31 Jan 2014

Friday party!

Oh man.

Some things to read

I read a lot, for curiosity and fun. I get most of my stuff via email lists, The Browser and Reddit.

You may want to read these interesting articles:
  1. How to Start Thinking Like a Data Scientist -- useful for the "data-challenged"
  2. The Decay of American Political Institutions -- insightful and scary
  3. Snowden and Greenwald: The Men Who Leaked the Secrets -- two idealistic Americans who've read #2
  4. I'm an Undocumented Farm Worker -- and I'm just like you
  5. Polyester Airlines: Europe's Ryanair vs. America's Southwest -- Southwest is cuddly but less profitable
  6. The Ghostwriting Business... serves most politicians and celebrities (as it should?)
  7. Interview with Ha-Joon Chang, a Korean economist at Cambridge who values reality over math
  8. Time to leave GDP behind [pdf] -- suggestions for replacement and a nice complement to my chapter, "economists owe ecology an apology"
  9. Academics put some numbers behind "obvious" ideas: school vouchers help public school students in Florida [pdf], health subsidies help the poor and reduce infant deaths in Thailand [pdf] and low bidders in Italian procurement auctions often cost more in reality [pdf]
  10. "Does journalism have a future?" Fascinating, historical context

30 Jan 2014

Anything but water

Chemicals are natural, sometimes
  1. In all the drug war debates, people rarely mention the success of Portugal's decriminalization of ALL drugs. The DEA guys probably have a clue, which is why some of them are "betraying" the cause and going into the legal pot business

  2. Interesting report on the interaction of hipsters and the poor in Portland. It turns out well

  3. Lots of Brazilians want you to stay away during the World Cup because they want their politicians to spend money on schools and hospitals instead of showy stadiums

  4. Payback: Pollution from China affects western US states that import lots of stuff from China that was previously made in the US*

  5. Great analysis of Google's purchase of Nest (a maker of hi-tech thermostats), which will make it easier to advertise energy efficiency to Nest users (win-win, in the tradition of google ads; Facebook would probably post your stats in public)
H/T to RM

* I love free-trade, but the "offshoring pollution" hypothesis (production is moved to a country with lax environmental regulations while consumption continues as normal) is a weakness when poorer governments do not/cannot care about pollution to their citizens or neighbors.**

** Game over for sustainability/mitigating climate change: "In the 1950s and 1960s the world economy was transformed by the emergence of the American consumer. Now China seems poised to become the next consumption superpower." Consumption -- not quality of life -- is the biggest barrier to sustainability.***

*** Most important footnote, ever.

29 Jan 2014

Are we who we are?

Watch this and think about it

BOGGIE - NOUVEAU PARFUM (official music video) from THE SOUP on Vimeo.

Here's an English translation of the lyrics

Want some bias with that?

BB sent me this snippet, reporting on how fracking in Texas is saving water in the state. Going to the U of T website, I get this:
Even though exploration for natural gas requires significant water consumption in Texas, the new consumption is easily offset by the overall water efficiencies of electricity generation from natural gas. The researchers estimate that water saved by shifting a power plant from coal to natural gas is 25 to 50 times as great as the amount of water used in hydraulic fracturing to extract the natural gas. Natural gas also enhances drought resilience by providing so-called peaking plants to complement increasing wind generation, which doesn’t consume water.
Those fine thoughts, along with an estimate that every gallon used for fracking saves 33 gallons from burning coal for energy, misses two huge points:
  • About 1/3 of the state's power plants run on natural gas. Two-thirds use coal. The study estimated how much water would be consumed if all plants burned coal (which requires more water for cooling). That is a false assumption, in the face of environmental and financial costs for coal plants (no new coal plants are being built)
  • The study assumes that those plants can only get gas from Texas sources, which is false
Nice try, Bureau of Economic Geology (Office of Making Money from Mining)

Bottom Line: If you're short on water, then burn natural gas instead of coal -- and import gas from places that have enough water to do fracking without destroying ecosystems and the non-energy economy.*

*Another article notes how fracking has saved Ohio energy users from higher bills. I'm sure that the money is welcomed, but I guarantee that cheaper prices mean more energy consumed -- and a faster march towards 4 degree climate change. That "remote possibility of disaster" will probably happen now -- and the consequences will outweigh lower bills by about 100x.

28 Jan 2014

Sound familiar?

