22 Jun 2017

Yes water markets work

Just my 183rd reminder to everyone that Australia has gone down that road :)

Happy summer solstice!

Stay cool! Drink water! (and stay warm if you're in the Southern Hemisphere :)

Growth, development and the doughnut

This post discusses a book (Doughnut Economics) that uses said image to help people understand how we need balance between too much (unsustainable) growth and too little (unfair) development. As someone who teaches on these topics, I think the image captures the key messages that are often lost on citizens and in public debates.

21 Jun 2017

Links of interest

  1. "There is really nothing much to be said about China that does not start with a river"
  2. China farms the world (can technology overcome pollution and resource consumption?)
  3. Chinese techno-infrastructure vs prepaid meters on groundwater [pdf]
  4. How Eritrea's dictator micro-manages and macro-fails
  5. "The Earth has been taking advantage of America" and "Trump trolls the world on the Paris Agreement" including suspending rules on methane leaks ("because they cost money to reduce"). Trump is hell-bent on getting to that tipping point of unstoppable CC.
  6. A connection is nice, a reliable connection is way better (applies to water as well as electricity)
  7. Hayek would have supported a carbon tax. (These 40 countries -- including China -- are pricing carbon)
  8. The blessings of Lake Malawi and Gash the river (Eritrea) are more obvious as they become more drained and diverted :(
  9. "Economics" is not about money as much as production choices in a large group
  10. "When the money gets big enough, finance and economics and politics are all the same thing. They are ways to measure risk."

20 Jun 2017

Leadership will prevail over censorship

This kid's going places...

Scam conflict diamonds

Speaking of India...

ps: I still am looking for someone who wants to run and "eco-diamond" business. PM me.

India's institutions are failing its people

Institutions are the "rules of the game" -- the formal rules and informal norms that can -- when strong -- enhance cooperation, defeat corruption, and contribute to prosperity and development.

One ready measure of "development" (or functional institutions) is the ready availability of safe drinking water and functioning sanitation.

In India, the institutions are weakened by corruption, caste-discrimination and bureaucratic indifference. To get an amazing insight into how dysfunction leads to failure, read this epic (17,000 word) investigation into the failing attempt to end "open defecation"

But not all Indians -- and very few politicians -- understand how failure occurs or who should get the blame. Read this piece on the scapegoating of Coke and Pepsi due to failures to manage groundwater, deliver drinking water or regulate pollution. Ask yourself how it might be possible for these companies to "destroy water security" in India, but not in many developed countries? The reason is that they are not the problem, but merely participants in India's failure.

Bottom Line: The Indian people need to go after their politicians and bureaucrats -- their fellow citizens -- if they are going to get safe water and the dignity of sanitation.

17 Jun 2017

Community is dying but nobody is watching

(Originally sent to my Aguanomics update mailing list)

It was about a decade ago that the iPhone and other "smart phones" came to the world. Little did we know that they would turn numerous people into zombies staring, swiping and liking whatever was "fed" to them by apps, websites and the like.

I grew up in the pre-internet era when TV had 3-5 channels, most people read the local paper, and buses and sidewalks were occupied by people who looked at each other. Although the internet (and related media) have brought us a deluge of content that's just right for me, that same freedom of choice has made it easier to forget what might be right (or useful) for others or society.

We've seen countries split into political factions claiming their own truths, pluralistic cultures dividing into "threatened" groups of Christians, Millennials or Blacks, and righteous groups forming around an endless circle-jerk of how special they are -- and others not.

These developments are changing us in slow and subtle, but serious ways: we are losing our communities.

I've blogged on these dynamics numerous times, have a paper "in press" on how people cooperate against a common enemy, and work hard to help our fledgling Leiden-University-College community work with its idealism and diversity.

Take a moment to look at your life. Do you have empathy sympathy for the people around you? To the point where you're happy to see your taxes help them, your work burdened (or assisted) by them, or your views resisted by them? Yes, it takes "two to tango," but social media and smart phones have made it ever easier to dance alone as "demands" -- including this newsletter -- fight for your attention.

I wouldn't mind losing my share of eyeballs if I knew that people were putting more time into their local community matters, but it seems that people are more isolated these days.

I have selfish reasons to say this -- as a public intellectual advertising new (sometimes uncomfortable) ideas, an entrepreneur asking others to support my climate-change projects, or as a teacher fighting students' addiction to "status updates" -- but I make these observations for all of us.

If there's one thing I've learned about sustainable communities, it's that connection is the key to success -- and survival.

I'd love to hear your thoughts on these ideas, but I also want your help:

Please consider contributing to the Life plus 2 meters Kickstarter, as that money will help me attract writers with diverse "visions" of life in a climate-changed world. I am crowdsourcing the money (and stories!) because I think these projects should be part of a community effort to understand and negotiate how we will live with each other. Check out volume 1 to get an idea of the diverse potential futures we may experience.

We're only $100 short of the $600 goal and there's about a week until the deadline. (If we go over, then I put more money into prizes :)

Please contribute here if you're in North America.

If you want to contribute outside of Kickstarter, then you can PayPal to dzetland@gmail.com, transfer € to NL80ABNA0518695174 or send Bitcoin to 19G1kvaqwKKoyJcqRXPPvBjPXrHTTKGaqY. Please add your name and email to any donations :)

This is a non-profit negative-profit endeavor -- here's the spreadsheet of expenses to date.

15 Jun 2017

Aswan High Dam as a high modern means of control

Alexander Lemons [email] wrote this paper [pdf] for his anthropology class while doing his Masters degree at Reed College.

I highly recommend it for its "non-engineered" take on the impacts of Aswan High Dam on Egyptian citizens.

Here's an excerpt:
The AHD was more than mechanical device crammed into a river in order to provide nearly limitless water for year-round crop production and hydropower. The dam was an infrastructure machine hardwired to specific ideas about how to organize a country politically, economically and agriculturally which in turn required a specific type of expert management bound within the ideology of high modernism. This “Rule of Experts,” as Timothy Mitchell calls them, was a techno-political promise to solve the legacy of postcolonial socio-economic problems in rapid way at the expense of a longer and messier democratic debate. Supporting and selling the dam required burying the potential problems, both ecological or social during and after its construction, while touting its line-by-line economic promises in a far distant future. Ultimately, the AHD was an inherently authoritarian method of radically defining citizenship within modern Egypt while jettisoning an organic democratic structure because its goals, from controlling the river at one focal point to simplifying agriculture on an industrial scale to transporting citizens from farms to cities to an obsession with the future at the expense of the present, forced Egyptians to abandon their traditions about water practices and farming as well as the possibility of a more plural post-revolution to match the demands of the dam.
I can't wait to see more from Alexander.

