20 Apr 2018

The myopia of techno-optimists

10 year ago, I blogged on Julian Simon's "end of the world" bet with Paul Ehrlich. Ehrlich (author of The Population Bomb) though that humans were destroying the environment and thus their future. Simons (author of The Ultimate Resource) thought that humans would innovate their way out of any problems (the "resource" is humans).

In this bet, Ehrlich made the fatal mistake of betting that a market commodity (metals) would rise in price because resources were being depleted too rapidly. Simons thought the price would fall as market incentivized innovation. Simons won the bet, but I argued that Ehrlich was right because he was thinking of damage to the environment, a "good" that cannot be priced, traded or managed well in markets.

Recently, some stories have brought these topics up again, so it's time to put them in their proper (right or wrong) context.

First, read this optimistic post from Will Boisvert, who argues that economic growth and technological innovation mean that climate change will only be "a middling-scale" problem. He's over-optimistic (and wrong) because he entirely fails to discuss the massive cost of replacing the flow of "ecosystem benefits" that we now get for free. These estimated benefits total $125 trillion per year, significantly higher than global gdp of $75 trillion per year. Boisvert works for the Breakthrough Institute, a think tank devoted to "ecomodernism," i.e., that we will innovate our way out of trouble. The BI opposes ecologists who want to reduce our footprint, argues with bias and sophistry, and supports subsidies for technology even when it would be cheaper to reduce destructive incentives.

Second, read this overview of the ongoing destruction of ecosystems (and the biodiversity they contain) and how that is bad for humans. If you want to hear it from the horse's mouth directly, then read this update on Ehrlich's thinking.

Third, consider why Ehrlich (and people like me) are so pessimistic about our future while Boisvert and other Simons-types are so optimistic. I think the optimists are too isolated in their theory, thinktanks and urban lifestyles to see the changes underway, let alone understand them. I also think that they are professionally "blind" (economists who only study markets) or deaf (journalists like Boisvert) to see the whole picture, which is helpfully illustrated by this photo I took of a recent TEDx:
Nature isn't going to hire you again if you trashed the place last time 'round.
Bottom line: Technology will not save the environment if there's no governance model to protect it from over-exploitation. Don't sit back and wait for Uber-solar to save nature. Uber, like all profit-seeking companies, doesn't give a shit.

19 Apr 2018

How much "surplus" do people get from consuming water?

A few months ago, DJ emailed:
My company has been asked to help a local water utility with a risk assessment in case of an earthquake. We are proposing an economic approach -- attempting to quantify actual risks, as opposed to the more common "high, medium, low" or risk tolerance thresholds.

A major difficulty seems to be estimating the consumer surplus from water supply, particularly after a disaster. I've looked at estimates of [price] elasticity, but even if you believe them, they don't tell you much about the economic cost of a total loss of supply.

I wonder if you have any suggestions about where to look.
I replied:
The surplus from access to drinkable water would be HUGE, varying from the price of bottled water (saved by having piped water) to the value of not getting an intestinal disease/losing your unborn child etc.

Note that water consumption after a disaster occurs at the top of the demand curve, where values (thus surplus) are highest and elasticity is probably VERY low. Elasticities are not usually calculated with respect to such consumption decisions. In the case of indoor water use (drinking plus much more) they are as low as -0.10. In most places where drinking water is used extravagantly (e.g., watering lawns), elasticity is high (-0.8-1.2), meaning that surplus is low.
To which DJ replied:
For the time being our approach is to estimate a demand curve using current price and estimated elasticity of demand. We extrapolate using a constant slope to a maximum value [for the first unit, thus the "anchor point" for tapwater demand (i.e., $500/m3 @ $0.50/liter), which does NOT represent the value of drinking water as much as the point at which demand for tap water shifts to the demand for tap water...], based on the price of bottled water or something like that.
Although I see the merit in this approach, it's important to think about it in terms of comparing cost to price to value.

Bottom line: The value of water depends on how much you already have.

18 Apr 2018

Links of interest

  1. Some interesting thoughts on President Xi, China's President (for Life?)
  2. Steven Pinker makes the case for human progress, but that's not inevitable
  3. Milton Keynes, a successful garden city?
  4. How much are you paying for your neighbors' solar panels?
  5. A paper comparing Dutch to American flood programs. The Americans are lagging. 
  6. "It’s sometimes said that data is the ‘oil’ of the digital economy, the resource that fuels everything else. A more helpful analogy is between oil and privacy, a concealed natural resource that is progressively plundered for private profit, with increasingly harmful consequences for society at large. If this analogy is correct, privacy and data protection laws won’t be enough to fight the tech giants with. Destroying privacy in ever more adventurous ways is what Facebook does."
  7. A very complete, and simple, guide to eating
  8. How Copenhagen avoided being cut to pieces by highways
  9. Trouble for Australia's Murray-Darling Basin Authority accused of "ignoring" farmers stealing water and wasting money as it fails to protect the river's environmental flows.
  10. Bangladesh vanquished diarrhea by helping poorer people (the rich then imitated them, to maintain status) and lacking the Hindu superstition that only untouchables "manage" waste. (That said, here's an article on the untouchables struggling with bursting sewers in Dhaka, so there's clearly a lot of work needed!)
  11. New book! Groundwater around the World -- free download
H/T to CP

17 Apr 2018

A teacher comments on my book

Andrew sent these comments awhile back, but they may be interesting for you:
I thought The End of Abundance was a really great tool for my course. In particular, I was teaching an online course on water economics for students in an online Master of Water Resource Management program. My course was the sole economics course in their curriculum, and there was considerable heterogeneity in my students’ math and economics backgrounds. In short, the only thing I could rely on was that my students could handle Algebra-I level math. Consequently, the course focused much more heavily at building economic intuition and using economic concepts to form written arguments.

I found the chapters I assigned from Part I to be better-suited for my course than the chapters I assigned from Part II. Broadly speaking, I found Part I chapters to be more closely and clearly tied to canonical economic concepts than the Part II chapters. In Part II chapters, it was more difficult to disentangle “textbook concepts” from more philosophical points or your own policy suggestions. In particular, I used chapters 7, 8, and 9 to teach about asymmetric information and moral hazard, benefit-cost analysis, and environmental externalities. That worked all right, but I think my students had a hard time understanding these concepts outside of the context of your chapters.

The above comments are from my perspective as an instructor. In fairness, I should also share my impression of my students’ thoughts. I think many of my students liked the Part II chapters quite a lot. Many of my students work in water management or environmental assessment capacities, and found your direct treatment of water management in California to be remarkably relevant to their own experience.
Besides being pleased with this nice use of my book, I have two responses:
  1. Part II of TEoA (and its successor Living with Water Scarcity, which presents the same material in a less-academic, free-to-download format) is about the political and social dimensions of water scarcity that must be considered and included in water management discussions. That duality (explained in this blog post) is why I call myself a "political economist" rather than just "economist."
  2. My policy suggestions often acknowledge complex institutional realities that economic models ignore. One of my favorite ideas, for example, is to turn a bunch of "non-point-source" polluting farmers into a single "point" responsible for all the runoff in their area, as a means of avoiding the traditional economic response (i.e., giving up). Such a suggestion (see Chapter 4 of Living) has almost nothing to do with economics, pricing or externalities, except in the way it avoids individual free-riding by assigning responsibility to a group. Such applications of the Coase Theorem are more familiar to political-economists working in the tradition of the Ostrom School than economists.
Bottom Line: A book presents ideas, but those ideas are only useful if you can integrate and apply them to your situation.

16 Apr 2018

Should water utilities insure against drought?

MH emailed this awhile ago:
David,

I's emailing in part due to your earlier ideas on the potential role of the insurance industry for performance oversight and rewarding proactive utility risk management (e.g., water pipe condition).

Have you evaluated the relative merits of weather risk transfer for water utilities? By this I mean index-based parametric insurance -- like the type farmers, power utilities & other weather-sensitive businesses use.

The issue as I see it: Water utilities' economic model is challenged because 80% of their costs are fixed while 70-80% of their revenues are variable, meaning that weather-driven changes in demand are financially painful.

[This post explains how mismatched revenue/cost structures lead to revenue shortfalls when falling demand lowers revenue faster than costs fall.]

Municipalities are in effect betting on the weather ("please snow enough in the mountains, please be dry during summer & then we'll sell enough water to get the funds to maintain our infrastructure").

The issue is that bad years are very disruptive -- surcharges to customers, projects delayed/deferred, staff distracted, etc. If there were a way to minimize this disruption, there could be real value created, i.e. less dead-weight loss. For regions with sufficiently volatile weather and volumetric price risk, it could be the case that tapping insurers' capital contingently based on weather triggers could be value-creating, more than offsetting the risk premium and margin that the underwriter would require.

