBR), is subtitled "an anatomy of ambition" but its subtitle should be "an examination of why big transportation projects go wrong, how to make them right, and why these ideas apply to all large infrastructure projects," but the marketing department probably favored snappy over accurate.

The main point that FBR make, in clear and painful detail, is that megaprojects (projects that have big financial, economic, social and/or environmental impacts) usually fail because their proponents and constructors do not bear the risk of failure when estimating the cost of constructing the project or demand for its services once completed. The risk is instead carried by taxpayers who end up paying more than expected to fund a project that's less useful than promised.

If that sounds familiar (it reminds me of Cadillac Desert, desalination in San Diego, the Colorado Aqueduct, Aridzona's CAP, the Delta "Conveyance", Coyote's critiques of light rail, and chapter 8 of my book), then you will STILL gain something by reading this book due to its clear analysis, useful case studies and forthright declaration of how to prevent failures in the future.

Here are the notes I made while reading:
  1. FBR make the important point that "dialogue" cannot overcome power. It's therefore necessary to change rules to improve accountability (they recommend that private money fund at least one-third of a project's cost, with no government guarantee of repayment in the event of poor performance).
  2. Many projects are "born in sin" - with unrealistic forecasts of costs and revenues. They should not be built, but developers often get paid their full fee when they are. That's no way to bring discipline to this arena.
  3. A huge share of environmental impact reports are carried out when the project is already going forward, do not contain adequate baseline data (to make it possible to understand actual impacts) and are very rarely updated after project completion (this is a common problem; development aid projects are not often subject to performance reviews).
  4. It's not unusual to ignore new costs that will result from reducing environmental impacts -- costs that may push the benefit:cost ratio below 1.0!
  5. Many simulations of futures follow a EGAP protocol (Everything Goes According to Plan) when it would be much more useful and enlightening to consider Worst Case or MLD (Most Likely Development) scenarios.
  6. Such myopia is expected when the developer does the simulation for a government that is the proponent of a project that it's ALSO supposed to regulate and oversee.
  7. To improve accountability, FBR propose accountability,* performance (not technology) specifications, clearly defined regulations and risk-bearing, and involving (private) risk capital.
  8. If private capital is not willing to invest without guarantees,THEN MAYBE THE PROJECT SUCKS.
  9. The book's full of checklists and flowcharts. It could be used as a cookbook for analyzing megaprojects. I wonder if anyone at the Bureau of Reclamation has a copy?
  10. FBR think that private or state companies can build megaprojects, but they need to do so as risk-carrying, stand-alone companies that are supervised by the government.
  11. Never underestimate the potential manipulation of rent-seeking politicians and/or special interests (developers, construction companies, transport companies, et al.)
Bottom Line: I give this book FIVE STARS. It should be used to vet, design and audit every project using public money or affecting public resources. We'd have far fewer white elephants if it was!

* Dan Ariely (review coming!) has found that transparency can result in MORE inaccuracy, as when the scrutinized estimator increases the fudge factor (e.g., +20 percent to cost) in the knowledge that it will be bargained down, but then makes more when it's not bargained down enough (e.g., -10 percent to cost). FBR's transparency is less vulnerable to this problem as they propose posting all documents in public AND allowing peer review, but this transparency will only really work if there's some SERIOUS exploration of numbers and estimates.

23 Jan 2013

Old guys and young girls in Philippines

Addendum (25 Jan 2018): This post is about relationships but it can also describe dynamics present in prostitution, sex trafficking and sex tourism. Learn more on those issues here and here. Report suspicious situations here.

Addendum (26 Aug 2016): I'm locking comments on this post, as most of the new comments are spam for love wizards (!). Enjoy reading the existing 100+ comments!

Addendum (17 March 2016): This post has received lots of outside attention and has very little to do with water (although it does have a LOT to do with "market failure," i.e., foreign men with relatively more economic power than they have at home). I approve most comments (no more "get my husband back services") as it seems fair to allow this complex conversation to continue in public. -- David

Not her dad
I just visited Philippines for the first time and loved the country and its people. One thing that stood out (vs., e.g, Malaysia, Vietnam, et al.) was the visibility of "couples" composed of (usually) old white foreign guys and young Filippinas.