California's shameful lack of conservation innovation

A few weeks ago, Dr. Rocket (my pseudonym) emailed:
I enjoyed reading your PDF of Living With Water Scarcity. Especially here in California, these are real issues.

Normally, I work in aerospace flow metrology, e.g.
  • Providing 100% of the flow measurement systems used for jet engine testing, notable since engines for entire fleets of aircraft are based on specific fuel consumption advantages as small as 0.1%
  • Providing calibration support for military flow measurement systems, etc.
(Years ago, as a young man, I calibrated the flow systems that performed the Apollo missions' lunar mid-course correction and the balanced flow-thrust systems that landed the Apollo LEMs upright on the moon!)

With this sort of flow metrology background, I frequently get enquiries regarding measurement systems for pipeline leak detection systems based on mass or volume balance. In the course of such analyses, I discovered that there is a really serious problem with water pipeline leaks. It seems that typical municipal water systems have a loss of something around 16% in the USA. But when we looking at natural gas pipeline leak detection systems in New Mexico, the state's Secretary of Energy even commented "You should talk with the Albuquerque Water District. They apparently have a loss of 30%." That's a lot of water in arid regions...

According to the AWWA (American Water Works Association) 2011 water audit of 21 utilities, the range of losses is 645.42 - 3,496.21 gallons/mile of main/day, with an average of 1,821.15 gallons/mile of main/day. NRW losses are 6.8% - 45.5% by volume, with an average of 22.6%.

As I see it, water is taken for granted, and its leakage does not pose direct health or environmental damage. It's also relatively cheap. So traditionally measurement and leakage have been pretty much ignored. This is not going to improve until measurement is improved in the large water mains in the municipal distribution systems. And measurement is not going to improve until there is some way to accurately calibrate large municipal water meters, e.g. in sizes up to 24".

Guess what, there are no large water flow calibration facilities that are capable of performing calibrations with +/-0.1% uncertainty... (I've arbitrarily chosen +/-0.1% so that one could realistically do 0.25% leak detection, i.e. to detect, find and patch small leaks before the pipeline erodes to catastrophic proportions, such as happened on Sunset Blvd., and flooded UCLA.)

And actually, such calibration systems are relatively easy to build. So there's something fishy going on -- or water managers are just to lazy to take steps that would lead to more efficient supply of water. Something has to change is this era of ever diminishing water supplies.
In reply, I wrote:
There are two main "drivers" (or lack thereof) for monitoring/blocking water losses:
  1. The cost of reducing losses is high relative to the value of the water.
  2. Water managers face no penalties for "following industry standards"
You've read my book, so you know that I think managers need to face discipline on these issues.

This article may also be useful: Why loss calculations must include opportunity costs
He replied:
Actually, David, the cost of maintaining water pipeline, finding leaks, and avoiding catastrophic failures (such as UCLA and/or other road closures) is very low if properly planned. If one is to believe the American Water Works Association (AWWA) survey of water audits, between 6.8% and 45.5% percent of the potable water is lost to leakage. Assuming that their average of 22.6% annual loss is representative, then said annual losses would easily cover the costs of the required monitoring systems.
  • Good measurement means equitable/honest distribution of costs
  • Good measurement allows early detection of leakage at low levels
  • Since most pipeline failures begin as pinhole corrosion pits, such small leaks (when detected) are easily repaired via saddle patches -- or pipeline section replacement can be scheduled before catastrophes occur.
  • Repairs under emergency conditions are usually considerably more difficult, less reliable, and much more costly than planned repairs -- and almost always require service shutdowns.
Since I am very concerned about California's water situation, I have already passed on the designs for a primary standard flow calibration facility to LA County Department of Public Works -- for free! -- so that they can take the first necessary steps to improving measurement. Unfortunately there is a high degree of apathy among water managers.
I replied:
  1. You're right.
  2. It's hard to get water bureaucrats (called "water buffaloes" for their indifference to reality) to act.
I'd love to stay in touch.
He replied:
Yes, let's stay in touch. Getting some sort of reaction to our looming water problems is going to require a massive effort to shake water burro-crats awake. It's always better to take a multi-pronged approach.

Certainly you may use my emails as support for your effort. However, I would appreciate it if you somehow insure that my email address is not exposed to those who are simply collecting email addresses for marketing purposes. Maybe something like "A concerned scientist. Name, affiliation, and contact information upon request"...

By the way, I sent an email to the Governor via the state's website, specifically noting his recent (April 16) executive order B-37-16 regarding stopping water leakage. I got a reply from some low level screener to contact the state's business opportunities office -- even though I stated that I was willing to provide guidance on a no-cost basis. I'll forward the email to you.*
Bottom Line: California is full of thoughtful people who are eager to help solve its water problems, but these people are ignored for the same reason that the State finds itself in continual "crisis": bureaucrats prefer inaction or their own biases to working for the public good -- a troublesome topic I've researched and blogged upon many times.

* Here's that email (note the last line)
Thank you for taking the time to write to Governor Brown regarding water flow calibration and leak detection technologies. The Governor always appreciates hearing from people who have innovative ideas to improve California.

The Governor's Office of Business and Economic Development (GO-Biz) was created by Governor Jerry Brown to serve as California's single point of contact for economic development and job creation efforts. GO-Biz offers a range of services to business owners including: attraction, retention and expansion services, site selection, permit streamlining, clearing of regulatory hurdles, small business assistance, international trade development, assistance with state government, and much more.

For further information visit Go-Biz's website, business.ca.gov. We hope you find this information useful. On behalf of the Governor, we wish you the best of luck in your future endeavors.


Constituent Affairs
Office of Governor Jerry Brown
The Governor is asking all Californians to do their part in conserving water. Please visit SaveOurWater.Com to see how you can help.

13 Jun 2017

Everykey -- the $1 million startup failure

Back in 2014, I pledged $50 to Everykey's Kickstarter, believing in their promise to deliver a wristband (or key dongle) that would automatically unlock my computer, phone, house, or whatever I wanted using bluetooth.

The product, in other words, would "let me be me" instead of forcing me to remember pesky passwords, keys, fingerprints, etc.

Just look at their video (try to avoid the CEO's demon eyes)

Even better, they got John McAfee (this guy) to come aboard as their spokesperson:

I ordered a single dongle/wristband for Windows and waited... and waited... and waited.

Then I bought a Mac, so I asked to get an OSX version instead.

Then I waited... and waited... and WAIT! A package!

Whoops, bad news. They labeled the package as "merchandise" so I had to pay €25 to pick up the reward I got for backing their project, which really pissed me off. (Kickstarter backers are NOT buying merchandise, but giving financial support to a project that may succeed or fail.)