I'm editing my book now and came across these words, which I wrote back in November:
All farmers turn water into money, and farmers -- users of about 70-80 percent of the water in most countries -- have a lot to lose from water shortages. Those high stakes explain why farmers complain when they do not get enough water, why they are increasingly in conflict with cities, environmentalists and each other, and why they lobby for relaxed enforcement of rules that "threaten food security."
Maybe Governor Brown has fallen for their claims.*

* Yes, California farmers are facing "unprecedented" water shortages, etc., but who was foolish enough to guarantee -- or believe in -- 100 percent irrigation reliability?

H/T to RM

Moral hazard and poisoned water

Insurance companies invented the expression "moral hazard" to describe the risks that people take when others bear the cost of their folly, e.g., drivers who take more risks because they are insured for accident damage.

I've said, many times, that bureaucrats and politicians need to bear more risk from the actions they take (here's my application of this idea to water managers [pdf]), but the same rule applies to businesses, since they can easily cause harm (accidentally or not).

As an example, consider how Freedom Industries responded to numerous claims for compensation as a result of spilling toxic chemicals in the river supplying drinking water to West Virginia's capital. They declared bankruptcy.

I know that some people will blame "capitalism" for this spill and the lack of money to address its damages, but capitalism operates within a legal and political system. Regulators and politicians define how that system works, but those of West Virginia -- like those of the US government with the Deepwater Horizon spill -- may have been too business friendly is allowing the company to operate without significant accident insurance. (Oh, and there's the little problem of the leaking tank having last been inspected in 1991 or so.)

Bottom Line: Government regulators have a duty to ensure that businesses pay their costs, not just collect their benefits.

27 Jan 2014

Monday funnies

Do advertising algorithms know that "every occasion" leads to "all shapes and sizes"?

Speed blogging

  1. Global Water Forum has lots of free resources. Go get them -- and tell Paul if you have more to add!

  2. Floods cause more damage because people live in more dangerous areas. The US government is trying to reform subsidized flood insurance rates to reflect real risk, which is increasing, but politicians are also trying to slow down reforms "because people don't want to pay more for insurance." That's stupid, but the Brits have been experimenting with restoring ecosystems to reduce risk and damages. This paper applies the same ideas in Missouri

  3. We're getting more data on the impacts of fracking on water supplies, but regulators in US states are not collecting the data in systematic or compatible formats

  4. The (Conservative) Australian government is selling renting water back to farmers that it had bought to maintain environmental flows. Not a problem if the water is really surplus, but according to who?

  5. On the public record is back after 8 months of silence, blogging on California's drought and the various disappointing responses of state officials. I recommend that you follow OTPR if you want frequent updates and analysis (I'm tired of California's serial failure to address these issues -- since the 1930s, if not earlier.) OTPR's post on the need for communities to contribute to their own salvation is particularly good

  6. Next door in Nevada, we get the (non-ironic) news that a report funded by Southern Nevada Water Authority -- and conducted by CH2MHill and Black & Veatch -- has identified a dozen ways of augmenting water supplies.* I guess there are no engineering firms out there willing to study ways of NOT using water. Maybe Pat Mulroy will become a demand-side consultant in her retirement?
H/Ts to ER, TS and DV

* Oh, gosh, look at the summary page if you want to laugh (piping and desalinating ocean water to Vegas!?!) or cry (no discussion of costs? WTF?). Semi-related: Scientists want to send a flood down the Colorado to try to revive its delta (now 95 percent dead). The flood is on hold, now, because the drought means that people are desperate to use that water (over 100,000af) on their lawns :(

24 Jan 2014

Friday party!

Now THIS is how you ride the bike lane!

Speed blogging

  1. Me, on the radio (after a minute of folk music :), discussing "what does water scarcity mean to Canadians?" (30 min MP3)

  2. This thesis looks at the struggle to provide water to the poor in Bolivia

  3. An examination (and perhaps critique) of China's transboundary relations; Ethiopia, meanwhile, says "boo" to Egypt's claim of Nile waters

  4. Non-residential water consumers in England and Wales will be customers in 2017, when they get to choose their retail water provider (as is now the case in Scotland)

  5. DC's water utility is building a "500-year storm barrier" to protect its facilities from climate change. DC is on of "11 US cities" that may run out of water. The others are in CA(2), FL, GA, NE, OH, TX(3), UT, but I bet that the vulnerable list is very long.