Reserve funds should play a role for disruptions that are fairly common. But for 1 in 5 to 1 in 10 type weather events in some regions (CO, CA, TX) the variability is so great that a really massive reserve would be required. Building and maintaining such a fund would be hard, and there's the opportunity cost of capital sitting in reserve vs. being deployed on infrastructure projects where it would generate a return on assets.

Rating agencies currently do not really assess weather risk and reward/penalize water utilities for proactive weather risk management. They note the lagging indicator of Debt Service Coverage, and very occasionally they downgrade someone (Ft Worth, TX, for example).
So MH has indeed identified a real problem at water utilities where revenue is based on the volume of water sold but costs are mostly fixed.

In my understanding, such problems are the result of managers and politicians following the advice of economists on how to incentivize water conservation by increasing the share of volume-based charges on a consumers bill (meaning that the share of fixed charges falls).

The evolution works as follows:
  1. In the beginning, customers pay a fixed charge each month to use as much water as they like. Such a scheme results in stable revenue to the utility, which helps it cover its fixed costs (roughly 80 percent of the total) for its network, salaries, debt, etc. Variable costs go up and down with use, but those costs are too small to worry about.
  2. In places where water itself is scarce, there's a need to get people to use less water, which leads to a shift of charges from fixed to variable. This system is "calibrated" so that the utility receives the same total revenue and "the average consumer" pays the same total charges, so everything is good as long as behavior is "normal and average." (It's important to remember that water utilities are supposed to "break even" or make regulated profits, which explains why total revenues are set to match total costs.)
  3. The system breaks down however if people decide to use less or there is less water to sell, i.e., in droughts where people are trying to do the right thing or utilities just can't deliver enough water to meet demand.
  4. The most common response to the ensuing revenue shortfall is for utilities to raise the unit price of water to collect the same (target) revenue from selling less water. These actions are always and deservedly unpopular.
So MH is asking if it wouldn't be better for utilities to receive insurance payouts when there's a drought, as a means of covering their revenue shortfalls. (Such a system implies utilities pay the insurance companies excess revenues that would result in a year when there is "too much" water, and consumption is high.)

Although such an insurance scheme sounds like a good way to counter-act the original sin (mismatched revenues and costs), I would prefer to undo that sin by matching fixed costs to fixed revenues and variable costs to variable revenues and adding a "scarcity surcharge" when water supplies are tight (for any reason, including drought), as my system would be far more stable and avoid the need to negotiate payments and premiums with insurance companies.

Bottom line: Many water utilities use a perverse charge scheme that unbalances their finances. Such schemes should be replaced by my scheme to protect utility finances while encouraging conservation.

13 Apr 2018

Learn the secrets of water management by listening to old folks

In a newsletter from over two years ago (!), I wrote:
I had a very interesting meeting with the ex-CEO of a major Dutch water company (these are public corporations) and learned quite a bit from his seasoned perspective. [That CEO was one of the key background sources for our paper, "Water civilization: the evolution of the Dutch drinking water sector," now in press.] Does anyone know of an oral histories project (or similar archive) that draws on the experience of folks who have worked decades in water? They would make a good book or series of blog posts/articles.
I apologize for the long delay in publishing these two responses:

Nicholas Brozovic wrote:
We actually completed an oral history project for water management in Nebraska at the end of 2013. I don’t know how much you know about the High Plains region of the US, or Nebraska in particular, but we have a unique local governance system for groundwater management (the Natural Resources Districts) that has been in place for over forty years. Many of the key people involved in setting it up are elderly, so our Water for Food Institute helped the Nebraska State Historical Society collect interviews from important people around the state to try to understand how and why the system was developed, and what people’s opinions were at the time. These were then transcribed, and together with the audio files, put online. There are over 70 interviews in total on the website. Here's a news release on the project, and here's a blog post from a grad student who used our database for research.
Linda Vida wrote:
There is an Oral History Center that is part of the UCB Bancroft Library. There is a search box about half way down the screen, enter "California Water Resources" in the search box and submit. You will see many oral histories that pertain to water and some of them were sponsored but the California Water Resources Center. It looks like all of them have been digitized and are available to read online and the researcher can print a certain amount of pages.

Here's how to prepare for an oral history (there are many links there).

Of course, now you can videotape oral histories but you have to still do the preparation as I mentioned before so that you have a quality finished project. And as I mentioned before, you can do an entire career (long) or just a major project or a part of a career.

I think most major universities would have an oral history department, as it truly is a unique way to capture history with the people who “made it happen.”
Bottom line: Anyone can learn a lot by talking to veterans. Use these resources, find your own, or -- best of all -- go find some water managers to tell you "how they did things in the old days."

12 Apr 2018

Water use and wastewater demand are linked

A few years ago (!) Jeremy emailed:
If there was one area you could expand your discussions of the economics of water then it would be how municipal water supply and waste water treatment are interdependent.

I've done some efficiency projects at waste water treatment plants (WWTPs) and found the cost to treat waste water is more directly linked to Biological Oxygen Demand (BOD, a measure of how much organic material bacteria need to digest before effluent is discharged) than the volume of water (million gallons per day) treated.

Thus, water conservation that reduces volumes at WWTPs will lead to lower revenues (when tariffs are based on volume) while costs of reducing BOD stay the same. This result will be common, and problematic, when separate entities manage water and wastewater.
As Jeremy notes, these results are indeed common, which means that WWTPs afraid of lower revenues might oppose water conservation.

Why would such a result occur and how can it be prevented?

It would occur when water and waste-water utilities are separate in their corporate form, service area, and financial management. Thus, these problems will not occur (or would be foreseen and avoided) at vertically integrated water managers such as WaterNet in Amsterdam, PUB in Singapore or the San Francisco PUC. In other cases, the problem can be coordinated and managed, but may not be if managers "forget" to talk to each other or pursue opposing strategies and goals.

The result can be prevented by charging consumers based on their contribution to average BOD or (better) integrating BOD-based sewerage costs into water service billing, which will give water suppliers an incentive to include cost impacts in their decisions.

Bottom line: Monopolies that ignore each other risk exchanging short-term gains for long-term costs, and those costs will be present -- and persist -- as long as they fall on customers rather than water managers.

11 Apr 2018

World inequality

The World Inequality Database is tracking the data, and the NY Times has written a good summary of the trends, which are captured in these two figures:

Inequality now, by region. Note N America's shares vs Europe

The bottom 50% and top 1 percent have done well. The middle not so much (hello populism)

10 Apr 2018

Review: Routledge Handbook of Water Economics and Institutions

I've had this book on my "review pile" for over three years, but I took some time to look through it the other day and have a few comments. This "review" is therefore not based on me reading all of the chapters word for word but my general experience with this type of material.

This 2015 book was edited by Kimberly Burnett, Richard Howitt (my old PhD advisor), James A. Roumasset, and Christopher A. Wada. It has 23 chapters by 41 authors (some repeats, many co-authors) that are organized into four parts:
  1. Principles and overview
  2. Private behavior and regulatory design
  3. Institutions and information
  4. Water markets and institutions around the world. 
It's important to note that the hardcover costs $250, the paperback $65 and that it's already posted to the pirate networks (let's be real, right?)

In browsing the book, I have a few comments:
  • There are three types of chapters in the book: model or optimization-driven, conventional wisdom on important dynamics, and regional/local case studies. 
    • The model and optimization-driven chapters might be interesting to academics who understand their limits (assumptions lead to results, missing data are misleading, false-precision, etc.)
    • The conventional wisdom chapters will be useful to anyone who's not thought about how water is (or should be) managed, but these chapters often ignore (institutional) barriers to change.
    • The institutional chapters are more useful at discussing how local situations and decisions lead to different outcomes, but they are (as usual) limited in their relevance to other locations.
  • In my quick read, I did not see a really strong case made for setting aside "social water" (see part II of my book) before discussing "economic water." This omission may have reflected a decision to "ignore politics" but I think that the editors missed an opportunity to test economic models against political reality. I was quite discouraged, for example, to see "environmental water" discussed only as another source of demand in water markets. Such a discussion not only ignores the non-market nature of environmental flows as non-excludable goods, but it also flies in the face of everyday discussions of "for whose benefit do we manage water?"
  • The only reference to Elinor (or Vincent) Ostrom is in passing. Given the book's use of "institutions" in the title, I think that the absence of her perspective/framework significantly weakens the value of this book. (I'm not too surprised at this, as I found out about Ostom's work outside of my graduate courses.)
  • On the other hand, I was extremely pleased to see that Gary Libecap revised his discussion of the Owens Valley (a famous case in which critics blame Los Angeles of "water grabbing" from farmers). In his first take on the topic (back in 2003 or so), Libecap pointed out that "holdout" farmers got higher prices, but ignored how those same farmers captured only a fraction of the total value of the water, i.e., that Los Angeles got most of the benefits. In this version, he adds some data showing how they didn't get very much of the surplus, thus giving an empirical foundation to their complaints. His chapter is therefore far better from a political-economic (as well as common-sense) perspective.
  • Many of the institutional chapters could have used a "measuring stick" comparing the current situation to "best in class" or "theoretical best" to help readers see the gap between where water management is (positive) and where it should be (normative). The California chapter, for example, is subtitled "lessons from a maturing market" but I would have written "lessons from a underperforming market."
Bottom line: I recommend this book to academics interested in these topics (FOUR STARS) but not to the general public, as the topics are too narrow and treatments too technical to be useful. For the general public, I recommend (in random order) Take Me to the SourceWater for SaleHeart of DrynessWater and the California DreamDead PoolKing of CaliforniaWater FolliesBlue RevolutionWhen the rivers run dryDown the DrainRain, and Introduction to Water in California. You could also do worse than reading my book, which is short, free and complete in terms of its discussion of the political-economy of water.