I asked a friend who had lived in Philippines what he thought, and his answer is worth sharing:

"Rather than one single explanation, I will throw out several:

Long colonial history, including long acceptance of international relationships, e.g., Macarthur and his mistress.

English proficiency and Catholic background equals desirability for many Western guys, who find them easier to relate to than Thai or Vietnamese or Indo or other Asian girlfriends

Many websites, both free and pay, that cater to Filipinas and foreign hookups of all kinds. These include a huge mix of people -- some maybe in it for the money, some for love, some to try something new.

Overpopulation + Poverty equals families eager to gain some extra financial support from their daughters' boyfriends/husbands, and hence encouraging of hookups of all kinds.

An entrenched and tolerated, if challenged sex industry. The biggest center was Angeles City, now apparently a scary ghost town of struggling prostitutes following the closure of US military bases in the 90s. But Manila, Cebu, and other cities all have many sex districts, and you've probably seen hourly hotel (SOGO) ads everywhere.

Early-age sexual activity, poor sex ed, and the political grip of the Catholic Church means low condom use. I suppose some guys like this kind of thing. It does mean that young single mothers are prevalent in all social classes, as abortion is outlawed in the Constitution, while dodgy black market pharmaceutical abortifacients and dangerous magical-herbal concoctions are sold in kiosks outside of churches.

Retirement haven: a lot of older expats want to settle down again, start a new family or small business (ex: dive shop), and buy some land. Only Phil nationals can legally own land. Of course there are ways around this (lawyers can arrange partnerships controlled by foreigners, with partners on paper who don't know each other), but some guys prefer to simply use their wives names. Of course this has its own dangers...

When I first traveled to the Phils as a mid-20s single male, everywhere I went in Palawan, locals of all ages and genders asked me why I was traveling alone, when I could just go pick up a college girl who was looking for extra cash during her winter break. I met a lot of couples like that -- their arrangements seemed pretty flex. Guy paid for everything, bought small gifts and maybe some gear, and likely made a cash gift at the end. Sounds like a lot of marriages really, just briefer... They usually looked really bored during dinner, with nothing to talk about.

When I lived in Manila, I dated interesting, articulate, beautiful, well-educated women. We met the same way people meet in the US -- through friends, at legit bars, online, in the supermarket, etc. In general, women were far easier to approach than in the US, and I usually felt welcome when traveling with them. Although, when I traveled with my ex (an upper class, college-educated Manileno who I was with for 2 years) I'd occasionally see holier-than-thou tourists turning up their noses at us in silly judgment. Taught me to be more tolerant myself."

22 Jan 2013

Tuesday funnies

I'm sick (can you get a runny nose and sore throat form too much pollution?), and this is relevant (and slightly funny):

(and why sanitizer is not so clean)

An expensive groundwater governance failure

GS sent me this report on groundwater abuse in Spain [pdf]. (It reminds me of Kern County Water Bank shenanigans in California). Here's the executive summary:

"Using satellite images, we have analyzed how water rights were sold in the Upper Guadiana Basin, where the “Las Tablas de Daimiel” National Park is located, inside the PEAG (Plan Especial Alto Guadiana), that aimed at recovering the aquifer with different measures, one of which was the bank. 13,3 Mm3 of water rights were, in theory, bought. But we found out that most (83%, equivalent to 11,3 Mm3) of the water rights were not being used on the 5 years before the sale (against current ruling –- that states water has to be used on the 3 years previous to the sale -- and common sense)-that is what we call “paper rights” not real rights-, some continued to be used after the rights where sold (almost half of that 17% that was being used before the sale, equivalent to 0,9 Mm3 out of the 2 Mm3 that were actually being used), and even rights were bought from fields that belong to the hydraulic public domain (corresponding to 212 ha). To make things worse, 95% of the water rights bought were located outside the priority area stated in the PEAG plan.

