25 Apr 2011

Restrictions vs prices

The Santa Clara Valley Water District plans to revoke [pdf] its "10 percent voluntary conservation" goal due to the [official] end of shortage and drought.

As the author of The End of Abundance, I need to repeat the book's thesis: The institutions for managing abundant water supplies need to be restructured for scarce water. That means that "temporary voluntary restrictions on demand" are outdated as a response to scarcity, drought and shortage if you think that scarcity will return.

It makes more sense to change to a system where prices go up with scarcity and go down with abundance. Those price signals (like the signals at a gasoline pump) help people permanently change their behavior, unlike temporary/emergency measures for drought that are implemented (or not!) via an unreliable bureaucratic or political process. Even better, prices allow different people to respond in different ways. Some will reduce their use by 2 percent; others by 20 percent.

Bottom Line: "And it never failed that during the dry years the people forgot about the rich years, and during the wet years they lost all memory of the dry years. It was always that way." --John Steinbeck
H/T to BN and RM

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