I asked the folks at Everykey to refund the customs charges and change their shipping labels, but no such luck. So their EU backers are going to be paying €extra to pick up packages* that don't even work.

Wait. What?

Yes, the version of Everykey I received does not work. I know this for two reasons. The first is that  they shipped me a Windows version (they are still not shipping OSX), and many people are already complaining about the product/app/software not working. (There are over 1,550 comments -- mostly complaining about delays and failures -- on their Kickstarter.)

The second is that I sold my Everykey to a security developer who wanted to check it out.

Here's what he told me after he had time to test the unit:
As expected, it doesn't work, neither on Windows 10 nor on Android.
On Android, it pairs successfully but the app can't unlock the phone (it says it's still not compatible with Android 7).
On Windows, the App SEEMS fake, it systematically crashes !
I dismounted the Everykey device and discovered that inside there is a standard Bluetooth low energy chip without a co-processor for security.
So, actually, it is nothing more than an iBeacon and it can never guarantee real security .. :)
If you google "Everykey reviews" you get the naive, the bot, the actual security expert, and those worried about McAfee.

Bottom Line: Everykey has shitty customer service (broken delivery promises, waste your money for no reason), a non-functioning and/or insecure product, and no future. Avoid them** at all costs.

* Shipping policy: "In addition, it is the sole responsibility of the receiving customer to pay any import duties, taxes, or brokerage fees due at the time of delivery. Packing slips for international shipments cannot be labeled as a gift."

** Founders Christopher Wentz and CiCi Qian are not listed on their website, but they are mentioned in articles. Be careful about supporting ANYTHING they ever do.

12 Jun 2017

Bureaucrats' quixotic attempts to "rescue" California

DH sent me this article on California's quest for "affordable" drinking water. Its short overview of bureaucrats' attempts to "make water affordable" is painful to read, as they seem to think that prices should be low enough that nobody spends more than 2.5% of their income on water. Besides the obvious issue (many poor people spend far more on mobile phones or cable TV), this effort misses the obvious fact that the price of water should reflect its full cost and that the best way to help poor people is by giving them money, not cheap water.

That was all I was going to say about that article until Dr Rocket (coming soon!) pointed out our "Quixotic quest" to bring sense to California water policy.

But I think that observation is backwards. Just read this bit from Cervantes:
Just then they saw some large water-mills in the middle of the river, and as soon as don Quixote saw them, he shouted to Sancho: “Don’t you see over there, my friend, a city, castle, or fort where there must be some oppressed knight or some queen or wronged princess, for whose assistance I’ve been summoned?”

“What the devil kind of city, fort, or castle are you talking about, señor?” said Sancho. “Can’t you see that they’re water-mills in the river, where flour is milled?”

“Hush, Sancho,” said don Quixote, “although they appear to be water-mills, they are not, and I’ve told you that enchantments change things from their natural state. I don’t mean that the enchanters really change the form of things, but rather it just looks that way, as experience has shown in the transformation of Dulcinea, the sole refuge of my hope.”

At this point the boat, having gone into the middle of the river’s current, began to travel not as slowly as it had to that point. Many millers in the water-mills who saw the boat coming toward them down the river, realized that it was going to enter into the millrace leading to the waterwheels, jumped out with long sticks to prevent it, and since their faces and clothing were covered with flour, they were a menacing sight. They shouted loudly saying: “You devils! Where are you going? Are you depressed and want to kill yourselves and be crushed to pieces by these water wheels?”

“Didn’t I tell you, Sancho,” said don Quixote, “that we have come to a place where I must show the strength of my arm? Look at how those brigands and rogues have come to attack us. Look how many monsters are against me. Look at the ugly grimaces they’re making at us. Well, now you’ll see, you scoundrels!”

He stood up in the boat and with a very loud voice began to threaten the millers, saying: “Evil and ill-advised rabble, set the oppressed person free that you’re keeping in this fort or prison, whether he be noble or plebeian, of whatever condition or station in life. I’m don Quixote de La Mancha, also called the Knight of the Lions, for whom the happy conclusion of this adventure is reserved.”

And saying this, he clapped his hand on his sword and began to brandish it in the air toward the millers, who, hearing, but not understanding his foolish banter, tended to the business of stopping the boat, which was going into the torrent of the channel leading to the mill-wheels, with their poles. Sancho got on his knees and was praying devoutly to heaven to free him from such imminent danger. The millers, with great skill and speed pushed against the boat with their poles and stopped it, but not without turning it over and causing don Quixote and Sancho to be thrown overboard into the water. It came out all right for don Quixote, who knew how to swim like a gander, although the weight of the armor he was wearing took him to the bottom twice, and if it weren’t for the millers, who plunged in after them and took them out as dead weight, it would have been another Troy for the two of them.

When they were on shore, more drenched than dying of thirst, Sancho, once again on his knees and his hands joined in prayer, asked God, through a long and devout supplication, to free him starting right then from the daring plans and assaults of his master. At this point the fisherman, owners of the boat that the water wheels had smashed to bits, arrived, and when they saw it in pieces, they attacked Sancho so they could strip him, and demand payment from don Quixote, who, with great calmness, as if nothing had happened to him, told the millers and fisherman that he would pay for the boat very willingly, provided that they set the person or persons who were languishing in that castle free and uninjured.

“What person or castle are you talking about,” replied one of the millers, “you crazy man? Do you want to carry off the people who bring wheat to grind in these mills?”

“That’s enough,” said don Quixote to himself. “It would be like preaching in the wilderness to persuade this rabble to do anything good. In this adventure there must have been two fierce enchanters—one of them prevents what the other attempts. One of them presented me with the boat and the other threw me overboard. May God provide the remedy, for the world is filled with plots and tricks, all contrary to each other. I can’t do any more.”

And raising his voice, he proceeded, looking toward the mills: “Friends, whoever you may be who remain locked up in that prison, pardon me, for by my misfortune and yours, I cannot remove you from your afflictions. This adventure is doubtless reserved for some other knight.”

After he said this, the fishermen and he came to an agreement on the price, and don Quixote paid 50 reales for the boat, which Sancho disbursed much against his will, saying: “Two more boat trips like this one, and all our wealth will have sunk to the bottom.”

The fisherman and millers were amazed, seeing those two figures, so uncommon and different from other men. They never did understand where don Quixote’s words and questions were leading, and considering the two of them to be crazy, they left them; the millers went back to their mills and the fishermen to their huts. Don Quixote and Sancho returned to their animals, and this was the end of the adventure of the enchanted boat.
Bottom Line: Water bureaucrats -- like Don Quixote -- are fighting imaginary dragons (water mills) with their ridiculous solutions distractions while normal folks -- like Sancho Panza -- wonder how the hell they got such crazy ideas.* One day perhaps they will realize that the problem is not water affordability but water that is too cheap (leading to over-use and system decay) and poor people that are too poor.

