São California

São California

I was speaking to a reporter a few weeks ago about Sao Paulo, Brazil. He wanted my opinion on what would happen in their developing water shortage and how policy might minimize the harm to the millions of people living there.[1]

My response to him (in short) was:

  1. It’s too late to use price signals to ration water because (a) the rich will pay and get water the poor cannot afford and (b) demand has to drop a LOT faster.
  2. Physical rationing will not work if people are connected to the network, since people facing service cuts — water delivered 6 hrs per day in each neighborhood, for example — will just fill tubs and tanks for insurance AND pressure changes will damage the network and water quality.
  3. Which leaves us with the de-industrialized option of closing down the network and distributing water in trucks, to make sure that human rights are protected. This is extremely inefficient (so many trucks for 20 million people when there’s a perfectly good piped network there), but it’s the only choice when there’s no way to cut off each household after they take their “fair share”.[2]

So it turns out that Paulistas are already in option 2 while suffering the distribution problems of option 1, i.e., the poor feeling that the rich are getting too much water.

What will happen next? I don’t know, but it’s looking ugly.

“LA Follies 2014”

And that brings me to California, which is entering its fourth year of drought with dwindling, mismanaged resources.[3]

How do we know? On the supply side, Jay Famigletti (a UC Irvine professor who continues to produce massive value for Californians) has described how the State has “only one year” of water left.

On the demand side, we see a total lack of vision or action to address the REAL drivers of scarcity — retail prices too low to notice, permissive overuse of groundwater, failing water-as-charity policies, and the blinders of a historic pretension that water rights are properly allocated (nope) in the correct volumes (NOPE).

Taken together, the excess of demand over supply and failure to address that fact means that California is heading the way of Sao Paulo, with twice the population at risk.

What will happen?

  1. I don’t think that riots and protests are likely. First, there are many places with many alternatives to address scarcity. Some will cope. Some will fail. Second, California has the option of taking water from other sectors for urban use.
  2. Will farmers suffer? Perhaps, but only after the environment is sacrificed (dry streams, drained aquifers), businesses are closed, and huge sums are wasted (emergency desalination?). This is because farmers are protected by politicians and water markets are non-existent/dysfunctional.
  3. Managers and bureaucrats will keep their jobs throughout this process because they are controlling the message (“drought isn’t our fault!”) and they serve powerful interests (farmers and politicians), not citizens.

What would I do if I was in charge?

In the short run,

  • I’d ban outdoor irrigation in cities, everywhere in the State
  • I’d shut down wells in overdrafted basins (most of them) until wells/pumps had meters and user-allocations were set and limited. This would take “motivated” farmers less than a month
  • I’d double urban water prices to lower demand and rebate the resulting excess revenue against fixed costs (see footnote 1)

In the longer (2-3 years) run:

  • I’d get measurement of stocks and flows in sync with allocations (per Australia)
  • I’d implement water markets for bulk water
  • I’d connect utilities into larger grids for sources, storage and recycling
  • I’d limit water transfers (i.e., south of the Delta) and return water to ecosystems
  • I’d charge farmers (but also many industries) for most of the costs of water contamination and cleanup.

There’s more, I’m sure, but that’s a start.

Bottom Line: Nature makes a drought, but Man makes a shortage. Perhaps it’s time to put a different Man in charge?

  1. I wrote about the crisis a few months ago, but I clearly had no idea of “impending doom” back in 2011. I suppose that folks could have seen the roots of today’s threat then IF there were signs of underinvestment into storage or a lack of demand management, i.e., cheap populist prices or incentives to make money by selling more water – two ideas I strongly oppose.
  2. Note that communities with smart meters/card readers could implement this solution. Too late (and too much $$) for Sao Paulo.
  3. One year ago, I warned that water manager’s smugness (“we have plenty of water”) would bite them in the ass if the drought continued. Whoops!

H/Ts to BB and RM