For all my reviews, go here.

9 Apr 2018

Baggage theft at airports? That's your problem.

In August 2016, we flew Amaszonas from Bolivia to Paraguay. On the way, my checked bag was robbed. I wrote this complaint:
Today, I took Amazonas from Rurrebaque to La Paz, then from La Paz to Asuncion, via Santa Cruz

When I arrived in Asuncion, I discovered that things were missing from my baggage:
  • USB wireless keyboard (value USD $35)
  • Souvenir cash from Argentina, Chile and Bolivia (value USD $35)
My bag was not locked, but I was unable to take it inside the plane because it weighted 9kg.

The items were stolen at Rurrebaque, La Paz, or Santa Cruz airports, as the bag came within 15 minutes of our arrival in Paraguay.

I know that someone was in my bag because it was "strangely" repacked.

Please tell me how you would like to proceed.
The reply was:
Thank you for contacting us. Inform you that we are sending your email to the person in charge to investigate the case. We also provide the following information so you can contact:

Ernesto Gutierrez: 71012115 egutierrez@amaszonas.com

Estimado Sr. Gutierrez: Buenas noches, solicitamos su colaboraci├│n al pasajero, gracias.
There was no reply. In October 2016 I emailed:
Hi Ernesto

It's been 2 months.

When are you going to send me $ to compensate for theft from my baggage?

Best,
David
To which I got this reply:
Mr Zetland

Unfortunately we cannot make responsible for loss reported after leaving the airport.

Amaszonas S.A. in accordance to the Air Regulation, (as it is at most airlines) is not liable for damage or loss to any electrical appliance, fragile items, money, medicine, jewelry, mobile telephones, documents in general, and others that must remain in the passenger's custody within carry-on baggage at all times. According to procedure claims claims as lost, pilferages, damages should have been done before leaving the airport in order to make them valid.

Amaszonas S.A. is not liable for any damage cause by the airport administration personnel during screening checks. For instance, we are sorry to inform you that the claim cannot proceed as it was not declared at the moment of checking at La Paz.
This useless reply denied compensation because I had:

  1. Failed to unpack and inspect my bag before leaving the airport;
  2. Checked items that the airlines have declared "must remain in the passenger's custody;" and
  3. Failed to declare theft in La Paz, half-way through our trip.

These excuses do not protect passengers. They only make it easy for airlines to ignore theft by airline and airport staff. Sadly, limited competition and lax regulation means that airlines and airports can ignore the criminals taking advantage of defenseless passengers.

Bottom line: Don't check anything that might be valuable or stolen when traveling in dodgy countries where the ground crew robs bags. (The US is on this list!)

6 Apr 2018

Free idea! The Rumor Mill

Back in 2005, I was really annoyed that Bush II was going after whistleblowers, as I think that they deserve the protection they are promised by law as well as our appreciation for putting themselves at risk to bring bad behavior to light. (Little did I know that Obama would be worse for whistle-blowers and Trump just plain worse for humanity!)

Anyway, I set up a website (rumor-mill.org, later rebranded whistle-safe.org) that would allow anyone to say anything they wanted, anonymously, as well as for others to comment on those "rumors" and vote on whether they thought the rumor was true or false.

I knew that some people would lie, but I thought that voting would slowly reveal "qualified commentators" because those who voted for rumors that turned out to be true would get a "positive reputation" while those who voted against them would get a negative reputation. (This system is similar to what we we see today on reddit, but I was inspired by digg, 4chan, and slashdot.)

Sidenote: In the course of shopping this idea around, I ended up chatting with Julian Assange in the early days before wikileaks got popular. I thought his idea was good, but his reliance on documents restricted what could be discussed. (His subsequent biased filtering and release of documents is just a basic betrayal of his original promise, so I think he's far more of a manipulative villain than hero these last few years.)

After I spent several thousand dollars to get the site set up, I tried to get people to use it. I failed to get any attention from whistle-blower lawyers because they prefer to know who they are dealing with. I failed to get any support from journalists because they like to see documents. I shut down the site after a few years of failure. (Here's a bit of background that's left over.)

My failure does not mean the idea is invalid! All over the world, there are middle managers, nameless bureaucrats and personal assistants who see misdeeds up close but lack a way to get information on those misdeeds out in public. A website like the rumor-mill would help them because it's easy to write a few words that might inspire others to add their own ideas, opposition politicians to ask questions or journalists to investigate potential mis-behavior.

So that's the idea. Take it. Use it. I'd be pleased. Humanity would benefit.

5 Apr 2018

America's brainwashing machine

Sinclair Broadcast Group has brought 1984 to the US, which is "extremely dangerous to our democracy."



Want more? Watch John Oliver's analysis.

Reducing residential and commercial water waste (part 3 of 3)

This post contains some of the interesting elements from a report I prepared for a client who never put the information into public circulation. I am posting it here in the hope that it's useful to readers. [Read Part 1][Read Part 2]

A drinking water provider (DWP) delivers potable drinking water to residential, commercial, industrial, institutional and/or government users. This solution addresses use by the first four classes (abbreviated RESCOM).

This solution thus focuses on the actions that a LG can take to reduce RESCOM water waste. Some actions (e.g., regulations on water use or appliances) are direct; others (e.g., water metering and pricing) are implemented and managed by the DWP. We will treat LG and DWP as separate entities (even if they are legally merged).

This solution proposes a number of policies for LGs and DWPs. The relative effectiveness of different policies depends on local conditions. Implementation of multiple policies should result in greater cumulative savings (i.e., positive reinforcement).

Effectiveness should be evaluated based on the cost per unit of demand reduction or water saved. Some policies will have “negative costs,” i.e., they reduce water consumption by ending inefficient spending. Other actions may not recover initial spending for years, but such long payback periods are not unusual. Cost-recovery for water infrastructure is measured in decades. This solution’s impacts will arrive in the short term (reduced water consumption and improved reliability) and long term (lower infrastructure spending).

Why save water?

Cities facing water stress (or scarcity) must find ways to increase supply or reduce demand if they are to avoid shortages that reduce economic activity, impair local ecosystems and threaten citizens’ quality of life. In many cases, it is legally, politically or environmentally difficult to increase water supplies, so it is necessary to reduce demand.

The policies discussed here can reduce water use by 10-50 percent, depending on local conditions. The largest reductions could occur in cities – such as those in the southwestern US -- where customers use 50-70 percent of drinking water outdoors, as such luxury uses are “waste” by definition where water is scarce. The smallest reductions would occur where metered customers can only reduce their indoor water consumption by installing low-consumption appliances (e.g., toilets or showerheads).

Of the numerous cases studies supporting these statistics, it may be useful to look at [snip] Loaiciga and Renehan (1997), where higher (metered) tariffs lowered demand in Santa Barbara, California, by 50 percent during a drought and [snip]. It is useful to note that conservation did not threaten utility finances in any of these cases. Indeed, it is much easier to increase revenues (via higher tariffs) with water meters, as increases can be justified as means of protecting reliable service.

The timely implementation of this solution will rationalize water use and thus minimize capital spending, distortions to business decisions, environmental stress, costs to consumers, and socio-political controversy over “fair” access to water.