* Yes, I know that politicians like to promise stuff they can't deliver (or that shouldn't be delivered), but bureaucrats are supposed to step that BS and keep things working.

8 Jun 2017

Free idea: Tamaguchi 2.0

You may recall the Tamaguchi craze from the late 90s, i.e., the "little digital creatures" that needed constant attention. That version was kinda annoying.

Here's an idea for Tamaguchi 2.0, an app that tracks your mobile phone habits (without collecting detailed data on words or actual apps) and then creates a "fingerprint" based on, e.g., "wake up and use phone for 10 minutes..." or "call only on weekends" etc. The idea is that everyone uses their phone in a specific way.

The app *then* hangs around and only pops up when you're using your phone in a different way, at which time it pops up and asks "how's everything? you ok?" and allows you to say "all good" or "I'm depressed" or "I'm traveling" or "I have a new partner" etc. Then the app gives a little feedback (e.g., thumbs up for travel but "maybe call a friend" for depressed)

It need not be invasive, and the data will only reside on the device, as it's unique to you.

Any app developer types out there are free to use this idea... I only ask for a thanks (and update!) if you go ahead with it :)

6 Jun 2017

Poverty is subjective, not objective

If you didn't know that already, then read this short post on how some people (usually Americans but many economists) credit success to individual effort while others (usually Europeans but many sociologists) see success as a collective outcome.

Remember Obama's "you didn't do that all by yourself" comment? It captures those diverging opinions.

Now watch this excellent TED talk by a Dutchman who really nails it.

I agree with him and that's why I support a Universal Basic Income. I think that people who live without fear of poverty will work rather than lying around eating donuts.* The difference is that they will work at jobs that they enjoy, rather than jobs that "pay the bills."

NB: Finland is 5 months into basic income trials

* An old, but sad, joke is how European colonialists got Africans to work shit jobs:

Euro dude: Hey! Want a job?

African dude: Why? I have land, food, water and shelter. Why would I work for you?

Euro dude: Well, I bought it from another white dude, so now you need to pay rent.

African dude: But I've lived here forever. Why would I pay rent?

Euro dude: Because you don't want my white dude friend to put you in jail for breaking the laws that we wrote saying that you have to pay rent.

African dude: Well that sucks. How do I get rent?

Euro dude: Work for me. Oh, and the rent it a lot, so you need to work a lot, eh?

African dude: FFS.

1 Jun 2017

What's up with NYC water?

PJ asks:
I am wondering if you have any resources about water usage in NYC. I have always been proud of our non-filtered, non-pumped system, however, I realized later that we were so stupid on the economics that we never even billed many people. Now we use twice as much water as the average American, at ~130 gal/person/day, though down from our 1990 peak of 200+!
So this observation gets at several related topics, i.e., cost, consumption, pricing and scarcity. I'll comment on each.

Cost recovery: Most water utilities are run (or regulated) to recover costs. Operating costs (energy, chemicals, etc.) are the smallest share (perhaps 10-20%) and thus "easy" to cover with initial revenues. Fixed investment and renewal costs are often much higher (80-90%) as well as spread over time, so they are far less likely to be covered, usually because politicians prefer "cheap water now and problems for their successors later" and tell regulators to set prices too low. (Regulators of municipal or investor owned utilities have the same job; ownership isn't really the problem.) Finally, there are "opportunity costs" that are missed most of the time by managers who do not consider environmental impacts, etc. I wrote a good column on those here.

Water consumption: Forget "dirt cheap" -- water is way cheaper at about $1 per m^3 (1,000 liters) delivered to your house. (10 cubic yards of dirt, or 7.5 cubic meters, costs $320 at Home Depot, which is $42/m^3 without delivery!) That low price -- assuming a water meter! -- means that most people don't think about how much water they consume. They just use what "feels right" and pay the bill. Most water "conservation" has come from water-efficient appliances (an idea Trump is trying to kill) more than people changing their habits.

Water pricing: In the past, most people paid a flat charge for water (I do in Amsterdam) instead of a volumetric charge based on metered use. That system makes sense where people are unlikely to "waste" water on yards but it doesn't help people patch leaks, etc. I'm a big fan of metered pricing where discretionary use is a problem (anywhere with lawns). Read this post on how to price water or this paper on the introduction of water metering in the UK.

Water scarcity: Excess demand relative to supply means that scarcity is present and ongoing scarcity can lead to shortages, e.g., when Sao Paulo nearly ran out of water (drought, leaking system, cheap prices) or in California (mismanaged rights, weak controls on groundwater use, subsidies to lawns, etc.) Scarcity is a local issue so it doesn't always pay to worry about it in places with plenty of water (e.g., Amsterdam and perhaps New Amsterdam NYC), but we do need to remember that human water use always has environmental impacts.

Bottom Line: PJ doesn't really need to worry about NYC running out of water, but that's more because the system is still running within capacity, not necessarily because New Yorkers are the biggest environmentalists. Unfortunately, many other parts of the world are facing water shortages because they do not maintain their systems, charge customers too little or price water without regard to scarcity.

30 May 2017

Does improved irrigation technology save water? (No)

I highly recommend this FAO report by Chris Perry et al.

Abstract: Unsustainable water use (over-drafted aquifers, seasonally dry rivers, disappearing lakes and wetlands) is a problem across the world. This is especially true in the NENA region, which includes many of the most water-short countries in the world. This review indicates that there are rather few examples of carefully documented impacts of hi-tech irrigation, while there are many examples of projects and programs that assume that water will be saved and productivity increased. The conclusion of this report is that restoring a balance between sustainable supply and consumption of water requires first physical control of the water resource by government or other agencies responsible for sustainable use, followed by interventions to reduce allocations. Within the allocated and controlled quotas, hi-tech irrigation will evolve and spread to the extent that it makes sense for the farmer who wishes to take advantage of the various benefits of hi-tech irrigation.

Why are carbon taxes so hard?

A few weeks ago, I participated in a really great panel discussion on EU investment in green technologies. I recommend the entire video for those who are interested in these topics, but here's a short excerpt on why -- in my opinion -- it's hard to get a carbon tax:

Addendum: Read this paper on the advantages of carbon pricing and this one on the domestic politics of distributing carbon tax revenues.

29 May 2017

Monday funnies

Trump makes sense after watching this.

Time for a new word for the idiocy of Trump (a la Santorum)? How about Trump, as in "that was a fucking Trump move, idiot!" or "A 4,500 year old earth? What do you think I am? A Trump?"

