29 Oct 2015

Who Gets What -- and Why -- the review

Al Roth, economics nobelist, wrote this interesting and very readable book about the economics of markets (subtitle: "The New Economics of Matchmaking and Market Design").

The book isn't about the perfectly competitative or monopolistic markets taught in economics textbooks, but markets for (work)mates, body parts, seats in schools and so on.

The book's structure (markets everywhere, how markets fail, how to improve them, and the ethics of allowing them) takes the reader from zero beginnings to some serious insight. You will find yourself seeing markets everywhere once you get into this book. I won't go into details on the book's content, which was fascinating.

Consider the market for clothes. It's not exactly a commodity market, even if you ignore fashion. Think about the need to match people for height, weight or shoe size. Those mere facts can explain why its hard to find large shoes in South America or why Walmart has nothing that's really "small."

Put in Roth's words:
Markets, like languages, come in many varieties. Commodity markets are impersonal, but matching markets can be deeply personal, as personal as a job offer or a marriage proposal. And once you observe that matching is one of the major things that markets do, you realize that matching markets—markets in which prices don’t do all the work, and in which you care about whom you deal with—are everywhere, and at many of the most important junctures of our lives. -- p228
That's not to say that markets don't have problems. "Thin" markets will be inefficient due to a lack of traders. When they get "thick" they can be inefficient again due to congestion (the dilemma of too many yogurt choices). In the worst case, a market will stay that way and make everyone worse off. Why don't they change?
In the case of markets, bad designs can often persist not just because it takes time to discover better ones, but also because there may be lots of market participants with a stake in the status quo, and many interests are involved in coordinating any market-wide change. -- p223
And this example is why people in the water sector (or any other "vested interest+tragedy of the anti-commons" sector) should read this book -- to understand the scope for improvement as well as the path to get there.

NB: Roth radically improved kidney organ programs as well as "fixing" underperforming school placement programs in New York City and Boston, so he's had massive success in very conservative areas.

Bottom Line: I give this book FIVE STARS. If you're interested in understanding the exchanges around you (priced or not), then read this excellent book.

28 Oct 2015

Thanks for trying!

My proposal for the "best climate practice" -- using All in Auctions to reallocate water -- did not win the BCP competition. It wasn't even in the top 10 :(

Thank you... those of you who took the time to vote for my entry (despite their terrible website).

The winner was an idea for a small-scale greenhouse that re-circulated water. They will try to implement this in Ethiopia.

I remain excited about this idea, so let me know if you need any help/advice putting it into use.

27 Oct 2015

No standard for success

I have a bit of a fetish against standards when they are offered as a label of quality.[1] "Organic" or "fair trade" labels, for example, are not always better for me, the earth or farmer. This is because some labels capture what can be measured more than what matters.[2]

That is why I mistrust the ISO-14046 standard for "water footprinting," i.e., a method of quantifying the water contained in a product, trade flow or process.

Many agree that footprinting has serious problems (following my lead, of course ;), which is why I worry that it may be misused to "show good" when actual bad is occurring.

"But they are very careful when they make and implement standards," you might (wishfully) think. Yes, but care doesn't always mean success.

Consider Apple and Windows (or Android) operating systems. On paper, both should deliver the same promised performance, because both Apple and Windows standards are written down and followed by thousands of engineers. But in reality they are not the same because Apple has much tighter control over hardware, manufacturing, labeling, etc.[3] This difference probably arises because some performance relevant factors are missing from the standard because they are too hard to understand. Put differently, I'd prefer to read a mystery novel by Apple (a single author) over one by Windows (a committee).

Bottom Line: Don't trust standards unless measured performance delivers desired outcomes.

  1. I love the USB standard, metric system and Euro for their reduction in my transaction costs.
  2. "What gets measured gets managed" is dangerous when mismeasure leads to mis-management.
  3. Fanboys -- I am talking about promise vs performance, not potential performance.

23 Oct 2015

Friday party!

I'm not sure if the Italian roads inspire their spaghetti or if the spaghetti inspires their roads!

22 Oct 2015

Some SDGs are more equal than others

I got this opinion in a "multilateral" newsletter:
SDG target 15.3 requiring countries to become land degradation neutral (LDN) by 2030 is a pragmatic pathway to slice into the other SDGs. It provides a frame for creating a long-term vision to achieve multiple Sustainable Development Goals.


Land is the wellspring of life. Investing in this most precious and profitable asset will place us on the development path that will lead us towards our shared global vision of prosperity, health and dignity for all the world's citizens. LDN is more than one target among 17 Sustainable Development Goals. It is the engine that will trigger change.
I noticed that you can replace "land" with "water" (or education, gender, etc.) to get statements that are just as true in terms of their magnified impact on other areas. That fact does not mean that you will get agreement on priorities. As many water people in California will tell you, it's hard enough to pursue two co-equal goals, let alone 16 SDGs.