Long-term benefits of solutions
  • Improved social and economic indicators for mortality, morbidity, and productivity
  • Improved social cohesion and cooperation by ensuring service to all the “public”
  • Attracting new residents and businesses through reliable water services
  • Decreased pressure on water resources and related political tensions
  • Improved ecosystem health and ecosystem services.
  • Decreased or postponed capital investments in water-supply infrastructure
  • Improved awareness and responsiveness to climate change
Short-term benefits of solutions
  • Improved reliability and quality of DWP services
  • Improved DWP financial sustainability
  • Decreased water consumption
  • Lower capital spending and expansion-related system disruptions
  • Decreased energy consumption linked to lower water use
  • Decreased greenhouse gas emissions linked to lower energy consumption
Indicators of results
  • Water production at treatment plant, in m3/day
  • Water consumption from household meters, in m3/day or liters/capita/day
  • Water consumption by commercial, industrial and institutional activities, in m3/day
  • Median change in year-on-year consumption for RES and COM, in percent
  • Metered water use out of total water extractions/withdrawals, in percent
  • RESCOM payments to DWP, as a percentage of total DWP income
  • Health indicators, e.g., water-contamination-related hospital admissions
  • Affordability indicators, e.g., percentage of customers with unpaid water bills
Local government roles
  • Planner
  • Policy maker
  • Regulator
  • Operator of municipal facilities (rolled into DWP role)
  • Role-model
  • Stakeholder engagement
Integrated solutions involve enabling, required and multiplier actions that, respectively, enable a solution to be discussed, are required for a solution to work, and multiply the impacts of a solution. There is far too much detail in my original report to include here, but these can be, for example, establishing a policy for reliable water supply (enabled); reporting RESCOM water use and per capita household consumption (required); and monitoring measures of environmental, economic and social sustainability (multiplier).

Necessary preconditions
  • DWPs are either investor-owned, autonomous public corporations, or part of municipal government. No matter the DWP’s organizational form, it will be regulated as a public utility with a “natural monopoly” on water services.
  • Local government has some level of control over DWP. Although it is possible to encourage people to use less without any control or coordination with DWP, such a message may be nullified if DWP benefits from “wasteful” use (i.e., higher revenue) or faces no penalty for depleting reserves that may be useful later.
  • The water supply network provides safe water services that satisfy the basic needs of people in the community. This solution does not apply if basic services are not available.
  • DWP must have billing and accounting systems, system meters, staff for outreach, accounting and engineering, and so on. An underfunded, understaffed, or underqualified DWP cannot focus on reducing water use without first establishing the minimum infrastructure necessary to serve customers.
Success factors
  • Adequate funding, staffing and time
  • Political support for action (i.e., acknowledgement of water waste)
  • Social acceptability, i.e., an agreement that the bulk of the financial burden from metering, higher prices or other conservation actions should fall on heavy water users (as opposed to falling on the wealthy, via property taxes). Such a result is possible if, for example, excess revenues (from raising prices above cost to reduce demand for water) are returned to customers in the form of lower fixed charges.
  • Willingness to experiment, learn and reiterate
  • Choice of technology, techniques and regulatory-price mix suitable for local conditions rather than outside imposition of “best practices”
Barriers to results
  • Political opposition to changes in water pricing or use
  • Regulations that prevent changes in water charges or water use
  • Favored groups (e.g., receiving lower prices per cubic meter) may oppose changes in prices or regulations
  • Lack of time and money necessary to establish a baseline of water use and plan for reducing water waste
  • Inability to gather or commit RESCOM, DWP or LG leaders to solution
Risks
  • Risk is related to fear of change, and staff who fear change may block solution rather than cooperate. The “hidden” nature of water makes it easier for people to hide their opposition (e.g., not installing low consumption toilets, certifying wasteful water use as “necessary,” etc.)
  • Water price increases often have a disproportionate impact on poor people who may oppose them. Exemptions create a risk of misclassification through incompetence (poor recordkeeping) or corruption (the rich bribing inspectors to be classified as poor)
  • Decreases in consumption may drop revenue and destabilize DWP finances
  • Introduction of incentives to use less water may be opposed by customers who feel that the quality of the existing service does not justify current prices.
  • Some actions may require upfront funding from non-customer sources. Outside funding from debt or bond markets may require LG to seek borrowing permission from citizens or other political bodies. Loans or grants from national or international sources may be easier to get but bring conditions or restrictions that interfere with LG, DWP or RESCOM opportunities or choices.

4 Apr 2018

Links of interest

She opened running to women by crashing the 1966 Boston marathon 
  1. East Asians don't think of "original" in the same way as Westerners, which explains a few persistent conflicts over actions and interpretation of those actions
  2. Tribalism is innate in humans but can be overcome very easily
  3. Subsidies, like puppies, are everyone's favorite, but too many can get out of control
  4. You can geek out for hours browsing the Guardian's style guide (example: "Scandinavia: Denmark, Norway and Sweden; with the addition of Finland and Iceland, they constitute the Nordic countries"
  5. Ralph Nader is back (and right): "How power in America has turned the rule of law into a mere myth"
  6. I'm a fan of the Organized Crime and Corruption Reporting Project (OCCRP), and I am particularly delighted to see reports holding politicians accountable, e.g, "Ex-President of France Detained over Alleged Gaddafi Money" and "Slovak PM resigns after journalist’s murder" [not that a resignation compensates for murder!]
  7. "To save congress, restore local news"
  8. Reich on the commons:
    "Occupy Wall Street morphed into the Bernie Sanders campaign, just as much of the Tea Party movement morphed into Trumpism. There is an overlap between authoritarian populism and progressive populism: Both sides detest what they call “crony capitalism” -- the overwhelming influence of “Big Money” on our political system to give favors that distort our economy and our politics [I argued the same 6 years ago]. That may be a place to begin, in terms of finding common ground."
  9. George Walden on Brexit:
    "The spectacle of such a talented yet leaderless nation stumbling blindly towards an unmapped future, tapping its stick fearfully as it goes, inspires sadness, shame and pity. As penury and not so splendid isolation loom, the question becomes, who are the patriots now?"
  10. Matt Taibbi on the Iraq War:
    "We flatter ourselves that Trump is an aberration. He isn't. He's a depraved, cowardly, above-the-law bully, just like the country we've allowed ourselves to become in the last fifteen years."

Reducing local government water waste (part 2 of 3)

This post contains some of the interesting elements from a report I prepared for a client who never put the information into public circulation. I am posting it here in the hope that it's useful to readers. [Read Part 1][Read Part 3]

A drinking water provider (DWP) delivers potable drinking water to residential, commercial, industrial, institutional and/or government users.

This solution addresses use by local government (abbreviated LG) by focusing on actions LG can take to reduce water waste within its own operations (e.g., inside LG offices and outside at LG-run parks). Another solution focuses on use by the remaining four groups (abbreviated RESCOM).

Some of these actions appear in the RESCOM solution (e.g., install and use water meters), but others are unique to LG, which operates in a bureaucratic environment where staff are motivated more by professional image than price signals.

This solution will therefore consider actions that motivate LG workers from two perspectives. Those that rely on “intrinsic motivation” work because workers decide they prefer to reduce water waste, even if they incur personal costs. Those that rely on “extrinsic motivation” work because they push workers to reduce water waste as a means of avoiding less attractive alternatives. As examples, compare “educational awareness” to “budgetary discipline.” The former can reduce waste because workers aware of scarcity will decide to use less water, even if nobody is looking; the latter can reduce waste because water use reduces the budget available for other activities.

Most solutions should be organized around business units (BUs, such as schools, parks, police, administration, et al.) in recognition of their separate administrative, personnel and budgetary functions. “Benchmark competition” will improve performance, but such competition should be organized – and incentivized – within each BU (e.g., school A versus school B).

The relative effectiveness of policies described here depends on local conditions. Implementation of multiple policies should result in greater cumulative savings (i.e., positive reinforcement).

Effectiveness should be evaluated based on the cost per unit of demand reduction or water saved. Some policies will have “negative costs,” i.e., they reduce water consumption by ending inefficient spending. Other actions may not recover initial spending for years, but such long payback periods are not unusual. Cost-recovery for water infrastructure is measured in decades. This solution’s impacts will arrive in the short term (reduced water consumption and improved reliability) and long term (lower infrastructure spending).

Why save water?

Cities facing water stress (or scarcity) must find ways to increase supply or reduce demand if they are to avoid shortages that reduce economic activity, impair local ecosystems and threaten citizens’ quality of life. In many cases, it is legally, politically or environmentally difficult to increase water supplies, so it is necessary to reduce demand.

The policies discussed here can reduce water use by small or large quantities, depending on local conditions. The largest reductions usually result from patching leaks; smaller reductions result from changes in habits of behavior. In all cases, it is necessary for LG to budget adequate time and money for measuring, implementing, coordinating, and reporting results. Salvador, Bahia, for example just reported on a five year effort to reduce water use at governmental facilities that involved changes in fixtures, changes in operating norms, and extensive reporting. Those efforts reduced water use by enough to lower the government’s monthly bills by 31 percent

It is important to note that conservation does not always result in LG budget savings. In some cases, LGs do not pay for DWP water because the (municipal) DWP is a division of the LG. In other cases, LG may need to spend money (e.g., repairing leaks or installing low consumption appliances) before it can save water and reduce bills. There may also be a disconnect between saving water and saving money, as when water is priced below its cost of delivery or (usually much higher) cost of replacement.