In addition, it was intended that 70% of the water rights bought would be used to ensure that water remains in the aquifer, to contribute to its recovery, and 30% would be used to legalize illegal boreholes. Reality was that, due to the pressures from the Regional Government of Castilla-La Mancha, all of the water rights (real or paper) are committed to legalize illegal boreholes, and legalization process has already started. On top of that, the Regional Government got an extra 1,5 Mm3 for legalizations, “invented” water that does not exist, since the aquifer is heavily overexploited and, despite the miraculously recovery thanks to the heavy rains in 2010, it is still missing 800Mm3 to be in good quantitative status. That fact puts in risk protected areas (Tablas de Daimiel National Park, mentioned above, Lagunas de Ruidera, Ojos del Guadiana…) and also the water supply to many villages in the area, that used to get the water from the aquifer but that see how some of their boreholes are running dry in dry years, and many of them have such a high level of nitrates they should not be used for drinking (nitrates concentration comes from the intensive agriculture being irrigated with the illegal boreholes, and gets worse when the levels of the water table drop).

What the water bank has done, we conclude, is to consolidate water rights and increase the pressure on the aquifer, as well as the vulnerability of the area to climate change. And that has been done with 66 millions of Euros of public money."

21 Jan 2013

Speed blogging

  1. Climate change: Jakarta is underwater, drought in Brazil's Amazon, "unprecedented heat" in Australia, too much cold in India, and black soot from diesel and wood fire cooking is responsible for a LOT of global warming (luckily, it's easier to reduce than CO2).

  2. Disaster! Russia is overhauling its tariff system to make it uniform across the country (terrible idea! postage stamp prices are a disaster for efficiency) but also reserves the right to change those prices for political reasons.

  3. Wow! New Dehli's "Green Court" has halted construction due to unsustainable use of groundwater.

  4. Big implications: Scientists have proven that Canadian oil sands production is polluting nearby AND distant lakes. Industry can no longer claim pollution is from "natural sources." In related (sad) news, the US EPA has been caught favoring a fracking polluter.

18 Jan 2013

Friday party!

Who says we can't innovate?

Crisis? What crisis?

In the world of political hyperbole, we have to deal with fake wars and cliffs, but I am most annoyed by the overuse of "crisis", so I asked people on my mailing list (subscribe here) for some help:
If we're constantly talking about a "water crisis" (a phrase I hate), then why are we not SOLVING that crisis, especially when it seems rather obvious, to me, that most of it is due to a failure to rein in demand. Is it as simple as the beneficiaries of the crisis blocking change? Tell me.
I got some great responses, i.e., MM wrote:
Ah, crises…water is not alone! In a time when we have enormous amounts of available information (and mis/disinformation) on almost every possible topic, and where we have little time/inclination to personally try to separate the wheat from the chaff for more than a few topics, the competition for public/political attention and resources has led experts/would-be opinion leaders in almost any field you can choose to identify the major issues in their fields as ‘crises’. The word ‘crisis’ has become loud static in my life... As a philosopher friend once told me, “When I have too much ‘noise’ in my life, it becomes increasingly difficult to separate the ‘urgent’ from the ‘important’.”
And MV wrote:
I would call it a people crisis, as any crisis is not caused by water but by people.
What do YOU think?

17 Jan 2013

The (Honest) Truth About Dishonesty -- the review

The (Honest) Truth About Dishonesty: How We Lie to Everyone---Especially Ourselves is the second book that I've read by Dan Ariely [Predicatably Irrational], and it's similarly enlightening.*

The main focus of this book -- as you can see from the title -- is dishonesty, an area which Ariely has been exploring for several years. I'm guessing that this line of research grew out of his broader interest in the difference between how we behave (revealed preference, or RP) what we profess (stated preference, or SP). This research agenda is similar to mine, as RP-SP divergences loom large in many water sector topics (everything from environmental flows to human rights). Most of those topics are interesting because success and failure depend on decisions made by people who have the freedom to favor themselves over those who depend on them (I explore this "principal-agent problem" here and here).