Bottom line. Everyone has their own priority. The SDGs are going to be a mess as bureaucrats, activists and funders argue for theirs.

21 Oct 2015

Business models: family trees and academic journals

I started to look into my heritage, via DNA. Now I need to reconcile my "genetic" and "official" heritage, so I have signed up for some family tree (genealogy) websites. I've discovered that there's a free version but the "advanced" version -- the one that connects your people to others' MUCH LARGER family trees -- costs more than $100/year.

What's interesting is that these genealogical sites get their data from members who take the time to research and enter names and dates. Then the sites charge for access to the data entered by others.

Academic journals pursue the same business model, charging $$ for subscriptions to journals whose authors and reviewers work for free. What a racket.

I know that data is power, but this is just a little too rich for my taste. I wonder what John Cochtrane thinks about this model?

19 Oct 2015

Monday funnies

Hey Canadians! You should definitely vote against Stephen Harper and the conservatives.

16 Oct 2015

13 Oct 2015

Have you been keeping up? My talks and writing

Just in case you were busy recently, here's a recap of my recent activities:

Water related: Not (directly) water related:
  • Oct 1: "GEDtalk with David Zetland" (58 min) with LUC's 22F(M)
  • Oct 1: "Different perspectives on impact" (45 min MP3 and PDF slides) for Leiden University students taking "Entrepreneurship for Society"

12 Oct 2015

Monday funnies

These pills may not fix your wifi (or bald spot or bike skills, etc.), but they WILL contribute towards HIV medication for those without the funds to buy their own. They are also minty fresh!

Visit the website to see other funny formulations... and maybe make a contribution?

9 Oct 2015

Friday party!

I made these short videos this week, on a break from the Water Innovation Lab near Comrie Croft, Perthshire, Scotland

Normal speed

Go slow (oh wow)

Bonus: Drone view of volcanic lava?

8 Oct 2015

Grades, self worth and the selfie generation

After reading this post on today's students being "fragile" about low grades. I've been thinking about this issue for several years and have the following thoughts for students:
  1. Many people have a BIG problem with quantification of value, i.e., "you did A work" or "your salary is 35.000 EUR" because many people collapse their entire knowledge or value into those numbers. This is a HUGE mistake, but it's hard for people who have lived with grades all their lives (I got my first one much later than usual... at 12 years old) without the opportunity to establish a separate means of evaluating themselves. (Few people, luckily, try to quantify "I love you.")
  2. This has always been a problem but it's gotten worse for two reasons:
    • Many bureaucrats are too lazy to understand you as an individual, so they use numbers. Students are rated by GPA. Professors are rated by publications (cf. Impact Factor). These are flawed measures, but those with power use them, and we all must therefore focus on THOSE measures over other, relevant measures.
    • The "Selfie" generation has a distorted view of themselves based on curated Facebook profiles, likes, etc. Nobody is the same as their profile, and VERY FEW are as awesome as their profile, but our monkey-brains are not so clever at seeing past the image control. Marketing people know this.
  3. Different professors indeed have different ideas of success or failure, let alone different ways of thinking about the same ideas. That makes it hard for students to deliver "reliable" performance. Some schools try to reduce this problem by curving grades (so that every class has the same % of As, Bs, etc.) but that doesn't fix the issue of style. The only way to address that is to have a good idea of what your professor is asking. (It's quite sad to me that so few students have come to my office over the years, to talk over their work and mistakes. It's important to understand expectations as well as learn from mistakes.)
  4. That said, professors use grades for a reason. They want you to pay attention to where they are trying to take you. Most students, by definition, do not know the theories they need to master or how problems work. The grades help everyone agree on progress, failure or success.
  5. "I am not my grade" is perhaps the most important thing you can write on your mirror. That's because your goal -- in school or life -- should be enjoyment and fulfillment. A shit grade on an assignment that you really liked and learned from is better than a "A" on something you copy/pasted from a spreadsheet. In the end, you need to hold onto your dreams when confronting problems mentioned in (2) above...
  6. Don't forget that few people wish, on their deathbed, that they had received higher grades rather than spend more time with family and friends. #perspective.
Bottom Line: Grades are not as important as pushing yourself to succeed at what you care about.

7 Oct 2015

Water conflict? Who's right?

The October WaterSmarts Calendar activity is about water conflict, specifically who's right or wrong (in your opinion).

It's inspired by Chapter 9 of Living with Water Scarcity, which is still free to download (40,000 people can't be wrong!)