The timely implementation of this solution will make it easier to implement other, related, solutions. DWP and RESCOM are much more likely to monitor and reduce water waste when LG establishes a benchmark for good behavior. They are less likely to take conservation seriously when LG has green lawns, leaking toilets and bubbling fountains.

Long-term benefits of solutions
  • Improved social and economic indicators for mortality, morbidity, and productivity
  • Improved social cohesion and cooperation by ensuring service to all the “public”
  • Attracting new residents and businesses through reliable water services
  • Decreased pressure on water resources and related political tensions
  • Improved ecosystem health and ecosystem services.
  • Decreased or postponed capital investments in water-supply infrastructure
  • Improved awareness and responsiveness to climate change
Short-term benefits of solutions
  • Improved reliability and quality of DWP services
  • Improved DWP financial sustainability
  • Decreased water consumption
  • Lower capital spending and expansion-related system disruptions
  • Decreased energy consumption linked to lower water use
  • Decreased greenhouse gas emissions linked to lower energy consumption
Indicators of results
  • Water production at treatment plant, in m3/day
  • Water consumption by LG (total and by BU), in m3/day
  • Median change in year-on-year consumption by BU, in percent
  • LG payments to DWP, as a percentage of total DWP income
Local government roles
  • Planner, policy maker and regulator of own use
  • Operator of municipal facilities (ignored here and delegated to DWP)
  • Role-model for RESCOM
Integrated solutions involve enabling, required and multiplier actions that, respectively, enable a solution to be discussed, are required for a solution to work, and multiply the impacts of a solution. There is far too much detail in my original report to include here, but these can be, for example, creating BU working groups to coordinate actions and learning among BUs (enabled); establishing targets for BUs and “benchmark” their progress against each other (required); and monitoring the financial health of BUs and DWP to ensure that water savings do not destabilize finance (multiplier).

Necessary preconditions
  • DWPs are either investor-owned, autonomous public corporations, or part of municipal government. No matter the DWP’s organizational form, it will be regulated as a public utility with a “natural monopoly” on water services.
  • Local government has some level of control over DWP. Although it is possible to encourage people to use less without any control or coordination with DWP, such a message may be nullified if DWP benefits from “wasteful” use (i.e., higher revenue) or faces no penalty for depleting reserves that may be useful later.
  • The water supply network provides safe water services that satisfy the basic needs of people in the community. This solution does not apply if basic services are not available.
  • DWP must have billing and accounting systems, system meters, staff for outreach, accounting and engineering, and so on. An underfunded, understaffed, or underqualified DWP cannot focus on reducing water use without first establishing the minimum infrastructure necessary to serve customers
Success factors
  • Adequate funding, staffing and time
  • Political support for action (i.e., acknowledgement of water waste)
  • Willingness to experiment, learn and reiterate
  • Choice of technology, techniques and regulatory-price mix suitable for local conditions rather than outside imposition of “best practices”
Barriers to results
  • Opposition from (potentially overworked) staff who do not want to be inconvenienced by water saving actions or rhetoric.
  • Regulations (from any government levels) that prevent water conservation (i.e., regulations inconsistent with conservation.
  • Opposition from BUs accustomed to large volumes of “free” water (e.g., parks and recreation)
  • Lack of staffing or budget for planning and implementing water use reports.
  • Power battles among LG, DWP and BUs over responsibilities, payments, etc.
Risks
  • Risk is related to fear of change, and staff who fear change may block solution rather than cooperate. The “hidden” nature of water makes it easier for people to hide their opposition (e.g., “emergencies” prevent training, leak detection/repair, etc.)
  • Water price increases may unwind long-standing subsidies to BUs, thereby raising the cost of service to citizens. BUs that absorb these costs make it harder for citizens to experience the cost of their (indirect) water use at the same time as it may threaten other budgeted responsibilities.
  • Decreases in consumption may drop revenue and destabilize DWP finances
  • Introduction of incentives to use less water may be opposed by staff who feel that existing services are inadequate (i.e., “we should not lose service quality to help another BU, the environment or customers”).
  • BUs will oppose or ignore conservation programs if they (1) do not believe that baseline use (or rights) has been fairly allocated or (2) BUs are unevenly rewarded or punished for progress (or lack thereof).
  • Actions requiring extra budget allocations may not be approved.

3 Apr 2018

Reducing urban water waste (part 1 of 3)

Back in 2014, I wrote a few briefings for a [name hidden] client who sat on the content. Our contract does not allow me to publish their "template" but I am free to publish my words, so here they are. Feel free to forward these posts, but please make sure my name and email are included ;)

Overview

This package contains two solutions. The first addresses local government (LG) “water waste." The second solution addresses water waste in the residential, commercial, industrial and institutional (RESCOM) sectors. Both solutions are designed to reduce stress on local water supplies without distorting or undermining the financial stability of the drinking water provider (DWP).

People define “water waste” according to their subjective beliefs about the relative costs and benefits of water use. We will respect these beliefs by focusing on ideas that reduce aggregate water use without ascribing or assigning reductions to individuals. Following the same logic, we will note that various “stressed” cities within “non-stressed” countries should implement the portions of this solution that address their local conditions.

This package is aimed at DWPs that supply water to all potential customers on an environmentally and/or financially unsustainable basis. It is not directly relevant for DWPs that provide sustainable services, although these DWPs may opt to increase their efficiency by adopting measures described herein.

The solution also does not apply to DWPs that fail to reach all potential customers. In those cases, it is more important to extend the network to unserved citizens before worrying about waste from existing customers. The solutions here can be helpful, however, in planning or implementing policies aimed at financing a network expansion or reducing existing customers’ water use to make more water available for new customers.

Why do we care?

The Stockholm International Water Institute estimates that every dollar spent on piped water supply brings four dollars in benefits. This ratio is helpful as a justification for investing in system expansion, but it’s also useful as an indicator of the damage that results when systems decay or collapse. This package is aimed at preventing such troubles by improving operating efficiency and increasing customer engagement.

Both solutions in this package focus on reducing water waste. One looks at water waste within local government operations (abbreviated LG); another considers options for reducing waste for residential, commercial, industrial and institutional customers (abbreviated RESCOM). The solutions are separated in recognition of differing incentive and governance structures.

LG staff in different business units (BUs) use water to meet various regulatory, cultural and community needs, but they do not pay for water. In some cases, neither do their BUs. These weak financial incentives suggest an approach that relies more on non-financial inducements to reduce waste, such as ranking BUs in proportion to their progress towards conservation targets (“benchmark competition”). The case with RESCOM users is more straightforward: raising the price of water so customers have a reason to repair leaks, install more efficient appliances, and reconsider water-consuming habits.

Both solutions rely very heavily on the installation and use of water meters, which should be numerous enough to give detailed data to decisionmakers without being so ubiquitous as to waste money. Both solutions also require extensive outreach, education and community feedback, as many people do not see their water use as part of a larger problem, know how to change their water footprint, or feel like they have a voice in community water management.

Meters, prices and conversation should be used together to inform people of how much they are using, how much their use costs, and how their choices affect the community. LG must play a central role in these dialogues as well as providing adequate time and money to facilitate training, install equipment, and maintain open communications among stakeholders.

Most cities have gone through similar processes regarding urban zoning, transportation, schools, etc. Now they must engage in a multi-year process to improve water allocation and reduce water waste. Water shortages are the 21st century equivalent of the overflowing sewers and drains that threatened cities in the 19th century. The good news is that it’s much faster and cheaper to reduce water waste; the bad news is that water waste cannot be addressed with a one-size-fits-all set of drains and pipes. These solutions must be implemented according to local traditions and conditions if they are to induce promised savings.

Strategic impacts of success
  • Improved cross-government information sharing
  • Improved social and economic indicators for mortality, morbidity, and productivity
  • Improved social cohesion and cooperation from protecting services for all
  • Attracting new residents and businesses through reliable water services
  • Decreased pressure on water resources and related political tensions
  • Increased awareness of overall resource efficiency
  • Improved ecosystem health and ecosystem services.
  • Decreased or postponed capital investments in water-supply infrastructure
  • Improved awareness and responsiveness to climate change
Direct impacts of success
  • Improved reliability and quality of DWP services
  • Improved DWP financial sustainability
  • Strengthened customer-utility relations (via payment for service)
  • Decreased water consumption
  • Lower capital spending and expansion-related system disruptions
  • Lower energy use and carbon emissions
  • Reduced impacts from new development
Solution: reducing local government waste

Who? Internal local government operations (i.e., business units delivering services such as transportation, education, public spaces, waste management, etc.)