But Dan states his purpose differently, i.e., he proposes to explain why we are not often dishonest in terms of a rational calculation of costs and benefits (as the economist Gary Becker proposed) but in terms of continuous small fudges made by many people. The socially-relevant dimension of dishonesty, in other words, is not about car thieves and purse snatchers but people taking pencils from the office or stock brokers thinking their fees are justified. The enemy, in other words, is us -- or as he states on page 22:**
Essentially, we cheat up to the level that allows us to retain our self-image as reasonably honest individuals.
From these words, you may be able to guess that this book explores how we create our self-image and how to change our perception of it.***

So that's a LOT of context and summary. Here are some particular notes:
  1. People will steal more, the more "distant" the object is from money, i.e., pencils are easier than petty cash and stock options are easier than salary.
  2. People who are given gifts are more likely to "objectively" favor the person/opinion of the giver. This is relevant to discussion of everything from political lobbying to "free samples."
  3. That said, it's not easy to eliminate conflicts of interest without inadvertently increasing other costs (lobbying has SOME use).
  4. We make worse decisions and are less honest when we are tired, hungry, etc.
  5. People who wear counterfeit (to show false prosperity) may also be less honest (theft, infidelity, etc.) and less trusting (thinking that you're the same).
  6. The "why-the-hell-not?" effect of eating too much after a small lapse in your diet, taking more drugs once you've tried a few or breaking more laws once you've broken one is real and harmful to you and others.
  7. We are more likely to cheat when someone in our social group does. (I read about the "culture" of cheating years ago, and this finding is similar. We pay attention to social cues.) That said, people in many countries cheat at similar levels in NON-cultural settings; local versions of cheating (infidelity, running red lights, etc.) will still vary.
  8. Ariely (posing as a student) paid for papers from "essay mills" that were crap. When he complained, they threatened to turn him in for cheating!
  9. People are more dishonest when their cheating can help others. This result has something to do with our ability to rationalize that it's not for us, but them (or our ability to "blame them" for the cheating).
  10. Most religions have ways to reduce cheating (confession, starting the new year clean, the Haj, etc.) -- and that's no accident.
Bottom Line: I give this book FIVE STARS for it's fascinating exploration of how we lie to ourselves (forget rational homo-economicus), the impacts of those lies and how to reduce them. Anyone interested in how humans work with "discretion" should read this book.
* I'm also reading Kahneman's Thinking Fast and Slow, which covers FAR more material at length. Review to come.

** I am reviewing the Kindle edition, and I don't think I'll be buying many more hard copies. I am traveling and it's MUCH easier to download and mark up an e-book than find or carry around a hard copy (I have eight books on my iPad). I was going to send the Nile book to someone in the US but didn't, since postage would have been $50! It's time for you to start looking at e-books if you are not already.

*** Adam Smith explored "fair" behavior in his 1759 Theory of Moral Sentiments by considering how actions would change if we looked at ourselves from an outsider's perspective (a variation on "what would your mother think?")

16 Jan 2013

My talk on land/water grabs in Singapore

...is at 12:15 on 23 Jan. Here's the promo:

Pigouvian taxes do NOT produce deadweight losses

For my final exam question, I asked students to compare the pros and cons of cap and trade and Pigouvian taxes for reducing the negative externality from pollution. Many students gave useful answers, but many also made two big mistakes.

The first was to claim that an advantage was their propensity to reduce consumption (an excellent example of rewriting the question as the answer :).

The other was simultaneously frustrating and enlightening to me. Many students claimed that Pigouvian taxes created a deadweight loss, i.e., the tax would reduce surplus-generating activity.* That statement is true, in general, of fiscal taxes designed to generate revenue (e.g., income, property or expenditure taxes) that the government would spend elsewhere,** but it's NOT true of Pigouvian taxes that are designed to reduce behavior that generates harm that is not reflected in the price of the good being taxed, e.g., taxes on cigarettes to pay for additional health costs or taxes on fuels to reduce and/or ameliorate the costs of pollution.***

The trouble that my students encountered -- and many teachers of economics fail to clarify -- is that fiscal taxes distort prices to generate revenue while Pigouvian taxes correct prices to affect behavior. (We explore the tension between these two goals in this paper on groundwater taxes.)

Bottom Line: We use the same word ("tax") to refer to two different policy instruments. Fiscal taxes generate revenue with some reduction in efficiency; Pigouvian taxes generate revenue as they improve efficiency. (That's why they are called win-win, but don't tell that to the people creating the pollution!)