Go here to fill in the short (5 minute) survey!

6 Oct 2015

WaterSmarts: Where's your water from?

The July WaterSmarts Calendar activity asked people to find where their community's water came from. These answers reveal a range of sources and uses.

Find the largest source of water (river, lake, groundwater, etc.) for your utility. Where are you? What's the source's name?
  1. South Lake Tahoe: Lake Tahoe
  2. Los Angeles: Los Angeles Aqueduct, State Water Project and Colorado River Aqueduct
  3. Glendale, CA: Colorado and Salt Rivers
  4. Lloydminster, Alberta: North Saskatchewan River
  5. Eugene, OR: McKenzie River
  6. Chicago: Lake Michigan
  7. Colombia: Chingaza Dam
  8. New York: A lake in the Catskills
What other users (cities, farms, ecosystems) extract from / discharge into your source?
  1. This water district is the only one around Lake Tahoe which draws water from groundwater. All the other water districts draw drinking water directly from Lake Tahoe.
  2. It seems after brief research that only Los Angeles can use LA Aqueduct water by city charter (isn't that a big part of the plot of Chinatown?). A ton of users use the SWP which brings water from the Sacramento - San Joaquin River Delta including Central Valley farmers and other counties north of LA. I don't even want to get into who uses the Colorado River before Los Angeles. (Short answer: Parts of Wyoming, Colorado, Utah, Nevada, New Mexico, most of Arizona, the Inland Empire and the Imperial Valley.)
  3. "The Colorado provides water to 40 million people in 7 states, also irrigates almost 5.5 million acres of farmland. The Salt provides a significant portion of the water supply for 4 million people and about 150,000 acres of irrigated ag"
  4. Probably the biggest users would be farms in Alberta followed by Edmonton.
  5. Agriculture, cities
  6. In order of quantity: thermoelectric power, public supply (water withdrawn by communities for commercial, industrial and domestic use), irrigation, and industrial use ("self-supplied" use by industry). And the Chicago Diversion, which accounts for 2.1 billion gallons per day!
  7. Hydroelectricity; farms
  8. Upstate NY farms, ecosystems, cities
Notes, comments or questions?
  1. South Tahoe PUD is mandated to ship ALL of the treated waste water out of the Tahoe Basin. They have an arrangement with Alpine County to ship the water into a holding basin and lake that is then used for agriculture irrigation. This costs rate payers millions of dollars a year. They could just as easily, and possibly for less money, treat the water to extremely clean conditions and recharge our own aquifiers, but no one has bothered to challenge this state mandated ruling.
  2. LADWP's website says that 60% of the city's water comes from the LA Aqueduct system. After doing some more cursory research, there's an article that says that Los Angeles is no longer getting water from the LA Aqueduct/ Owens River Valley/ Mono Lake area. It's unclear what source is meant to fill this gap.
Bottom Line: Water has a local character that requires different, appropriate management techniques to manage different uses. Those who forget this "identity" risk destroying water's value to its numerous dependents.

5 Oct 2015

1 Oct 2015

Water recycling isn't new water

A reader emails:
Recycling does not provide a new source of water that can be exploited in upstream areas without leading to bad basin-wide outcomes.*

In California these bad outcomes are pushed by state policies to increase recycling (typically meaning consumptive use) statewide, when in fact this only makes ecological sense in areas near terminal drainage, i.e., the coast. If you're in mountain or inland regions (i.e., Central Valley) then recycling will reduce flows and quality to next uses or groundwater recharge (increasing aquifer salinity has stopped all civilizations that get efficient with (irrigation) reuse).

This is as bad as some outside user taking water out above the watershed and piping it out of basin, leaving the basin with less and lower quality water (think Hetch hetchy, delta tunnels). This problem with recycled quality can be mitigated by salt removal (reverse osmosis) but again that only makes sense at the areas of terminal drainage as they can send the brine to terminal drainage too. Inland, it creates a hazardous waste to be disposed of at great cost. But even then there will be less flow out of the system and that flow is what it takes to keep the basin fresh, long term!

Needless to say this works against the development community which sees recycling as a cheap source of new water, if they can “green shame” others into paying for it :(

[Their ]Bottom Line: Yes, recycling provides drought resilience but not as a long term new source.

* Relevant:
Based on the findings, the researchers have determined that suggestions of reusing wastewater for irrigation and other consumptive purposes may be detrimental to the river.

"Back in 2012 when we were having a drought in Indiana, people were looking at reusing wastewater for irrigating," Jafvert said. "Well, if you diverted wastewater to irrigation instead of letting it flow back into the river, then the river flow's going to get even lower. The point is, the river is not this immense untapped source of water that's available for us to use in times of stress. It's already being used."