Hey, it's where I live! I had no idea we were doing such cool work in that area. Australia as you can imagine, while often quite lush in many regions, is quite acutely aware of water as a limited resource. Most places I have lived have been under some kind of permenant water restriction policy and I think that drills into most people that it's a pretty serious matter.
Australia seems to (in a similar way to California) have a difficult time distributing scarce resources because they're afraid of letting market forces do it. California would have more than enough water if its bizarre distribution scheme didn't make it so cheap for people to grow crops like alphalpha.
I grew up next to Lake Michigan, a huge source of fresh water. Yet for decades only municipalities within the Great Lakes watershed have been allowed to draw water from them. That pact has only recently started to be challenged by thirsty nearby communities[0]. I fear that groundwater crises in the Midwest will continue to erode what I see as a rational and sustainable restriction on the Lakes' water.
Yeah, no doubt there will be challenges, so it's good that the Great Lakes Charter [1] exists to regulate (ie. restrict) access from non-neighboring communities.
But, even further away from the Great Lakes, the midwest seem roughly okay for now - IA, IL, OH, IN, WI, all seem to have okay rainfall and ground water levels. But the great plains states, KS, OK, TX, etc, which were historically less arable, are set to experience greater changes for the worse :(
Ireland. Even if we lose most of the water through rusty pipes, there's still no shortage. Ireland uses that water to be the fifth largest beef exporter in the world and the largest exporter of beef in Europe.
They currently have the capacity to satisfy 30% of water demand using 'reclaimed water' (i.e. recycled) and 10% using desalinated. Although I don't think they actually need to fully utilise these capacities as 50-75 per cent of their water needs are met by man-made rainfall catchments.
And more widely, much more crops are used as animal feed vs human consumption. We have no food shortage, just a high demand for luxury (meat) foods that competes with basic sustenance.
The solution in a first world economy is not to limit options. That is just regression.
The solution is to make the industrial system sustainable.
If there was a power crisis, you wouldn't make everyone use pocket calculators instead of computers, you'd figure out how power generation alternatives.
That analogy isn't great -- plenty of places in the world have power crises, and they do respond by limiting consumption of power.
In actual water crises, such as the one in California, limiting and controlling consumption is the response. Obviously, it's always better to come up with an alternative before you reach the crisis. But once you've gotten to the crisis, you're already exhausted all other options and have to be realistic.
Actually, conservation is likely much lower hanging fruit than new generation -- both for water and energy.
It's just that the American market somehow thinks "conservation" equals "limiting and red tape" when it really means "making sure you can keep producing/consuming."
It's not clear to me that such numbers are meaningful, because most of that water does not stay in the cow. It is just temporarily in the cow, and should eventually become available for other uses.
But I can raise cattle on land that wont grow wheat. I say this as someone that grew up near the Idaho Rockies. The land is incredibly rocky, seemingly barren looking, and EXTREMELY plow unfriendly. But cattle graze without a problem.
Now, as for the giant feed lots that you probably think all cattle are raised in, those are a thing. But so are open range cattle.
When people use a resource, they should pay more than just the cost of extracting it. They should also pay for its underlying value, which bears some relation to the price you would pay if the resource were no longer available.
Such prices would signal to users the actual scarcity of the resource, giving them incentive to reduce waste and find alternatives. It would also spur development of desalination and other technologies.
That is one reason public ownership of a resource doesn't work very well. And shared private ownership doesn't either, if you can use as much as you want. These aren't really different. Just the size of the group.
But both could work if everybody pays a market price for what they use and owners/taxpayers get paid for their share of what is used.
I don't disagree, but it is still a scary prospect. Humans need water. We don't need gas, or oil, heck we can even survive without electricity. We can make do. But we die without water, and it is worrying to imagine a scenario where some people can no longer afford water because the price went up due to any number of factors. The price of a resource fluctuates for reasons not always related to the actual resources inherent cost and demand dynamic, and private companies don't have the same incentives as councils or government.