* Miscalibrated taxes of all types create deadweight losses from being set at the wrong level, but those losses are not present in theory.

** Deadweight losses will be lowest when behavior changes by the smallest amount, i.e., it's best to tax the most inelastic behavior.

*** For more on why politicians prefer command and control over Pigouvian taxes, read this paper [pdf] by Buchanan and Tullock. Buchanan just died; he and Tullock are responsible for much of Public Choice theory, i.e., the idea that politicians and bureaucrats may serve themselves, not the public interest. Here's my review of their brilliant book on constitutions and laws.

15 Jan 2013

The impacts of cheap energy

Gasoline and diesel are subsidized in Malaysia and Brunei (where you can buy 16 liters -- over 4 gallons -- of diesel for the same price as an espresso; see photo).

The implications of cheap prices are obvious -- people use more fuel -- but they manifest in interesting ways.

First, you have the fact that many people sit in their cars, engines running to keep the AC on, reading books, talking or sleeping.

Second, Malay gas stations try to maximize their sales volume, since the government monopoly sells them fuel at a fixed cost (RM 1.73) and also controls sales price (RM 1.80 per liter is EUR0.45/liter or $2.23/gal).

Third, prices do not vary, so people neither shop around for lower prices nor pay attention to how much fuel they use -- their price elasticity, in other words, is zero. This makes any attempts to increase prices (a political decision) very controversial, since a change in price is likely to directly reduce income instead of modify quantity demanded.

(I'll get to cheap hydropower and deforestation after I've left Malaysia.)

Bottom Line: Political control of gas prices, in other words, has converted fuel from a private, economic good into a common pool, political good that is leads to fiscal and energy waste.

14 Jan 2013

Monday funnies

Some people are getting too excited about crowdsourcing... [click to see full size]

Who does this help?

The Malaysian government tries to control the price of several "strategic" commodities ("boneless imported mutton excluding thighs"?), a practice that does not benefit merchants and probably does not benefit consumers (when those commodities end up out of stock). I DO see an advantage for the 3,400 enforcement officers and monitoring personnel charged with sticking their noses into other people's business. What a waste.

11 Jan 2013

Friday party!

This (via MV) may or may not be real, but it's good:

Speed blogging

iWater! (Alona Beach, PH)
  1. What would be the impact of SoCal losing access to Delta water? A 6+ percent drop in GDP and employment (Table ES-4), UNLESS customers are allowed to adjust ("Simultaneous Resilience"), in which case the cost drops to about nothing (Table 11). I'm annoyed that the authors buried this result, but it WAS prepared for the LA Country Economic Development Corporation (hint).

  2. California’s Water Market, By the Numbers: Update 2012 [pdf]

  3. Here's the summary report [pdf] for the EA/Water UK Tariff Workshop where I spoke in November [previous post with slides and audio].

  4. Here's my post on water, energy and the economy over at the Growing Blue website. As usual, I think the water-energy nexus is irrelevant.

  5. Achieving Financial Sustainability and Recovering Costs in Bank Financed Water Supply and Sanitation and Irrigation Projects has an interesting description of evolving attitudes towards finance, but I still think there's no role for direct subsidies to water users, i.e., aim for full cost recovery (including scarcity pricing) and directly transfer cash to subsidize politically-important groups.

H/T to BB

10 Jan 2013

Nile River Basin -- the review

The Nile River Basin: Water, Agriculture, Governance and Livelihood is edited by Awulachew, Smakhtin, Molden and Peden. The 316pp, $135 book has 15 chapters written by 50+ authors. The book is, in other words, a compilation of papers written for three overlapping projects for evaluating the current situation and potential future scenarios for the ten countries that share water in the Nile Basin (NB).[1]

As many of you know, the biggest problem in the NB is the current use of water, with Sudan and Egypt claiming most of the water for their own irrigated agriculture (drinking water and water quality are smaller problems that do not have significant transboundary components). In a reverse of the typical norm of power-politics (e.g., China and the Mekong), these downstream countries have claimed -- with success so far -- that they are the only ones entitled to NB water. That situation is about to change, as Ethiopia and other countries are now building dams that will hold and use water from the Nile -- sometimes for hydropower (meaning a low net reduction of flows due to evaporation behind reservoirs) or for irrigation. This latter use, according to the Egyptians, may increase regional tensions by reducing the water that Egyptian farmers have seen as their right since Aswan High Dam (AHD) went into operation in 1970.