  6. "Does the Endangered Species Act Preempt State Water Law (and property rights)?" Yes, for now

  7. The EU will now debate whether a human right to water should be enshrined in EU law and that public, not private companies should be responsible for providing water services. I suspect that no legislation will emerge from this debate, as the key to access is income support for the poor, not rights, and there's no evidence that the public sector is either more efficient nor cheaper than the private sector in the long run (short-run reductions in prices can reduce reliability). Related: Swedish public utilities price according to each other more than costs
H/Ts to DL and JV

23 Jan 2014

Are B-Corps a waste of time?

"B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency." They pursue what's often called the triple bottom line (people-planet-profit).

I've thought about these for awhile, and think they are vulnerable to wobbly vision, since they have to maximize three objectives. I'd prefer that they stuck with the old goal (maximize profits*) while leaving social and environmental targeting/constraints/management to individuals, non-profits and government.**

Even allowing for three goals, I have other questions:
  • It's not clear WHEN they are non-profits or just advertising virtue to make more profits
  • How does one weigh cash against other qualified outcomes?
  • What happens when stellar environmental performance comes with heavy cash losses?
  • Can "legacy industries" be B-Corps (e.g., tobacco firms) or are they not "progressive" enough?
  • What happens if activists set performance standards (e.g., vegan food only) that do not match social norms?
  • Is it harder to track three indicators and goals when their weights are in flux, socially?
  • Are B-Corps vulnerable to inertia, with "tradition" defended as socially optimal for workers?
  • Can defense or oil firms be B-Corps? If they give more to the environment than recycled shoe makers?
Bottom Line: You can have as many goals as you want, as long as you can keep them predictably balanced.

* Maximizing profits is not the explicit goal; serving shareholders is the obligation. Most shareholders want to maximize profits (Milton Friedman explained why), but they COULD agree to pursue B-Corp goals. Does that mean that the market has already spoken and found B-Corps lacking? Or have times changed? I doubt it when I look look at how so many people are eager to learn how to make easy money from the Wolf of Wall Street. (They line up to pay $1,000 to a convicted criminal and acknowledged liar and fraud who stole $100 million from people; ironic that they don't want to know an ex-felon responsible for a stolen car.)

** Fixed weights/ratios would return them to a single-optimization goal but leave them vulnerable to focussing on the wrong, rigid mix of weighted goals.

H/T to CD

22 Jan 2014

Going back to Cali!

Hey! I'm going to be in the Los Angeles-San Diego area from 10-15 February, to meet with water managers about WaterSavr (a safe-to-consume compound that reduces reservoir evaporation by 30% at a cost of $150/af) and give a talk here and there. Let me know if you're interested in evaporation, talks or have anything cool to do or see.

Anything but water

  1. Bravo! University of California Press has opened access (=free) to 700 ebooks. On the darker side, there are now over 400 "predatory" open access publishers. Be careful where you send your work!

  2. The good part of the US farm bill? Conservation easements. That's it. The other parts subsidize wasteful, unhealthy industrial agriculture. Scientists propose a tax on meat to reduce methane emissions; I'd support that, after a carbon tax. (Both are easy to implement, save political corruption.)

  3. An excellent podcast on teaching. I've started calling out students (no waiting for hands) in class

  4. The post-NSA internet will be hosted by us. Gas pipelines, on the other hand, may start to route gas with methods used to route data on the internet. Those algorithms will be useful if most renewables will be centralized

  5. An update on how the Colombians make and smuggle cocaine to the US, further illustrating the hopelessness of the war on Americans' desire to party. Forget drugs, how about counterfeit, smuggled truffles?
H/Ts to JR and JW

21 Jan 2014

Tuesday funnies

Meanwhile, in Fargo...

California's Official Drought

It's no real surprise, but it's also a little sad to hear all the usual hang-wringing without much of a discussion of how California needs to change its water management to reflect reality.

I commented on KCBS here (5 min MP3). I suggested that higher prices would be better than restrictions on certain uses (especially if politicians get to send people checks to rebate the excess revenue).[1] I also suggested that farmers need to stop overdrafting groundwater,[2] but it seems that the declaration -- which suspends environmental regulations on water use/transfers[3] -- may reward farmers' overdrafting as well as helping them do greater environmental harm by diverting low flows.

Bottom Line: Nobody ever says the Sahara is in drought.