It is because it is so vital that we should get a clear signal of its value. We should be paying for what it is worth.
I don't think the supply of ground water and the demand for it vary wildly. And that is what market prices are based on.
But a sudden change in prices would definitely occur when it is depleted.
Rain water is a different thing. The supply varies greatly. But it is also completely renewable. Industries that use it should adapt to its potential scarcity and prices help to do that.
Besides, I wasn't suggesting selling off water to private companies. Only having realistic prices that communicate the actual scarcity of the resource.
You can't get industry to conserve without them. Because, as you pointed out, they don't have the same incentives as governments do. And industry is the biggest user in many places.
>We don't need gas, or oil, heck we can even survive without electricity. We can make do. But we die without water
I understand that this is not your primary point, and I even understand the sense in which it is true, but I think it's short-sighted.
People will die without oil, electricity and silicon chips because we've come to depend on them for such things as medicine, agriculture, waste processing, etc.
Things like your run-of-the-mill plastics are very much a matter of life and death.
Every person gets a free daily "survival" quota. Above that, you pay market. The latter subsidises the former. You pay less for your drinking water and more for your lawns and alfalfa.
And it's not a scary prospect to me. I pay market prices for most things. And when the price goes up, I rethink my use. And when the price goes down, I don't worry so much. I may even use it to replace other things.
When water is cheap, you may see people spraying down a sidewalk during a drought when they could use a broom. Raise the price and their behavior changes.
And if you're worried that people can't afford water for they personal use, what I advocated was each citizen getting paid their share of the water revenue.
And that actually would go UP during a drought, more than the cost of their own direct personal use. That's because INDUSTRY uses the most water.
They would, of course, pay more for the products of industry.
And things like shipping bottled water from California during a drought might become a thing of the past. As it probably should.
Should we base (US) water allocation on the electoral college outcome or the popular vote? If you think it's scary having a market determine the allocation of water, the prospect of allocating it with political currency should be terrifying.
If you look at the great resource shortages in the US in the 1970s, they really only happened because the government imposed price controls.
I remember grade school being so cold in the winter because they used gas to heat the school. The US only used domestic natural gas back then, so it couldn't be blamed on some embargo.
The way I interpret that problem is that the pricing model itself is broken: it should be set up such at the cost of water increases the more water you use; if you are using a family's worth of water for drinking and cooking and showering, then you pay low rates, but if you are using an estate's worth of water then instead of just paying linearly more you should be forced to pay staggeringly more.
Another way to model this which some people will prefer and others will think is worse is that you just charge the correct/high rate for water at all scales but then hand people cash to subsidize their expected requirement for water, which they could choose to spend on water or which they could spend on something else, which maintains incentives to use less than the expected amount of water but which also doesn't cause weird effects in the market itself where people start trying to sell each other water from their different rate brackets.
(edit: Actually, I guess this is sort of how California has been trying to deal with this, with penalties to larger users... but in practice these penalties are of course being given to the people already not using much water and are not being levied against the richer people who are using tons of water :/. Here is an article about this from the New York Times, "In California, Stingy Water Users Are Fined in Drought, While the Rich Soak".)
The question is, can we arrive at a system and culture of paying for the "underlying value" of a resource, as you put it, before those resources no longer exist?
In economics what you are describing is typically referred to as a Negative Externality (https://en.wikipedia.org/wiki/Externality#Negative). It's hard to reframe these for the obvious reason that the parties involved directly in the transaction benefit from ignoring them (at least in the short term...)
I think it's what they call the tragedy of the commons.
Wikipedia says an externality "imposes a negative effect on an unrelated third party". For example, pollution from a coal-fired power plant that pollutes the air of people living somewhere else.
i think the above is a bit over the top for my taste:
> Secondly, is it really clear that people in Bangladesh (say) have a rights claim to an climate environment that is not two or three degrees warmer than it is right now? How did they acquire this right?