What? LG needs to set goals for reducing water waste and establish systems for monitoring, reporting and feedback (rewards), such that BUs know how much water they are using, how much “waste” they should reduce, and which BUs are making the most and least progress. LG will need to pay for the oversight system and perhaps subsidize BUs facing high transitional costs.

How? LG should allow BUs to find their own ways to reduce water waste, as they see “inside the black box” of their operations. LG should monitor water use as well as BU operations, to make sure that priority customer services do not deteriorate. Some services may be cut, in the name of reducing waste.

Solution: reducing residential and commercial waste

Who? Most urban water is used by these sectors. Residential use ranges from basic health and sanitation (drinking, bathing, cooking) to “lifestyle” consumption (landscaping, pools, etc.). Commercial use is aimed at increasing profits. Water waste will depend on various definitions of water value or need.

What? LG and DWP can increase water prices and/or incentivize adoption of low consumption appliances. These steps will be more effective – and more acceptable to citizens – if they are accompanied by extensive education, outreach and feedback mechanisms that help citizens “do their part.”

How? LG and DWP should signal changes well in advance of implementation and allow stakeholders to participate in developing programs, to maximize effectiveness. Actual results will depend on citizen responsiveness. Initial results can be used to design the next phase of implementation.

In Part 2 & Part 3, I'll give more details on how to design and implement these solutions.

2 Apr 2018

Review: Sapiens: A Brief History of Mankind

FC recommended this book, and I enjoyed it a lot. Given its massive success, I am not going to write very much about its content (here's an overview) but give some comments and impressions on Hariri's thinking.

Warning: I made over 300 notes, as Hariri is an elegant and perceptive thinker and writer. Below, I group my comments or quote Hariri by the book's parts.

Although many points are presented as fact, I think of them as informed opinion. In most cases, I agree with Harari's logic, but that agreement dropped as his narrative approached our contemporary times (skip to the bottom). I think that's less due to the presence of more data than the ever-deepening diversity and complexity of our institutions -- trends that Hariri also acknowledges.