  1. "Households that can compare their water use to neighborhood averages reduce average residential water use by 5 percent." That's great psychology but what about raising prices so people cut down on the 50 percent of their use that goes to outdoor irrigation?
  2. Fresno county has seen an 80 percent increase (hardly regulated) in well drilling. It's a race to the bottom![4]
  3. I've been in favor of streamlined regulations for "no-brainer" transfers for years, but those rules should be implemented as part of a deliberate process, not in the haste that can lead to mistakes.
  4. Westlands, which has no shortage of shameless, illogical irony, has this to say:
    This crisis demonstrates the need for workable solutions that address the immediate situation and long-term solution that will prevent these reoccurring droughts that disrupt our economy and harm our agriculture industry. We are seeing the failures of this generation to wisely manage our precious water resources and the consequences of these failures in the most painful of ways. Westlands remains committed to seek solutions by continuing to meet with public officials at all levels to assess what actions can be taken to provide immediate relief to mitigate the impacts of this disaster
    I'd suggest that the Bureau stop delivering water to Westlands, as their service contracts no doubt allow in cases of emergency. End of water, end of Westlands, and an end to the failure of the generation that brought Westlands into existence.
H/Ts to RM and DV

20 Jan 2014

Living the dream

Today, America honors Martin Luther King, a civil-rights leader famous for having a dream that little white and black boys and girls would grow up together, without concern for race.

King's dream is still distant in parts of the US, although greater opportunity and prosperity means that fewer blacks* suffer from the color of their skin. In other countries, race- and skin-based frictions, policies and politics are sometimes less and sometimes more common.

That's because racism is not natural. What's natural, to humans, is identifying with one group and -- from within that group -- denouncing, hating and attacking other groups. You can see those dynamics in sports, nationalism, industrial relations, advertising, and so on.

Our natural tendencies are not going to go away, but their harmful influence can be reduced by policies that are more inclusive than exclusive. This means discriminating in favor of the poor, the unemployed, the hungry or the vulnerable. It does not require a skin-color chart, last name look-up, or crucifix check. It also means reducing the role of the state in personal matters that have zero public dimension (gay; abortion) and ensuring that state services are not captured by special interests.**

Bottom Line: I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident, that all men are created equal"... and thus they shall not be treated according to their physical features but their status in life.

* American racial classifications (black, white, asian, etc.) are narrow enough to offend and subjective enough to confuse. They're a statistical, biological and social disaster even before considering the political games and conflict that they encourage.

** One reason, perhaps, for better relations (among races or migrants and citizens) in some countries may be a perception by the majority that "we've got ours" while the minority is not "taking our stuff." In the US, where politicians vie to bring home the bacon (money, jobs, prestige) to voters, there may be a perception that costs attributed to helping the weak actually mean less pork at home. This perception may be false, but the emotion around it is vivid.

17 Jan 2014

Friday party!

Storyboard P is an amazing dancer. Check out how he fills a hotel hallway:

Check this link for a performance on the Brooklyn Bridge and link to a New Yorker profile

Would you read this book?*

I'm working on the text for the back cover of my book, but I'm not sure if I'm being clear or if the text will attract readers.

Can you give me your opinion for changes or improvements?

Version 1:
Water scarcity leads to water shortages as excess heat leads to burns. The warning is clear to people who pay attention; the damage is regrettable to those who do not. Water scarcity is increasing with population, affluence and concern for the environment, and damaging shortages will result if we do not respond to those signals.

Living with Water Scarcity will help you understand the causes and costs of water scarcity at the same time as it suggests solutions suitable for your community's priorities and conditions. We must learn to live with scarcity, just as we've learned to live with each other. First, we set goals for social water uses and act to meet those goals. Second, we make rules for private water uses that are fair and objective. Third, we work together to balance those systems under changing conditions. Too little water, like too much heat, can be deadly, but neither shortages nor burns are inevitable. We can manage water as we manage heat -- as an essential, fun, and useful part of our lives.
Version 2:
Water scarcity is increasing with population, affluence and concern for the environment, and damaging shortages will result if we do not respond to those signals. Living with Water Scarcity will help you understand the causes and costs of water scarcity at the same time as it suggests solutions suitable to your community's conditions and priorities. We can live with scarcity as we live with each other -- by setting goals for social water uses, implementing rules to reconcile private water uses, and adjusting those goals and rules as conditions change. Too little water can be deadly, but shortages are not inevitable. We can manage water as an essential, fun, and useful part of our lives.
My bio:
David Zetland has worked on water issues for ten years as a consultant, speaker, teacher, and blogger at aguanomics.com. Since earning his PhD from UC Davis in 2008, he has lived in Washington DC, Berkeley, Amsterdam and Vancouver. He hopes that people implement these ideas so he can get back to baking bread.