26 May 2017

How will we live in a climate changed world? (Part 2)

Last year, I crowdsourced 29 visions of life in a climate-changed world from 27 authors. Those visions were published on the Life plus 2 meters website as well as in a book, Life Plus 2 Meters, volume 1, which is free to download or cheap to buy.

Now I'm back for a bigger and better volume 2. The first goal is to raise $600 (at least!) to award prizes to authors with the best visions. The second goal is to get a lot of submissions from around the world.

Here's the promo video:

To learn more about the fundraising, please visit the Kickstarter campaign here. The deadline is 25 June, but pleas contribute early (and often!)

To learn more about contributing your vision (there are prizes for best storyteller, practitioner, under-25, and from lower-income country), then please go here. The deadline for submissions is 31 July.

You can follow the project by subscribing to the newsletter or on twitter :)

Friday party!

Death is inevitable; sadness is not.

25 May 2017

Unexpected water reallocations

Damian used to blog with me here. He just published a paper that's worth your time
Park, Damian (2017) "California water reallocation: where'd you get that?" Natural Resources Journal 57:183.

Abstract: When thirsty, Californians often avoid going to the market for more water. Instead, they might borrow some from their rich neighbors, they might sue them or more commonly, they simply take more from users without much of a voice (e.g. the fish or future generations). These alternatives are often superior to using markets.* Within markets, a surprising detail emerges – it is uncommon for farmers to fallow fields in order to sell water to another user. Rather, many water transfers are structured so sellers can have their cake and eat it too. While some of these transfers rightly bring about jealousy and criticism, they likely do facilitate efficient water use. In discussing these points, I provide a more holistic description of how water users reallocate water as well as a richer understanding of how California’s water market actually works.
* My interest in this paper comes here, where you see that political feasibility trumps economic efficiency and/or social justice. That's a major point in my paper on desalination.

23 May 2017

So what would a carbon tax really cost?

While writing my paper on the tragedy of the commons and desalination, I was a little shocked to see that the cost of paying for CO2 permits -- or even the much higher social cost of carbon -- was actually quite small, i.e., the cost of offsetting carbon emissions at $12/ton would be roughly $3.60 per San Diego resident* -- a number that's a tiny fraction of people's water costs (let alone their latte budgets). Increasing the cost to $30/ton CO2e (one estimate of the social cost) would mean that San Diegans could offset the GHG-cost of 100 percent desalinated water for only $9 per year, which is about equal to the price of one hour of downtown parking.

This situation was interesting to me because it -- like the example of running a pig farm to meet clean water codes (most violate many of them) at an additional cost of $0.05/kg -- shows how absolutely CHEAP "doing the right thing" really is. If you listen to politicians, talk radio hosts and lying lobbyists, you'd think that a carbon tax (or the cost of cleaning water) would put your parents on the street, your ancestors' headstones for sale, and your kids into prostitution. But the cost is really just a tiny amount of money.

How can that cost be so low and why are people so opposed to it if it is?

The first answer is that a little cost can have a big effect if its spread across enough people. Wal-mart regularly breaks conservation records by shaving 0.2 percent off its shipping distances or packing weight. Five cent charges for plastic bags have dropped use by 50 percent or more in many cities. So the key is the total effect, not the lack of effect on you or small effect with any given person.

Second, the people who oppose these moves often face a much higher cost than the average person because they are in the oil selling, pig selling or bottled water selling business. We know about oil and pig lobbyists, but I am just as sure that Nestle, Pepsi and Coke are ALL opposed to (refundable) deposits on plastic water bottles because they do not want to raise the price of their product from $1.00 to $1.05 per liter (for example) because such a move might remind consumers that they can switch (in many places) to "practically free" tap water.

So those are the theories, but let's look at how much more things would cost (spreadsheet with numbers and sources) if we added a carbon tax of $30 per ton of CO2 (double the costs below if you're feeling a sense of urgency).

A gallon (liter) of gasoline would cost $0.27 (€0.06) more
NB: Gasoline in the Netherlands now costs €1.64/liter, which is $5.65/gallon**

One thousand cubic feet (one cubic meter) of natural gas would cost $1.59 (€0.06) more
NB: Our household uses about 30m^3 per month, so our bill would rise by €1.80 per month

One kWh would cost $0.012 (€0.011) more***
NB: Our household uses about 139 kwh per month, so our bill would rise by €1.50 per month

"Typical" meat, vegetarian, or vegan diets would cost $79, $42 or $32 per year more.

Looking into individual food prices:
  • Beef would cost $0.37/pound (€0.74/kg) more.
  • Cheese would cost $0.18/pound (€0.37/kg) more.
  • Chicken would cost $0.09/pound (€0.19/kg) more.
  • Eggs would cost $0.07/pound (€0.13/kg) more.
  • Rice would cost $0.04/pound (€0.07/kg) more.
  • Tofu would cost $0.03/pound (€0.05/kg) more.
Bottom Line: The "right price of carbon" would add trivial costs to the cost of living in richer countries, but it would do a lot to encourage changing consumption habits at the aggregate level (and changing production patterns at the corporate level). Too bad politicians seem more interested in listening to fossil-fuel lobbyists than to economists (and others) urging price signals as a cheap way to mitigate carbon emissions and the dangers of climate change.

* I assumed the same emissions for supplying desalinated water to ALL citizens, not just the 7 percent the plant can now supply.

** This price reflects existing "green taxes," which makes me wonder how much Dutch prices would change -- if at all -- under a carbon pricing scheme. I guess that it would have a low impact on households that already pay such taxes (as we do on electricity and natural gas) but a bigger impact on farmers and industry that are usually exempt from "anti-competative" or "job killing" taxes (see the pig example above for the truth in that lie!)

*** US Energy Information Agency data are very difficult to understand so I used EU data.

18 May 2017

So here's what I am thinking after 6,000 posts

Aguanomics was the only living child of Sex, Drugs and Water Utilities, which was upwardly mobile child of the short-lived Another Brilliant Idea. When I began Aguanomics in March 2008, I imported about 150 posts from the SD&WU that were water-related. After that beginning, I blogged a lot more on water because (1) I was excited to talk about all the "new" topics, (2) I got a postdoc that left me with no time obligations, and (3) blogging was an amazingly helpful and productive activity for me (and perhaps some readers).

Several years and thousands of posts later (around 500 of them guest posts!), I see many topics as old or known but often unresolved due to governance issues, public indifference, and unimaginative or exploitative stakeholders. I also have less time due to my teaching duties joys! and other projects. Those reasons explain why I have not been blogging so much, but there third reason -- the productive joy -- is as strong as ever. I now have a queue of 40-50 topics that I need to write out. (Go ahead and suggest more!)