Part 1: The cognitive revolution
  • Humans are born underdeveloped, so they need help growing up. Thus we have strong social potential that can be shaped (language, taste, religion) in many ways.
  • Our jump to the top of the food chain (due to the advantages of social organization) was sudden. Thus, we lack natural predators or instincts that might limit our exploitation of resources, a problem that's especially acute in the "new world"
  • Humans are "afraid" in the sense that they do not understand their power. Thus, we might over-react against perceived threats or destroy through ignorance: "The wandering bands of storytelling Sapiens were the most important and most destructive force the animal kingdom had ever produced" [p 62].
  • Language probably (?) allowed sapiens to dominate and eliminate Neanderthals (and other human species) even though any given Neanderthal individual was stronger and smarter. Language and social organization made it easier for groups of sapiens to dominate Neanderthals via collective action. Aside: Read this fascinating paper on how groups facing extinction (i.e., competition from other groups) will cooperate at much higher levels than groups not facing existential threats. And here's a great description of why sapiens are tribal and how to overcome tribalism in the name of nation, tolerance, etc.
  • Language allowed abstract thought, planning, story telling and deeper social relations, all of which drove forward the cognitive revolution and dominance of our species.
  • Gossip made it easier to control bad behavior. The value of a "maximum anthropological unit" is based on the fact that "most people can neither intimately know, nor gossip effectively about, more than 150 human beings" [p 26].
  • Religion grew out of story telling. Religion, fiction and other communal myths help larger groups cooperate by supporting laws, money, and other institutions.
  • Telling effective stories is not easy. The difficulty lies not in telling the story, but in convincing everyone else to believe it. Much of history revolves around this question: how does one convince millions of people to believe particular stories about gods, or nations, or limited liability companies? Yet when it succeeds, it gives Sapiens immense power, because it enables millions of strangers to cooperate and work towards common goals.
  • Story-telling allows cultural evolution to run 1,000x faster than genetic evolution.
  • Our diverse stories led to "culture" and the events changing culture became "history."
  • These stories make it possible for sapiens to cooperate in far larger groups than our chimpanzee cousins that are limited to groups of 150.
Part 2: The agricultural revolution
  • The majority of individuals were far worse off living with domesticated animals and crops. They had worse nutrition, worked harder, suffered from more disease (a key element in Guns Germs and Steel), and lost autonomy to elites who could control property: "This discrepancy between evolutionary success and individual suffering is perhaps the most important lesson we can draw from the Agricultural Revolution" [p. 97].
  • The agricultural revolution led to larger populations that needed high-density food production systems to survive. Thus, we lost the "exit option" to return to the hunter-gatherer lifestyle. (It's also true that agricultural societies could seize land and territory from hunter-gathers, so all groups were trapped in that equilibrium.) The same "no-return" problem (cf. Logic of Collective Action) makes it hard to reverse an arm-race, educational inflation, imported-water-dependent cities and farms. Likewise, the "luxury trap" has turned email into an incessant job, our "smart" phones into pestering devices.
  • The agricultural revolution led to required planning, which introduced stress about potential futures that hunter-gathers had never needed to experience. Planning led to bureaucracy, elites and rulers, who have taxed peasant workers (us!) ever since. Those elites funded art, temples, palaces and forts, but those "cultural institutions" were not often available to peasants.
  • Page 101: "History is something that very few people have been doing while everyone else was ploughing fields and carrying water buckets..." for rulers who often started wars fueled by peasant blood.
  • Page 111: "If people realise that human rights exist only in the imagination, isn’t there a danger that our society will collapse? Voltaire said about God that ‘there is no God, but don’t tell that to my servant, lest he murder me at night’."
  • Page 112: "To say that a social order is maintained by military force immediately raises the question: what maintains the military order? It is impossible to organise an army solely by coercion. At least some of the commanders and soldiers must truly believe in something, be it God, honour, motherland, manhood or money... How do you cause people to believe in an imagined order such as Christianity, democracy or capitalism? First, you never admit that the order is imagined. You always insist that the order sustaining society is an objective reality created by the great gods or by the laws of nature. People are unequal, not because Hammurabi said so, but because Enlil and Marduk decreed it. People are equal, not because Thomas Jefferson said so, but because God created them that way. Free markets are the best economic system, not because Adam Smith said so, but because these are the immutable laws of nature."
  • These beliefs underpin individualism, romantic vacations, consumerism, pick-up basketball, etc.
  • Page 118: "These imagined orders are inter-subjective, so in order to change them we must simultaneously change the consciousness of billions of people, which is not easy. A change of such magnitude can be accomplished only with the help of a complex organisation, such as a political party, an ideological movement, or a religious cult."
  • Social orders work on a small scale due to evolved social skills (gossip). On a larger scale, they depend on writing and numbers -- abstractions that are harder for sapiens to grasp and use. Both can be helpful in communicating information across time to many people, but both are abused. Writing can be abused via dubious logic (Marx's labor theory of value). Numbers are abused in their abstraction. Many scams depend on "trustworthy people" selling us crap at prices that do not result in value. Think multi-level marketing, Brexit's “£350 million a week,” or Trump's steel policy ("create 33,000 metal-making jobs and destroy 179,000 metal-dependent ones")
  • Page 136-8: "Time and again people have created order in their societies by classifying the population into imagined categories, such as superiors, commoners and slaves; whites and blacks; patricians and plebeians; Brahmins and Shudras; or rich and poor. These categories have regulated relations between millions of humans by making some people legally, politically or socially superior to others. Hierarchies serve an important function... In most cases the hierarchy originated as the result of a set of accidental historical circumstances and was then perpetuated and refined over many generations as different groups developed vested interests in it."
  • Page 142-3: "The stigma that labelled blacks as, by nature, unreliable, lazy and less intelligent conspired against him. You might think that people would gradually understand that these stigmas were myth rather than fact and that blacks would be able, over time, to prove themselves just as competent, law-abiding and clean as whites. In fact, the opposite happened – these prejudices became more and more entrenched as time went by. Since all the best jobs were held by whites, it became easier to believe that blacks really are inferior...Such vicious circles can go on for centuries and even millennia, perpetuating an imagined hierarchy that sprang from a chance historical occurrence. Unjust discrimination often gets worse, not better, with time. Money comes to money, and poverty to poverty. Education comes to education, and ignorance to ignorance. Those once victimised by history are likely to be victimised yet again."
  • Page 145: "Rape, in many legal systems, falls under property violation – in other words, the victim is not the woman who was raped but the male who owns her. This being the case, the legal remedy was the transfer of ownership – the rapist was required to pay a bride price to the woman’s father or brother, upon which she became the rapist’s property."
  • Page 147: "From a biological perspective, nothing is unnatural. Whatever is possible is by definition also natural. A truly unnatural behaviour, one that goes against the laws of nature, simply cannot exist, so it would need no prohibition. No culture has ever bothered to forbid men to photosynthesise, women to run faster than the speed of light, or negatively charged electrons to be attracted to each other. In truth, our concepts ‘natural’ and ‘unnatural’ are taken not from biology, but from Christian theology. The theological meaning of ‘natural’ is ‘in accordance with the intentions of the God who created nature’."
  • Page 155: "It is only natural that the chain of power within the species will also be determined by mental and social abilities more than by brute force. It is therefore hard to believe that the most influential and most stable social hierarchy in history is founded on men’s ability physically to coerce women...the greater the number of wars, the greater men’s control of society. This feedback loop explains both the ubiquity of war and the ubiquity of patriarchy."
  • Men are in power mostly because they are pushier, not because they are better at ruling.
  • Page 160: "During the last century gender roles have undergone a tremendous revolution. More and more societies today not only give men and women equal legal status, political rights and economic opportunities, but also completely rethink their most basic conceptions of gender and sexuality" ... and the results can be seen in many cultures and countries: not just better lives for women but better lives for men.
Part 3: The unification of humankind
  • Page 163-4: "Myths and fictions accustomed people, nearly from the moment of birth, to think in certain ways, to behave in accordance with certain standards, to want certain things, and to observe certain rules. They thereby created artificial instincts that enabled millions of strangers to cooperate effectively. This network of artificial instincts is called ‘culture’... every man-made order is packed with internal contradictions. Cultures are constantly trying to reconcile these contradictions, and this process fuels change."
  • Page 166&172: "Over the millennia, small, simple cultures gradually coalesce into bigger and more complex civilisations...the first universal order to appear was economic: the monetary order. The second universal order was political: the imperial order. The third universal order was religious: the order of universal religions such as Buddhism, Christianity and Islam. Merchants, conquerors and prophets were the first people who managed to transcend the binary evolutionary division, ‘us vs them’, and to foresee the potential unity of humankind."
  • Page 177: "Money is not coins and banknotes. Money is anything that people are willing to use in order to represent systematically the value of other things for the purpose of exchanging goods and services. Money enables people to compare quickly and easily the value of different commodities (such as apples, shoes and divorces), to easily exchange one thing for another, and to store wealth conveniently."
  • Page 183: "Counterfeiting is not just cheating – it’s a breach of sovereignty, an act of subversion against the power, privileges and person of the king. The legal term is lese-majesty (violating majesty), and was typically punished by torture and death. As long as people trusted the power and integrity of the king, they trusted his coins."
  • Good news! "For thousands of years, philosophers, thinkers and prophets have besmirched money and called it the root of all evil. Be that as it may, money is also the apogee of human tolerance. Money is more open-minded than language, state laws, cultural codes, religious beliefs and social habits. Money is the only trust system created by humans that can bridge almost any cultural gap, and that does not discriminate on the basis of religion, gender, race, age or sexual orientation. Thanks to money, even people who don’t know each other and don’t trust each other can nevertheless cooperate effectively" [p 186].
  • Bad news! "When everything is convertible, and when trust depends on anonymous coins and cowry shells, it corrodes local traditions, intimate relations and human values, replacing them with the cold laws of supply and demand. Human communities and families have always been based on belief in ‘priceless’ things, such as honour, loyalty, morality and love. These things lie outside the domain of the market, and they shouldn’t be bought or sold for money. Even if the market offers a good price, certain things just aren’t done. Parents mustn’t sell their children into slavery; a devout Christian must not commit a mortal sin; a loyal knight must never betray his lord; and ancestral tribal lands shall never be sold to foreigners. Money has always tried to break through these barriers, like water seeping through cracks in a dam" [p 186].
  • Page 187: "As money brings down the dams of community, religion and state, the world is in danger of becoming one big and rather heartless marketplace. Hence the economic history of humankind is a delicate dance. People rely on money to facilitate cooperation with strangers, but they’re afraid it will corrupt human values and intimate relations. With one hand people willingly destroy the communal dams that held at bay the movement of money and commerce for so long. Yet with the other hand they build new dams to protect society, religion and the environment from enslavement to market forces. It is common nowadays to believe that the market always prevails, and that the dams erected by kings, priests and communities cannot long hold back the tides of money. This is na├»ve."
  • Page 190: "Cultural diversity and territorial flexibility give empires not only their unique character, but also their central role in history. It’s thanks to these two characteristics that empires have managed to unite diverse ethnic groups and ecological zones under a single political umbrella, thereby fusing together larger and larger segments of the human species and of planet Earth."
  • Page 195-6: "Cyrus did not see himself as a Persian king ruling over Jews – he was also the king of the Jews, and thus responsible for their welfare. The presumption to rule the entire world for the benefit of all its inhabitants was startling. Evolution has made Homo sapiens, like other social mammals, a xenophobic creature. Sapiens instinctively divide humanity into two parts, ‘we’ and ‘they’ ... [in contrast] imperial ideology from Cyrus onward has tended to be inclusive and all-encompassing. Even though it has often emphasised racial and cultural differences between rulers and ruled, it has still recognised the basic unity of the entire world."
  • Page 197: "Ideas, people, goods and technology spread more easily within the borders of an empire than in a politically fragmented region. Often enough, it was the empires themselves which deliberately spread ideas, institutions, customs and norms. One reason was to make life easier for themselves. It is difficult to rule an empire in which every little district has its own set of laws, its own form of writing, its own language and its own money. Standardisation was a boon to emperors" -- but not always to individuals.
  • Page 204: "Many Indians adopted, with the zest of converts, Western ideas such as self-determination and human rights, and were dismayed when the British refused to live up to their own declared values by granting native Indians either equal rights as British subjects or independence. Nevertheless, the modern Indian state is a child of the British Empire," which is a problem when it comes to its centralizing tendency -- a tendency present in many post-colonial countries -- to deny local autonomy and ignore local solutions.
  • Page 210: "Religion must...  espouse a universal superhuman order that is true always and everywhere [and] insist on spreading this belief to everyone. In other words, it must be universal and missionary... People tend to believe that all religions are like them. In fact, the majority of ancient religions were local and exclusive... As far as we know, universal and missionary religions began to appear only in the first millennium BC. Their emergence was one of the most important revolutions in history, and made a vital contribution to the unification of humankind, much like the emergence of universal empires and universal money."
  • Page 214: "Most Hindus... are sunk deep in the morass of mundane concerns, where Atman [the supreme being] is not much help. For assistance in such matters, Hindus approach the gods with their partial powers. Precisely because their powers are partial rather than all-encompassing, gods such as Ganesha, Lakshmi and Saraswati have interests and biases. Humans can therefore make deals with these partial powers and rely on their help in order to win wars and recuperate from illness."
  • Page 215-18: "The only god that the Romans long refused to tolerate was the monotheistic and evangelising god of the Christians. The Roman Empire did not require the Christians to give up their beliefs and rituals, but it did expect them to pay respect to the empire’s protector gods and to the divinity of the emperor. This was seen as a declaration of political loyalty. When the Christians vehemently refused to do... polytheistic Romans killed no more than a few thousand Christians. In contrast, over the course of the next 1,500 years, Christians slaughtered Christians by the millions to defend slightly different interpretations of the religion of love and compassion... Since monotheists have usually believed that they are in possession of the entire message of the one and only God, they have been compelled to discredit all other religions. Over the last two millennia, monotheists repeatedly tried to strengthen their hand by violently exterminating all competition."
  • That said, "The monotheist religions expelled the gods through the front door with a lot of fanfare, only to take them back in through the side window. Christianity, for example, developed its own pantheon of saints, whose cults differed little from those of the polytheistic gods" [p 219].
  • Page 227: "Buddhism does not deny the existence of gods – they are described as powerful beings who can bring rains and victories – but they have no influence on the law that suffering arises from craving. If the mind of a person is free of all craving, no god can make him miserable. Conversely, once craving arises in a person’s mind, all the gods in the universe cannot save him from suffering."
  • Page 232-4: "The main ambition of the Nazis was to protect humankind from degeneration and encourage its progressive evolution. This is why the Nazis said that the Aryan race, the most advanced form of humanity, had to be protected and fostered, while degenerate kinds of Homo sapiens like Jews, Roma, homosexuals and the mentally ill had to be quarantined and even exterminated... Hitler dug not just his own grave but that of racism in general. When he launched World War Two, he compelled his enemies to make clear distinctions between ‘us’ and ‘them’. Afterwards, precisely because Nazi ideology was so racist, racism became discredited in the West. But the change took time. White supremacy remained a mainstream ideology in American politics at least until the 1960s."
  • Page 241-3: "So why study history? Unlike physics or economics, history is not a means for making accurate predictions. We study history not to know the future but to widen our horizons, to understand that our present situation is neither natural nor inevitable, and that we consequently have many more possibilities before us than we imagine...There is no basis for thinking that the most successful cultures in history are necessarily the best ones for Homo sapiens. Like evolution, history disregards the happiness of individual organisms. And individual humans, for their part, are usually far too ignorant and weak to influence the course of history to their own advantage."
Part 4: The scientific revolution
  • Page 251-3: "The great discovery that launched the Scientific Revolution was the discovery that humans do not know the answers to their most important questions. Premodern traditions of knowledge such as Islam, Christianity, Buddhism and Confucianism asserted that everything that is important to know about the world was already known...The willingness to admit ignorance has made modern science more dynamic, supple and inquisitive than any previous tradition of knowledge. This has hugely expanded our capacity to understand how the world works and our ability to invent new technologies. But it presents us with a serious problem that most of our ancestors did not have to cope with. Our current assumption that we do not know everything, and that even the knowledge we possess is tentative, extends to the shared myths that enable millions of strangers to cooperate effectively. If the evidence shows that many of those myths are doubtful, how can we hold society together? How can our communities, countries and international system function?"
  • Good news! "The notion that humankind could [end wars, famine or death] by discovering new knowledge and inventing new tools was worse than ludicrous – it was hubris. The story of the Tower of Babel, the story of Icarus, the story of the Golem and countless other myths taught people that any attempt to go beyond human limitations would inevitably lead to disappointment and disaster" [p 264].
  • Bad news! Scientific advancement was not going to "overcome any and every problem by acquiring and applying new knowledge... because it would be funded and directed for the benefit of rulers and empire, not humanity.
  • Page 282: "What potential did Europe develop in the early modern period that enabled it [rather than the Asian empires generating 80 percent of the world's wealth] to dominate the late modern world? There are two complementary answers to this question: modern science and capitalism. Europeans were used to thinking and behaving in a scientific and capitalist way even before they enjoyed any significant technological advantages."
  • Superior knowledge made it possible for a ridiculously small number of Britons to control India.
  • Page 303: "the place of racism in imperial ideology has now been replaced by ‘culturism’... Marine le Pen’s speechwriters would have been shown the door on the spot had they suggested that the leader of France’s Front National party go on television to declare that, ‘We don’t want those inferior Semites to dilute our Aryan blood and spoil our Aryan civilisation.’ Instead, the French Front National, the Dutch Party for Freedom, the Alliance for the Future of Austria and their like tend to argue that Western culture, as it has evolved in Europe, is characterised by democratic values, tolerance and gender equality, whereas Muslim culture, which evolved in the Middle East, is characterised by hierarchical politics, fanaticism and misogyny."
  • Page 308-11: "You could cut the pie in many different ways, but it never got any bigger. That’s why many cultures concluded that making bundles of money was sinful...If the pie is static, and I have a big part of it, then I must have taken somebody else’s slice... Whoever believes in progress believes that geographical discoveries, technological inventions and organisational developments can increase the sum total of human production, trade and wealth... Smith’s claim that the selfish human urge to increase private profits is the basis for collective wealth is one of the most revolutionary ideas in human history – revolutionary not just from an economic perspective, but even more so from a moral and political perspective."
  • Harari claims [p 215] that the human economy has been able to grow continuously "thanks only" to scientific discoveries but forgets how fossil fuels have allowed us to consume "millions of years of solar energy" in only a few centuries.
  • Page 318: "The secret of Dutch success was credit. The Dutch burghers, who had little taste for combat on land, hired mercenary armies to fight the Spanish for them. The Dutch themselves meanwhile took to the sea in ever-larger fleets. Mercenary armies and cannon-brandishing fleets cost a fortune, but the Dutch were able to finance their military expeditions more easily than the mighty Spanish Empire because they secured the trust of the burgeoning European financial system at a time when the Spanish king was carelessly eroding its trust in him. Financiers extended the Dutch enough credit to set up armies and fleets, and these armies and fleets gave the Dutch control of world trade routes, which in turn yielded handsome profits. The profits allowed the Dutch to repay the loans, which strengthened the trust of the financiers."
From around here (1800) forward, Harari's narrative is (more) vulnerable to critique, probably due to a combination of his over-reliance on a given trend that might ignore other trends or an over-simplified version of a concept (capitalism, for example).