I read this book with great interest, since Cornelia and I are writing an analysis of the costs and benefits of AHD. One crucial factor that has been missed by most is the way that AHD made it easy to direct hydropower, irrigation and fishery resources to select beneficiaries (e.g., the military) at the same time as it reduced access to those resources to the majority (e.g., the poor). More to come.

So this book comes at an opportune time, as it's important for both insiders and outsiders to understand what is going on in the NB and what potential actions and futures are possible.

This book delivers partial answers to both sides of this question, falling short mainly due to a lack of integration among chapters (a common problem with collections of papers) and failure to give a full picture of all relevant topics across all relevant places.[2] The book, instead, hits some topics in some places, which makes it hard to see the larger picture or know if the presented material is more or less important than the missing material.

But this figure underlines the basic fact: precipitation less evaporation leaves most of the NB in deficit, and institutions for managing water in the NB -- institutions that may have been established in a time of relative water abundance -- may not be able to cope with scarcity within countries or allocating transboundary scarcity.

Here are my marginal notes:
  1. Many chapters offer prescriptions ("should do") that sound nice, but the major problem is getting these ideas implemented. Nowhere in the 15 chapters did I see a discussion of HOW to get ideas implemented, e.g., how to share Nile water among ten countries! It's common to read "these ideas will require novel levels of transboundary cooperation." Such cooperation between, e.g., Sudan and Ethiopia are less likely than cooperation between the US and Mexico.
  2. Authors often apply various academic techniques to analyzing incomplete and imperfect data in relationships that may be mis-specified. That said, they establish a baseline for improvement in terms of data collection, analysis and feedback. 
  3. Chapters vary in quality. The worst are full of wish lists, non sequiturs, and unsubstantiated conclusions.[3]
  4. Technical chapters (on groundwater, soil erosion, etc.) provide useful information that is neither necessary nor sufficient for sustainability in the Nile Basin. (Locals can manage well, without knowing very much. It's outsiders that cause problems with policies and/or exploitation.)
  5. If you didn't know already, irrigated agriculture is not the only path to prosperity. Rainfed agriculture and pastured livestock offer relative and absolute advantages, but those sources are not as easy for central governments to understand or corrupt elites to control.
  6. Johnson's chapter 5 ("Availability of water for agriculture in the Nile Basin") was excellent and informative. She points out that Egypt is already using more than its quantified rights (even assuming you acknowledge them!)
  7. The chapters on governance are better at describing messy administrative structures than at highlighting failures, costs or paths to reform. I'd like to see some aid agencies tie their money to results instead of funding another Ministry of This or That.
  8. Ethiopian farmers are willing to pay to preserve the environment (PES), but only 1/1,000 of the cost proposed by the Ministry of Water Resources. That's not going to lead anywhere.
  9. The chapters based on simulations and models were worthless and unrealistic. I asked myself, many times, HOW are you going to get that result in reality?
Bottom Line: I give this book THREE stars for people engaged in research in this area. For others, I suggest googling for free academic papers on water, land, power and agriculture in the Nile Basin.

[1] I do not understand why this book -- an output of CGIAR research -- is not available for free download. Routledge's price is FAR too high to promote access to these materials. I would not have bought it (I had a review copy), and it's NOT WORTH $135 to individuals. It will be sold to libraries and government ministries. Maybe it will be read.

[2] This same critique applies to the book on Land Grabs in Africa in which one of my chapters appears.

[3] My favorite typo was "Discussions and concussions" (probably pretty accurate for some ideas :), but there were mistakes in emphasizing GDP (over GDP per capita), assuming that a large economy made investments in agriculture profitable, concluding that "classified wetland" was synonymous with area of environmental vulnerability, etc.

9 Jan 2013

Who to blame?

Guillermo Donoso posted this image on his Tumblr account, carrying forward the caption "this is a ridiculously powerful picture."