* Many people decide to read a book based on its back cover.

16 Jan 2014

A little light makes a big difference

Vancouver, OTOH, has some unique ice :)

Addendum: It's sunny this week :)

Canadian guilds

In my short time here, I've noticed that it's harder [than in the US or NL] for people to work in some professions (engineers need to be members of their organization to call themselves "engineers"), restraint of trade in some businesses, and so on.

Suppliers who face less competition often say that they can provide more quality. A certified engineer will be paid more but she will have more resources to build safer bridges. A lack of competition in beer retailing -- or higher prices via tax -- saves lives (I'll stop bitching about alcohol taxes; I don't mind paying more if fewer people die).

I was lucky to be exempted from most of these rules when it came to my visa (PhD with US passport and offer letter can get a NAFTA professional visa on the border), but others are not so lucky. They cannot work; they cannot deliver value at a bargain to customers.

My point here is not to blast prudence in the name of competition. It's to call attention to the benefits and costs of a "guilded marketplace." Let's look at them from a "negative" perspective.

Less competition means...
  • Higher prices for consumers (but more profits -- "monopoly rents" -- to suppliers)
  • Less innovation and more "convention"
  • Less opportunity for the restless and more power to the establishment
More competition means...
  • Less consistency on methods, outcomes and safety
  • Greater search costs to find a supplier
  • Harder regulation and oversight
These bullets (feel free to add your own points) should help you see how the Canadian system may be seen as "cozy and responsible" by incumbents, the rich, and bureaucrats but "costly and staid" by innovators, the poor and outsiders.

Bottom Line: Costs and benefits depend on where you stand.

15 Jan 2014

Everyone has a vice

...and the philosophical version:

H/T to JT

Speed blogging

  1. The Water Integrity Network (WIN, part of Transparency International) has a "User’s guide on assessing water governance" [pdf] that provides tools to conduct comprehensive assessments that can inform effective policy processes. This guide complements WIN's Water Management Toolbox

  2. Jay Lund and Ellen Hanak list 10 changes to water management that Californians NEED to implement if they want to live in a viable state. I'd have emphasized "pay to play" to smackdown the something-for-nothing crowd (although I'd prefer the State's "excess revenue" go to monitoring and managing groundwater instead of a silly bullet-full-of-nobody train)

  3. Good news: a water-peace deal in the Middle East. Bad news: using desalination to fill the Dead Sea instead of restoring flow to the Jordan River

  4. The lawsuit between the San Diego County Water Authority and Metropolitan Water District of Southern California -- the subject of my dissertation -- should be resolved by the end of the month. SDCWA may pay less for water, or the same, but the suit won't fix the bigger issue of allocating water. My solution would, but both sides need to free their minds

  5. China follows Soviet bootsteps: its largest freshwater lake is drying up
H/T to RM

14 Jan 2014

Do the rich deserve THEIR subsidies?

Jon Stewart continues to point out American (Republican) hypocrisy (US CAN)

Taggers, graffiti and incentives

A few months ago, we did a neighborhood clean up a few km away from our place. I was eager and excited to get all the garbage under the freeway overpass, but also a little depressed that people so casually dumped their crap into common areas ("the tragedy of the assholes").

I was surprised to see so many empty spray cans (we picked up 40+) lying around, and that got me to thinking about potential ways to keep them out of the environment and in garbage cans:
  1. Put a deposit on cans of spray paint. New cans will come back; old cans will be found.*
  2. Shame "artists" and taggers by associating their work with litter instead of glamor (we mean you, Pinup!)
  3. from Vancouver
  4. Give taggers "territory" that they can paint and repaint without interference, as long as they keep it clean
from Medellin, Colombia
Bottom Line: Street artists want to fit in even as they stand out. Change their incentives if you want to change their actions.**

* I emailed the city of Vancouver with suggestion (1). They said "leave a message with engineering; it's not our jurisdiction," which was pretty unhelpful (a caring insider would FIND the person to handle it).

** Incentives to stop tagging, etc. (jail, fines) won't work because the POINT is to break rules and tag.

13 Jan 2014

Making aguanomics more useful

I've added a "translate this blog" function to the right side-bar. Now you can tell your non-English-reading friends about the blog!

