16 Mar 2015

Auctions will allocate water better than bureaucrats

DdDrought and "shortage" are leading water managing agencies to announce (again) that users will get less than 100 percent allocations, e.g.,
That's a reasonable statement of fact, but HOW will they cut users back? The normal response is to reduce everyone by the same 10-15 percent, but that fails to account for the FACT that some users may need value the water more than others. How can the bureaucrats find out the right values? They cannot when users can lie, mumble or merely get things wrong.

The fact is that the best way to reconcile values is in a market (you know, like the one for houses, oil, used cars, etc.), which is why I designed the All-in-Auction (AiA) based on my dissertation on the Metropolitan Water District of Southern California (see Chapter 7).

Water markets are hard to set up when you need to specify rights, figure out infrastructure, determine who can buy and sell, worry about environmental impacts, etc., but they are EASY to use WITHIN existing water users associations (see above), which is why the AiA can be implemented TOMORROW for those agencies seeking ways to re-distribute scarce water WITHOUT forcing users to sell (see the AiA materials for more.)

So... feel free to use those designs or contact me for more information.

The alternatives (lawsuits, conflict and economic and social disruptions) are far worse.

H/T to RM

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