It is also a misleading picture (GD agrees), since the most common reason that the poor lack access to water is NOT a businessman who "owns" the water, but a bureaucrat or politician who has -- though negligence or corruption -- failed to allow water to flow to those most in need, and most willing to pay. (I covered this topic in my paper on water and human rights, which I am now revising.)

Bottom Line: Businessmen do NOT benefit from dead customers but profits, and it's more profitable to provide good water service to people. It's even BETTER when there's competition to provide those services, but that's not always easy.*

* We ran low on fuel while riding in the middle of nowhere in the Philippines. We we arrived at a "gas station," the price of gas was only 3-4 percent higher than the city prices. Why? Because that "station" was a guy who sold gas by the liter in refilled Coke bottles. He couldn't charge more because his neighbor could "start a gas station" in a day. This unregulated outcome was good for consumers and sellers.

8 Jan 2013

Question of the week

What's a (recent) great idea that did NOT originate in the "West"?

M-Pesa, e.g., allows people to carry and transfer money with their phones. It originated in Kenya.

7 Jan 2013

Monday funnies

In the Philippines, you have Spam choices...

Anything but water

  1. Bad incentives I: "Electric-car owners in Washington will be hit with $100 fee" because the state government wants to maintain revenues that are falling due to lower gas consumption.

  2. Bad incentives II: California's carbon auction was a "success" because one company bid for double the available permits.

  3. A good rant/summary of Facebook's continued abuse of "social" (see image at right, setting my posts to "public" instead of "friends" as a default. Oh, and their way of generating money -- selling access to your email box -- falls under the "evil FB" scenario I outlined 30 months ago. I still have a FB account, but its future is doomed.

  4. We are using local SIM cards in Asia. It costs $3-4 to get a phone number and credits for calling and texting. This makes it VERY easy to arrange hotels and taxis while on the go (getting a jump on walk ins). This "just in time" booking system should improve efficiency for travelers and vendors. Oh, and they also make it easier to stay in touch with random people you meet.

  5. Russ does a great interview with an organic (capitalist) farmer.

4 Jan 2013

Friday party!

Gangnam Style hit one billion views on YouTube. I'd like to take credit, but maybe these kids I filmed in Manila deserve it?

Anything but water

  1. How to do development aid right (give directly) and wrong (pay for bureaucrats)

  2. I enjoyed this econtalk on makers, and their point on web innovation (a move from parallel reinventing the wheel to adding onto each others' shoulders) is important. Academics need to do the same (e.g., blogs or wikis) instead of duplicating and failing to reconcile their ideas in too many journals.

  3. Does "culture" keep predatory individuals and governments in check? Seems to be yes.

  4. A great infographic on climate change and fossil fuel use.

  5. Ronald Coase (and partners) are trying to make economics more realistic (useful). Hear hear!
H/T to MGC

3 Jan 2013

Speed blogging

  1. "International Water Cooperation and Conflict: A New Event Dataset" ...and the news is good.

  2. "Antibiotic-Resistant Genes Reported in Six Rivers in Eastern China" ...and the news is bad.

  3. A good post discussing the impact of dams on the Mekong... and the attempt to engage locals in their development. (I still think that there's too much corruption, i.e., Thai money for dams in Laos that will screw over the Cambodians.)

  4. Jay Lund has a funny post on how engineers see California's water problems.

  5. Excellent discussion of the problems in getting good data on sanitation in Africa.

2 Jan 2013

New years funnies

These guys (H/T to MV) will be making new innovations and creating more jobs well into 2013:
The 3rd Annual Nigerian EMail Conference: "Write better emails. Make more moneys."

I am Mr. Laurent Mpeti Kabila, a senior assistant leader of the Revolutionary United Front of Sierra Leone.

I present to you an urgent and confidential request: I request your attendance at The 3rd Annual Nigerian EMail Conference. This is an excellent opportunity to meet your distinguished colleagues, learn new marketing techniques, and spend your hard-earned money. Attending this conference demands the highest trust, security and confidentiality between us.

[read more]

Question of the week

Welcome back from the holidays! Now let's get to work...
Many people talk about the water-energy nexus (or the water-energy-food-climate nexus).

Although these sectors are clearly connected, do you think that water and energy should be managed together or separately?