I've also put a link at the top of the sidebar to my (ongoing) lectures on resource and environmental economics at Simon Fraser University. Watch and learn (and see me learn :)

Monday funnies

This clip from Yes Minister (1980) clarifies how Britain's EU membership is more about destruction than harmony:

Anything but water

To serve and protect? (Colombian police get US $)
  1. The post-9/11 militarization of police means that Americans are 8x more likely to be killed by police than terrorists (by another measure, more Americans have died from American police than have died in Iraq). Armed police may be forced to wear cameras in Britain; cameras reduced use of force AND complaints against police in Rialto, California. I recommend Google Glass for all police, with red flashing lights that could be turned off for sneaky stuff (those recordings would be reviewed by citizen overseers). Police would be even more eager if they got data access as well as fewer complaints

  2. In this podcast, a central banker argues for replacing "too big to fail" with "too small to save." Agreed!

  3. Company town: Anti-oil protestors arrested for terrorism in Oklahoma

  4. This podcast gets into the complications around climate science. I agree that the models may not be very accurate, but very few scientists debate the negative impact of climate change.* That's why it's a good idea to implement no brainer changes such as ending subsidies for fossil fuels that waste money, increase fuel consumption and favor the rich over the poor. A carbon tax would be the next step (especially compared to subsidies for biofuels, solar, etc.) because it would drive energy efficiency. This advice (end consumption subsidies; tax scarcity) also applies to water, where efficient management improves reliability in drought or abundance**

  5. Industrial pollution in China has "killed" 3.5 million ha -- an area the size of Belgium

* I haven't heard anyone say if atmospheric turbulence will increase. If so, if could make flying more dangerous. Your thoughts?

** This recent MIT study highlights the interactions of population growth, economic activity and climate change. Good water management necessary in developed AND developing countries.

H/T to RM and JW

10 Jan 2014

Friday party!

A guy in Cartagena was making bubbles for the kids...

A guy in North America, meanwhile, celebrated the cold

Time to learn some resource economics!

I'm teaching resource economics to undergrads at Simon Fraser University this semester.

My 362 class will apply basic microeconomics to natural resources and -- inevitably -- environmental goods.

I'm running my 482 class as a seminar in which the students will teach ME about resource issues.

Many students are from China, so we're going to get into issues in that country (eerie parallels with the US!).

You can watch YouTube videos of the lectures for 362 or play/download MP3s for either class.

If you want to get up to speed on these issues, then I recommend my videos (Really! My 2009 UC Berkeley class has 10,000+ views per lecture!). Be sure to ask questions via email or YouTube comments.

Students will be guest blogging here in March. That should be interesting!

9 Jan 2014

Anything but water

  1. The NSA scandals have generated a lot of stories:*
  2. Marginal revolution reviews the pros and cons of working as an academic economist. Far fewer PhDs are doing so -- despite a heavy bias towards the path of their advisers -- because the rewards (financial and professional) have weakened. This government economist describes the good life

  3. Related: Elsevier goes after academics who promote their research. Free information disrupts publisher profits but no water manager is going to pay $41.95 to read my paper on all-in-auctions. That's why I post all my papers on my site

  4. From my travel guide: "The divide between rich and poor in Colombia remains enormous. The wealthiest 10% of the country controls 45% of the country's wealth." In the US, the wealthiest 10% of the country controls 76% of the country's wealth. Scary, and somewhat depressing, given that politicians are part of that 10 percent. Calitalism will not fix this problem, so perhaps "socialist" Europe's idea of "free money" as a replacement for welfare and promoter of social harmony and individual progress will work? Not sure, but I'd rather be over there, where my taxes do not go to wars and millionaires.

  5. Coyote celebrates quitting a California county that strangled his business. He would sympathize with the "Garbage Warrior" -- a guy whose desire to build innovative housing in New Mexico was crushed by the planning department. Watch the documentary
Addendum: There's a movement to attack the NSA by its Achilles heel, i.e., cutting it off from water or energy supplies. Water would be easier, as it's under local political control. They have my blessing.

H/T to BP

8 Jan 2014

American energy independence

The fracking revolution has dramatically increased America's supply of oil and natural gas. Prices have dropped; industries and consumers are switching from coal and renewables to oil- and gas-powered machines and generators.

American industrial firms now enjoy a significant cost advantage over international competitors. American politicians claim that America is finally reaching the "dream" of energy independence. More Americans are working in energy-related -- and energy-intensive -- jobs. Consumers pay less to keep themselves warm and their laptops charged.

The big debate now is whether politicians will end the ban on American oil and gas exports. (Yes, there's a ban, but it hasn't mattered for decades, due to a consistent need to import oil.)