He says [p 329] "there simply is no such thing as a market free of all political bias," but that's obvious when you remember that political institutions (e.g., property rights or regulation) determine the form and regulate the operation of the market.

The sad thing is that he -- by underestimating the importance of institutions -- lays too much credit/blame on the economy, i.e., "much like the Agricultural Revolution, so too the growth of the modern economy might turn out to be a colossal fraud. The human species and the global economy may well keep growing, but many more individuals may live in hunger and want." This claim might be justified by looking at the number of people living below the "$1.90 per day line" (11 percent, or 800 million), but "hunger" is often the outcome of failed political structures (politicians favoring themselves over their citizens [pdf]), and "want" should be blamed on our desires (see Buddha, above) rather than the "new ethic of consumerism" that "appears" as a means of rescuing capitalists from their overproduction [p 347].

This claim -- besides appearing in the passive tense, as if handed down by god -- is naive.

I see many of these market developments as good and many of the problems of inequality as the result of political decisions, but perhaps he's upset at "the collapse of the family and the local community and their replacement by the state and the market" [p 355] because he prefers the pre-market world where "the community offered help on the basis of local traditions and an economy of favours, which often differed greatly from the supply and demand laws of the free market" [p 356]. That nostalgia in the present day might echo his ancestor's nostalgia for the the life of a hunter gatherer after the agricultural revolution, but I do not agree on the parallel.

First, it's unlikely that a community-oriented society will be invaded and colonized by a capitalist-oriented society in the same way that hunter-gathers were displaced by farmers.

Second, it's much easier for anyone to "go back" to a community lifestyle and spend less time in the market economy. We have the technology and productivity to make it possible for someone to work less and enjoy a decent standard of living. (After-tax wages in the Netherlands are probably half the level of those in the US, but the quality of life is better here for most people -- due to communal and market reasons.)

Third, Harari assumes that people are hapless victims  -- "many of us now bewail the loss of strong families and communities and feel alienated and threatened by the power the impersonal state and market wield over our lives" [p 360] -- assertions of dependency that I would not make for most people in middle and upper-income countries. (Neither would Mr Money Mustache.) Are the poor people in the world with limited agency? Absolutely. But many other people are more trapped by their decisions (college debt, opioids, pregnancies) than "the impersonal state and market." (That said, I'll allow for the power of marketing propaganda.)

Fourth, Harari seems to have a nostalgia for an imagined paradise: "The intimate communities fulfilled the emotional needs of their members and were essential for everyone’s survival and welfare. In the last two centuries, the intimate communities have withered, leaving imagined communities to fill in the emotional vacuum" [p 362]. In my experience of the recent history of ex-communisst countries, there was indeed a loss of community when people gained the freedom to earn more and buy goods and services they had previously traded with friends, but very few of these people want to return to those older times. (Those with nostalgia, like Donald Trump's for coal, often suffer a selective amnesia over the drawbacks of the era.)

Finally, Harari seems to assume a surprising path dependency to our future. He says that war is less likely because our economies are so intertwined, but I wouldn't bet on it. He wrote his book in 2011, and recent events have made both trade wars and shooting wars more likely.

The book ends with a call for less consumerism and more family/community (I agree), but Harari's "history of mankind" now seems to represent his personal opinion on how to be better human:*
According to Buddhism, the root of suffering is neither the feeling of pain nor of sadness nor even of meaninglessness... People are liberated from suffering not when they experience this or that fleeting pleasure, but rather when they understand the impermanent nature of all their feelings, and stop craving them [p 394].
From here, he imagines the next step:
There seems to be no insurmountable technical barrier preventing us from producing superhumans. The main obstacles are the ethical and political objections that have slowed down research on humans. And no matter how convincing the ethical arguments may be, it is hard to see how they can hold back the next step for long, especially if what is at stake is the possibility of prolonging human life indefinitely, conquering incurable diseases, and upgrading our cognitive and emotional abilities [p 403].
You might not be surprised that this passage refers to the topic in his most recent book (Homo Deus: A Brief History of Tomorrow), which I do not crave.

Bottom line: I give this book FOUR stars for its fascinating narrative of human evolution up to modern times, after which it loses direction in an attempt to be a little too tidy with our complex culture, i.e., "Those who have only a superficial knowledge of a certain period tend to focus only on the possibility that was eventually realised. They offer a just-so story to explain with hindsight why that outcome was inevitable. Those more deeply informed about the period are much more cognisant of the roads not taken" [p 238].

For all my reviews, go here.

* Harari lives in a moshav (a type of cooperative agricultural community), practices Vipassana meditation daily, and does not have a smartphone.