This graphic captures my posting frequency over the years, but it also gives you an idea of my cumulative satisfaction :)

Bottom Line: Don't blog to succeed. Blog to share.

17 May 2017

Links worth your time

  1. Do you like learning as much as sex?
  2. Spot fake Amazon/Yelp reviews with Fakespot or ReviewMeta
  3. An incredible investigation into Soma water filters (they're worthless)
  4. How trolls stopped google (and authors) from putting millions of books online
  5. Fórum Paralelo Mundial da Água ("Parallel to World Water Forum") is where protestors against the goals of the 2018 World Water Forum will meet
  6. Instead of helping the world communicate, Twitter turned to advertising (fail analysis)
  7. "How To Invest In Yourself" (set 100 goals then do them)
  8. "Screw finding your passion" (more good life advice)
  9. Silk Road was a hot start-up, but illegal. Silicon Valley does drugs and murder.
  10. Scientists measure Alberta oil sands pollution as 2-4x worse than reported. Industry says "definitely listening and looking for better way to measure pollution" (get back to you in 2025?)

16 May 2017

Links worth your time

  1. A really interesting proposal on how to fix incentives in the US health care "system"
  2. We have no idea how badly cybercrime is going to harm us (it's already bigger than "real" crime but hard to spot)
  3. How to be your own investment manager
  4. How will we stay busy when the bots take over? Religion.

Know anyone in Flint, MI or Galway, Ireland?

The City Water Project (an effort by me and some students) wants to hear residents' opinions on water quality. Please forward this post (or the survey link!) to anyone you know!

(The survey closes FRIDAY, so please hurry!)

Flint, Michigan:

Flint survey: https://goo.gl/forms/C5Abiq11nh2RhxK92

Galway, Ireland:

Galway survey: https://goo.gl/forms/FKo3QksgtMHyReHz2

Here's my goodbye from Den Haag/The Hague and here's a link to the blog posts on what we (didn't) find.

People on mobiles be like

...zombies -- staring at the screen and stumbling as they wonder, with a feed tube of distractions crippling their brains.

15 May 2017

Monday funnies

MV sent me this example of (empty) corporate braggadocio:*
Press Release: Nordic brands saved almost 7 billion liters of water, enough for daily needs of 134 million people... Factories supplying H&M, IKEA, Filippa K and 20 other Nordic brands saved more than 6.7 billion liters of water since STWI initiated its work with the factory base in 2012. This cumulative result equals the annual need of more than 360,000 people, or one day’s need* of 134 million.
Besides the obvious point (their saved water won't create or operate a drinking water system in another country), this PR is even more meaningless...

As you can read in the release (but not the headline), they saved enough "for the daily needs of 134 million people" for ONE DAY. How about 360,000 people for a year? No way... as "water" is only component in a water system. You also need things like "pipes", "energy", "personnel" etc.

Bottom Line: The marketing team needs to drink a little less koolaid and more water.
* Addendum: The example was so good that I blogged on it twice (whoops!)

13 May 2017

Flashback to May 2008

These posts are still relevant 9 years later!
  1. What is Aguanomics? Good question. Related: Special Interests and Lifeguards and Risk
  2. Desalination as an Investment puts another bad idea (Desalination -- OUCH!) in context
  3. Economics v ecology: Was Julian Simon Right about the Wrong Thing? One of my best (on ). Related: Malthus and Carbon Trading, (stupid) Footprints and People versus Tigers (or Loggers)
  4. Scarcity and conservation: RAISE THE PRICE!Elasticity of DemandFeeling a Need explains why conservation isn't always useful, Rationing in NorCalPrice and EfficiencyWater is Valuable!Central Planning for LawnsPaternalistic Water ManagementYou WILL Do ThisSoviet LAWastewaterGolf in the Desert and God's Water (what do believers say?)
  5. Farmers: Rice, Water, Luck, Wisdom -- farmers want profits, via water or rice. Related: Photogenic Losers and Fat Cats (farmers), Fat Cats or Skinny Cats? (water managers), Do Farmers Care?Standard Food (industrial ag), Abuse of Water RightsSocio-politics of Water (transfers) and Markets for Water -- Australia
  6. Food policy: Wrong Way Right Way to manipulate food prices in Egypt, economists have criticized Agricultural Policy for 50 years, Offshoring Food and Ethanol is Dumb, part 54
  7. The Colorado: Down Mexico Way -- the Colorado's death hits them harder. Related: Die! Salton Sea Die! and Radioactive Water
  8. LDCs: USAID Harms The Poor (as Sachs the Planner does), but unlike WaterAid. Related: Water Tanks in poorer countries and Digging Wells for the Poor
  9. CC: USDA Sees the Light? Climate change is a threat. Maybe tell Trump? Related: Sustainable LivingAcid OceanConspiracy to Emit... (companies hiding emissions), Speaking of Carbon (costs of mitigation), Taxes Are Easier...Baikal Warms and World Bank, Climate Profiteer
  10. Ecosystems management: China -- Danger and OpportunitySue the Corps, (stupid) Yazoo PumpsDelta Myopia, and Clean Water Restoration Act -- my comment in favor of more federal regulation of "navagable waters," which Trump just killed. Idiot.
  11. Black Market Oil -- US gas taxes are 10% of what they should be
  12. Nestle Blinks -- an update on "the evil one" that shows mostly incompetence. Related: Who Needs Bottled Water? (funny)
On these posts, I've changed my mind
  1. I had no idea Trump would come along and make Bush 2's EPA appointments look so good

12 May 2017

Don't let Google help you get dumber

I wrote a paper [pdf] about 10 years ago that discussed the "negative, second-order effect" of using Google to find anything from music tracks to teaching presentations. My observation is that Google's ease of use (a good thing, i.e., "a positive, first-order effect") makes it easier for us to be lazy in terms of researching, mastering ideas or working to present them.

I see many signs of this effect around me, i.e., when spell-checkers fix our typing, translators give us some but not all of the meaning, or when students cite others' ideas based on a googled snippet, rather than the memory from reading broadly or for comprehension (the ctrl+F problem). These stages are merely the most recent in an evolution that began thousands of years ago, when homo sapiens were able to share collective knowledge to overcome the larger-brained (smarter) homo neanderthalensis, which had weaker social organization.

Russ Roberts and Tyler Cowen discuss these ideas -- among others -- in this podcast on Cowen's book, The Complacent Class (start around 40 minutes in). I recommend that you listen to the podcast if you want to think differently about how you might retain some knowledge in a world where bots and automation are increasingly dominant.

Bottom Line: It's nice to benefit from "collective knowledge" but be careful when that knowledge is controlled by corporations.