I'm guessing that the ban will not end, due to a baptists and bootlegger coalition of "consumer advocates" who like lower energy bills and industrial bosses who want to pay less (and make more) than their competition. The most likely reason they'll lose is that oil companies with better lobbying more money convince politicians that oil exports will help the country, reduce the trade deficit, and make big profits, but they may also lose to common sense.

A ban on exports keeps domestic energy cheap, but such a ban is harmful because:
  • People use more energy when it's cheap. That's not bad per se, but it's bad when long-run (3+years) efficiency and competativeness fall. Remember how bad US cars were in the 1970s before the Japanese kicked butt and disrupted the cozy industry?
  • Neighbors are unlikely to respond well to an ongoing ban. They may impose tariffs and taxes "to level the field" on US exports
  • It's not a great idea to use more energy if you worry about climate change
  • The US -- and the world -- needs integrated energy markets to minimize the impact of disruptions -- everything from battles in Nigeria to exploding rail cars in North Dakota
  • Energy firms focussing on "cheap" are less likely to spend the money it needs to prevent environmental pollution. Export profits will make it easier for them to produce without ruining the country
Bottom Line: The fracking revolution can help everyone if it's not turned into a subsidy for American industrial firms. Integrated, world energy markets help the US achieve real independence... from energy disruptions and inefficiency.

7 Jan 2014

Am I a prophet?

I don't think so, but BB sent this:
This bit from your first book caught my eye as I was re-reading it this morning after driving through the Westside on I-5, with Dust Bowl and water allocation cut signs posted everywhere by farmers:
As I write (in early 2011), California is experiencing its heaviest precipitation in years, Australian reservoirs are spilling excesses, and the Mississippi river is flooding nearby farmlands. Does that mean that Californians, Australians and other people in water-stressed areas can ignore this book? No. First, drought will probably return to California, as it has in the past. The tools for managing scarcity will be useful when that happens. Second, tools that handle droughts can also work with floods. Robust institutions can allocate dry land just as well as they allocate scarce water.
Someone forgot to bring the snowpack! (Photo by RM)
So drought is back in 2014: California faces driest year on record -- 10-20 percent of normal precip. -- and it's the third year of drought. The human impacts of drought are more interesting than the natural impacts because drought (a temporary lack of precipitation, relative to historic averages) exposes the weaknesses in systems designed for abundance (and mentalities of entitlement).

It's not just farmers who miss their free water.
The sad thing is that these problems and their flawed solutions can be avoided. Here's how:
  • Price retail water service so fixed revenues cover fixed costs (e.g., pipes and plants) and variable revenues cover variable costs (e.g., making desalinated water or pumping water). Add an additional surcharge when water is scarce (i.e., to reflect the of of using water now that you may want later). That surcharge can be rebated to customers (by meter, not according to use) if the utility has no deficits
  • Use markets to allocate irrigation water among farmers who cannot take more than sustainable volumes from surface or ground water
  • These two mechanisms (for retail and wholesale water) will ration demand to prevent shortages
  • Stop listening to people who promise something for nothing (free groundwater) or spend other people's money (water and money imports)
Bottom Line: Responsible water management means that users pay and shortages don't happen, drought or not.

H/Ts to SJ, DL, RM and DV

6 Jan 2014

Monday funnies

I'm not sure Moses would have got out of Egypt if he had to listen to feedback.

Speaking of feedback -- how do you like the new colors/banner on the blog?

Speed blogging

  1. An analysis of American farmers' "notorious exemption" from the Clean Water Act

  2. Here's a 45 minute video demonstration of all-in-auctions that I did with ecologists and economists in Oklahoma (more info on AiA here)

  3. Water scarcity will get worse in the future (climate change update). Some think "there's plenty of water," but they miss the economic and ecological costs of getting it

  4. BC Hydro's smart meters did not "materially" reduce household energy consumption. Two reasons: intraday price differences were too small and/or most people "waste" energy in their capital decisions (old furnace or new air conditioner), not in how they use those appliances. Water, ironically, may be more elastic. This post has good tips on understanding (and reducing) home energy use

  5. The Romans practiced "some for free, pay for more" water management (Salzman reviewed here). Sad that most water companies can't separate the two (i.e., average prices are too low)
H/T to JR

3 Jan 2014

Friday party!

This is pretty cool -- and a good example of how bands market themselves these days

Yes to marine protected areas

I've read about using "marine protected areas" (MPAs) to protect ecosystems and improve economic productivity in non-protected areas, but my recent trip to the Galapagos Islands drilled those ideas far deeper into my head.*

Surfing iguanas? We got those!
MPAs are protected from human activity, to allow species to exploit as many ecological niches as possible.** Their interactions develop biodiversity in species that, combined, create an ecosystem that is greater than the sum of those parts.

More important (from the perspective of selfish humans), MPAs can produce enough surplus to sustain species in non-protected areas that would otherwise be wiped out (read about MPAs in Indonesia for a recent effort or the extinction of the passenger pigeon for an example of our failures).

Bottom Line: We need MPAs as insurance against our greed and ignorance. Set aside "no go zones" to let nature nurture the ecosystems that make life possible -- and worth living.

* Ecuador does a decent job, given its poverty

** For a sad view of how humans fail at this, consider dog breeding

2 Jan 2014

Thursday funnies!

I hope you didn't lose your balance without me!

The oversimplifying mind

Warning: Long, linked and thoughtful (I hope). We're all eager after the break, yes?

I just got back from three weeks in Ecuador and Colombia. The trip was fun and interesting. It also reminded me of the importance of keeping an open mind when it comes to new situations, people and places.

We all use stereotypes when thinking of people or cultures; we all simplify decisions and rationalize events.[1] These shortcuts can be useful when it comes to everyday situations and interactions, but they can also interfere with our progress by directing us to a path that's easier... and wrong.[2]

I've often ridiculed "planners" who assume that they understand enough about people and behavior to design systems that will be complete, robust and efficient in allocating water. I've tagged these posts "economics versus engineering" to poke fun at engineers (this version is funny), but I was wrong to use that phrase.

Mea culpa.

The truth is that economists are often guilty of oversimplifying (this and this), just as engineers often design robust systems. The real problem arises when individuals mix their biases into their work. I'd say that economists are more likely to make this mistake, as their "models" are rarely stress-tested in the same way as engineered constructs (everything from bridges to artificial knees to software algorithms).[3]

The Colombian bubble butt? ¡Si!
The fact is that we should all be cautious when guessing how people will behave. Oversimplification leads to bad planning, poor execution and gratuitous failure.

That's one reason why I've traveled to over 90 countries, to be surprised, to learn, and to appreciate the variety of human and natural ingenuity.

(This post is not about Ecuador and Colombia, but I was surprised by their urban creativity and sexuality, respectively. A little on the Galapagos, tomorrow.)

Those experiences have honed and strengthened my belief that we must build imperfect understanding into our discussions of "fact" and design of policies. That's why I tend to rely on markets or other disaggregated decision mechanisms for allocating or managing resources (for example).[4]

Many people lack this perspective insight, which is why, for example, both George Bush and Barack Obama -- assuming they have good intentions -- have failed to help the average American. Economists may contribute to this problem by oversimplifying their explanations or policy recommendations, but politicians create greater harm when they mistake their power for judgement and their opinion for consensus.[5]

So, how do we overcome this problem within ourselves and when dealing with others?
  1. Nurture diversity, especially in schooling
  2. Respect our ignorance of reality
  3. Expect surprises with innovation
  4. Devolve power in the context of 1-3
Bottom Line: Every new year gives us an excuse to repent of past sins and choose a new path. In this year, I suggest that you give everybody more credit for knowing something useful while giving nobody the power to decide what is most useful.

  1. I've reviewed several books on this issue, i.e., The Black Swan, The Calculus of Consent, Death and Life of Great American Cities, The (Honest) Truth About Dishonesty, Madmen, Intellectuals and Academic Scribblers, Predictably Irrational, Prophet of Innovation, Two Cheers for Anarchism, and Say Everything. On these topics, I recommend anything by Bill Easterly as well as the paper that explains it all: Hayek's "Use of Knowledge in Society."
  2. I am nearly done with Kahneman's Thinking Fast and Slow, which describes how thoughtfulness (System 2) may be ignored in favor of intuition (System 1).
  3. I've said that economists use math to "prove" their opinions. Read this brilliant 1966 essay [pdf] by Kenneth Boulding ("The knowledge of economics and the economics of knowledge"). Historians are wary of bias, as discussed here.
  4. These themes are central to my new book -- more on that next week.
  5. Ostrom and Ostrom (1971) [pdf] discuss the origin of "public choice" theory, which contradicts the earlier model of the perfect public administrator by integrating bureaucratic self-interest with the complexity of political debates. Read these recent essays on polymaths versus experts, the hubris of financial models and political mangling of markets and how machines may overthrow us while following our instructions.