11 May 2017

NAFTA’s impact on Mexico’s working women

Esmée writes:*

On January 1 1994, the North American Free Trade Agreement was signed by Canada, Mexico, and the United States. It consists of two parts: the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation. It was aimed at increasing trade between the three countries by creating a trilateral trade bloc. Free trade is a well-known driver of economic growth. However, contrasting empirical evidence exists on NAFTA’s impact on Mexico’s development. Mark Weisbrot, for example, argues that the agreement has tied the country’s economy even closer to the US economy, led to the displacement of many small Mexican corn farmers, and failed at reducing poverty in the country. On the other hand, Steffan argues that NAFTA has triggered a process of democratic transition in Mexico by reducing the power of the presidency and removing authoritarian legacies.

Apart from these more general findings, another, less researched impact of the agreement exists: Its impact on Mexico’s women, through the increased amount of Maquiladoras. These are foreign-owned manufacturing plants that assemble duty-free imported components/materials/equipment for export. The Mexican government initially implemented the Maquiladora program to boost industrial growth in Northern Mexico and slow down labor migration to the US. Sixtypercent of the 1.3 million workers in Mexico’s 4000 Maquiladoras are women [pdf]. They are mostly young and uneducated. They work around 50 to 80 hours a week and earn 56 cents an hour. With the implementation of NAFTA, Maquiladora workers expected a rise in wages, job growth, and improved working conditions. However, not all these promises were realized. As a result of the trade agreement, Mexico became attractive for multinational corporations looking to cut costs, and the amount of foreign-owned maquiladoras doubled.

Comparing current female labor force statistics to the ones prior to the implementation of NAFTA, research indicates that in general, this trade liberalization has improved women’s labor outcomes. According to Aguayo-Tellez et al. [pdf], Mexican women’s relative wages increased by 2.7 percentage points during the period after NAFTA. They also found that there has been a declining share of agricultural employment since NAFTA, and that at the same time female intensive sectors such as clothing and electronics have grown. Additionally, according to the World Bank, Mexico’s female labor participation rate has increased from 34% to 45% from 1990 to 2016.

Now this may seem like a generally positive result. However, Mexico’s pollution regulation, labor rights enforcement, and corruption enforcement have been lax. Human Rights Watch has reported forced pregnancy testing and deteriorated health and safety conditions in the factories, as well as public health problems related to pollution/toxic chemicals exposure, such as miscarriages and fainting spells. Women rights organizations have claimed that all this has contributed to the reinforcement of gender inequality. Unfortunately, Mexico’s institutions are not designed to prevent these negative impacts from happening.

When looking at the alternative path that Mexico might have been on without NAFTA, we can thus conclude that considering job creation and wages, Mexico’s female labor force is probably better off now than it was 25 years ago. However, the trade liberalization has had a neutral or even negative impact on women labor rights, through a lack of efficient institutions in Mexico. Now that US President Donald Trump is arguing for a renegotiation of NAFTA, taking into account women labor rights in Mexico in such a renegotiation would thus be crucial. However, considering Trump does not seem to care a lot about women in general, assuming he will care about Mexican women is probably highly unrealistic.

Bottom line: The NAFTA agreement was designed to increase the economic growth and development of all three involved countries, including Mexico. However, NAFTA has been problematic for Mexico’s female labor force, due to the increased amount of Maquiladoras in the northern part of the country. Despite increased wages and job creation, instead of raising Mexican women’s standard of living, NAFTA has led to greater gender inequality and health problems.

* Please comment on these posts by students in my growth & development economics course. It really helps if you highlight unclear analysis, alternative perspectives, better data, etc.

Greening economic growth and development

Anniek writes:*

Economic growth and development are two key terms that governments strive for. But given rising environmental challenges, where does the green economy fit in? The World Economic Forum (WEF) believes that slowing down climate change could add $19 trillion to the global economy and increase global GDP with 0.8% by 2050. So what is preventing governments from greening the economy and achieving green growth?

Lets first briefly revisit the green economy. The green economy refers to the results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In doing so, it shifts traditional economic growth and development towards green growth and sustainable development. The former refers to the fostering of economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. Whilst the latter refers to development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

The WEF believes that tackling global warming will result in an economic boost, thereby adding $19 trillion to the global economy and increasing global GDP with 0.8% by 2050. A green economic transition is thus good for the environment, through low carbon, but also good for the economy through investment and the creation of 6 million jobs.

Despite the WEF’s estimate, there is no indicator to illustrate the socio-economic and environmental benefits of a green growth. Hence, many politicians and policy makers remain skeptical and believe that decarbonizing the economy through leaving oil and gas in the ground would present significant costs to the economy. Even though this is a factor to consider, the WEF believes that this loss would be compensated by the offset of new sectors and the creation of employment.

Many Nordic countries like Iceland are transitioning towards a green economy; however, numerous countries are still lagging behind. One example of such a country is the United States, where President Trump even overturned Obama’s policy to reduce emissions, and may potentially even exit from the Paris agreement.

Even though existing indicators of economic growth (Gross Domestic Product) and development (Human Development Index) already exist, these do not represent green growth. Thus, a new indicator has to be established in order to show politicians and policy makers the vast socio-economic as well as environmental benefits associated with green growth.

Such an indicator should further frameworks already presented by the the Organization for Economic Co-operation and Development and Green Knowledge Platform thereby helping countries to assess and compare their green growth progress.

Bottom Line: The WEF believes that slowing down climate change could add $19 trillion to the global economy but many countries like the US remain skeptical given the void of a green growth indicator. So we will not get green growth until we measure it.

* Please comment on these posts by students in my growth & development economics course. It really helps if you highlight unclear analysis, alternative perspectives, better data, etc.

10 May 2017

Links worth your time

  1. How development aid's "appeal to pity" undermines aid
  2. A basic income trial begins in Uganda. First reports are promising.
  3. Jihadis are just another flavor of millennial
  4. Some notes explaining the form of Chinese writing
  5. The ultimate means of building community: baby swaps
  6. "What I learned about life by becoming a landlord"
  7. The Economist on Saudi Arabia: "In a kingdom which acts like a (heavily armed) charity doling out cradle-to-coffin welfare, few see a reason to upset the felafel stand. Two-thirds of Saudi Arabia’s 21m citizens are employed by the government and expect annual pay rises whether working or not." A witty way to talk about a confusing country (water prices will still rise).
  8. "The 5 Elements of a Brilliant Sales Narrative" -- worth a read for EVERYONE.
  9. Palliative care may be better (live longer and more comfortably) than conventional treatment for terminal cancer patients
  10. "Which countries destroy the environment the most (and least)?"

The Bengali pro-poor policy paradox

Kristine writes:*

During recent years, Bangladesh has experienced an increase in human well-being and economic growth. The state is amongst the most densely populated in the world, with 161 million citizens inhabiting an area slightly smaller than Florida. The improvements in living standards are a result of policies and programmes implemented by the government and NGOs within Bangladesh. This is puzzling, as the development emerged from a political system hallmarked by powerful economic and political elites. This is what some, including the World Bank, have referred to as a “paradox” [pdf].

Since the mid-1960’s the Bangladeshi fertility rate has dropped steadily, and is currently at 2.1 children per woman. Also, the numbers of years of expected schooling has increased to more than 10 years on average. Interestingly, the number of expected years of schooling for girls (10.4 years) has exceeded the number of expected years of schooling for males (9.9 years) which is likely due to a government and NGO focus on female education; often offering payment to rural families sending girls to school. The significant improvements in the well-being of Bengalis citizens beg the question of why Bangladesh's political elites have provided more public goods.

Since the Bangladeshi democratisation, in the early 1990’s, its political system can be classified as a vulnerable limited access-order [pdf], where the political costs of depriving Bengali citizens of their liberal rights are low, and political support is gained through patron-client relations. If Bangladesh has a limited-access order, then why do self-interested elites provide public goods? Many, including Hans Rosling, argue that the incentive for lowering fertility rates and bettering education is to create a more economically prosperous population (boosting the economy). I find that this argument has its drawbacks, as it does not consider the costs of elites losing political and economic power. One would expect the elite to have little incentive to change the institutional framework and increase the well-being of the citizens, because this ‘opens up’ the political and economic sphere to non-elite members, and disrupts the elite's rent seeking.

Therefore, I propose that there are three main incentives for the government and NGOs program and policy intervention. Firstly, the vulnerability of Bangladeshi political institutions may incentivise politicians to comply with some public requirements. Secondly, despite the clientelistic characteristic, the system is democratic. Although there is too little space and time to elaborate why elites are competing, suffice it to say that they do. As Kitschelt argues, increased competition between politicians leads to increases in the supply of public goods. This is because competition increases the number of citizens needed to win an election; making the provision of public goods (non-excludable and non-rivalrous) more efficient than the provision of private goods (excludable and rivalrous). Nonetheless, this does not explain why governments (actually) implement policies and support NGO intervention.

The last incentive may explain this. The level of corruption and strong-economic ties between elite members impacts political decisions. It is clear that many policy programmes are profitable. As such, many NGO’s are ‘loyal’ to political elites. In other words, the incentive to contribute to human development may be driven by the benefits derived from lucrative project initiatives. This means that the limited access-order might still be thriving on rents, and the improvements in life-quality is not as good as it could have been with a different political structure.

Bottom line: The decline in poverty and progress in human development in the absence of liberal democracy, is likely due to three factors: regime instability, political competition leading to the provision of more public goods, and the rent-seeking opportunities created by the government and NGOs. As such, Bangladeshi growth and development is not a paradox; however, the development programmes and policies are not implemented efficiently.

* Please comment on these posts by students in my growth & development economics course. It really helps if you highlight unclear analysis, alternative perspectives, better data, etc.

The WCA: Whose fault is it anyway?

Charlotte writes:*

Between December 2011 and February 2014, 2.380 people in the UK died after a work capability assessment (WCA) found they were fit for work, hence ending their employment and support allowance (ESA). ESA is the main benefit for the long-term sick and disabled in the UK. If a claimant’s ESA is discontinued after being found fit for work, they will either receive jobseeker’s allowance, or no benefit at all. Many disabled people rely on ESA to pay for necessities, and the ineffectiveness of the WCA is toying with their potential standard of living. Although overseen by the Department for Work and Pensions (DWP), the WCA is administered by private firms who earn huge sums of taxpayers’ money, therefore benefitting from continuing to carry out these controversial disability assessments.

The British government - whilst supposedly ‘watching the watchmen’ (i.e. the private firms) - is actually legitimising the private firms’ actions through continuing to use outsource providers. Outsourced providers also allow the government to place blame on the firms and their shortcomings, meaning that less attention is paid to the WCA being ineffective - despite the Assessment itself being the root cause of the problems. However, regardless of attempts to shift the blame, the facts speak for themselves. Atos, one well-known contractor, chose to withdraw from a contract worth millions of pounds due to the damage the WCA was causing to the firm’s reputation. If such a lucrative deal can be outweighed by this, it is clear that there is a serious situation at hand. The numerous protests in the UK against contractors such as Atos only further illustrate this point.

Regardless of whether private firms should be able to capitalise on the suffering of others, it is clear from both individual stories and aggregated data that, with regard to the WCA, contractors simply don’t do the job to decent standards. The focus is wrongly on getting the assessments done quickly, rather than making the right decisions. There is a clear quality/ quantity trade-off here. However, unlike most situations where those adversely affected cannot easily challenge the company, the incorrect decisions regarding the WCA can be directly appealed - an option which many former ESA-claimants have opted for. The appeals process means that the lack of quality in the decisions can actually be challenged and the outcome can be reversed. With this in mind, one would assume that the firms have strong disincentives regarding rushing the job to save money and time, given that more appeals mean increased burdens. Yet so far, this basic logic has not been seen. Perhaps future reforms should involve stronger (dis)incentives for the individual firms, so that there is more pressure to actually do the job right.

In a 3-month period in 2016, 2.000 people were wrongly found fit for work; in June 2016, 56% of appeals were upheld. How can this system be viewed as anywhere near functioning, when over half of its decisions are proved wrong? Not only is this traumatic for those being tested - who run the risk of losing the ESA benefit that they so often rely on for basic needs -, but processing so many appeals means digging deeper into taxpayers’ pockets. So much for the claim [pdf] that the WCA would save loads of money...

So, whose fault is it anyway - the DWP for relying on private firms on such sensitive matters, or the contractors themselves for doing an inadequate job? An independent review suggested 37 changes to the system, 32 of which applied to the DWP. It is surely worrying that a system in place for years still needs so much adaptation. Nevertheless, such reviews highlight the urgent reform needed, as well as the responsibility of the DWP to fix the mess they originally created. It is difficult to claim that the DWP could find a better solution, given the many limitations of counterfactuals. But I would sincerely hope that this is not the best the British government has to offer. With the upcoming snap election, I’ll be interested to see how significant the WCA is in the political arena.

Bottom line: The WCA is an ineffective tool for judging who is (not) fit for work and the DWP and outsourced providers are both somewhat accountable for the many mistakes made. A major overhaul is well overdue; hopefully, the General Election in June 2017 will increase the speed of this process.

* Please comment on these posts by students in my growth & development economics course. It really helps if you highlight unclear analysis, alternative perspectives, better data, etc.