... because yes, I'd say they do have that right, but the point about the expectations being tied to some kind of property rights [physical or fundamental] as a differentiating factor seems to be a strong one.
here they describe the tragedy of the commons as a specific sub category of negative externality (in direct contradiction to the preceding link):
You can argue that some ongoing tragedy of the commons also has externalities.
But is there such an externality in the use of water? Is there some side effect that doesn't involve the use of water itself? Isn't the tragedy, the depletion of the supply, the problem? That isn't external.
> You can argue that some ongoing tragedy of the commons also has externalities.
sure, two of the preceding opinions [wikipedia, mit], argue that the tragedy of the commons is a specific type of negative externality, rather than the other way around. one [north carolina] gravitates more towards your interpretation.
the fundamental issue remains though: our conception of time and consequence is woefully limited in scope.
I think I get it. The low cost is itself having a destructive effect. People, eventually, can't get the resource that is depleted. I just didn't register that as external, but it is if you consider the depleted future to be external to the wasteful present.
An important point, actually, if I understand correctly. Thanks.
That's not really correct. The GP is essentially describing standard price rationing of resources. Negative externalities occur when some activity or transaction imposes costs on some external party that has nothing to do with that activity or was not a participant to the transaction.
EDIT: To put it another way, if 'depleting a finite resource' is considered to be imposing a negative externality, then pretty much every act of consumption generates negative externalities. While I guess we can define it like this if we want, it turns it into a pretty uninformative concept.
I don't see how it follows that "public ownership of a resource doesn't work very well". From what I understanding, you're talking about inefficient over-consumption of some resource, and suggesting price-rationing as the solution. In most cases I think you'd be correct. In the case of public ownership then, the problem isn't public ownership per se, but rather when the public (i.e. government) does not set an appropriate price for using that resource.
Although economic efficiency is all well and good, it's worth remembering that there are cases where another thing should be considered: equity. While it might be 'allocatively efficient' to charge high prices for water when water is scarce, the result could very well be that rich people can still fill their swimming pools while poor people die of thirst.
In a market economy, people are a lot less likely to be THAT poor or to be surrounded by similarly desperately poor people unable to help them quench their thirst.
In the desert of San Jose, California where I live, water costs a half cent per gallon. Even if the market price is 10 times that, a gallon of drinking water would only cost a nickel.
In the US there is $300 billion a year in charitable giving. I'm not worried that no one will give free drinking water people who can't afford a nickel a day for water. In fact, there are free water fountains already.
So I don't think that is a serious consideration. The problem we would help solve by adopting more market oriented prices is vastly more important than edge cases that are already handled by other efforts.
As to your first point, public ownership generally does not set market prices for resources. Governments often don't even have the means to determine what the market price is. And then they don't change them in response to conditions.
Or they just give them away for free, making it impossible for the private sector to compete. Free things result in greater demand and shortages. And pressure to create more of the resource to give away, more than the population would use if there were a market price.
Our roads are a good example. At rush hour they are clogged with traffic. Drivers pay nothing more for traveling at 5 pm than they do at 5 am. More roads are built so more can be given away. And the additional capacity is only needed part of the time, making it even more expensive.
By contrast, a road with demand-based prices would be most profitable if the price was high enough to keep too many drivers from getting on the road. Too many drivers and traffic slows to a crawl.
And that happens every day. And that only happens because of the public ownership.
But you are right. One can say that if the decision makers understood this issue, public ownership would not be a problem. Roads would have market prices.
And they do in Singapore. It's not a democracy. The decision makers do understand the issue and you pay more to drive at rush hour there.
It sounds like we more or less agree then, in principle, on the government ownership side of things. However I do have a few minor quibbles (see below). It's also worth noting there are instances where the government pricing is inefficient because they are not giving certain things away for free.
A concrete example (from Australia), although you might again accuse me of 'picking edge-cases': the Australian government charges between $20 to $40 for downloading information from the national corporate registry (e.g. per-corporation information about shareholders, directors, company address etc.). This 'product' is very obviously provided by an automated script pulling information from the corporate registry database and shoving it in to a PDF template. In other words, the marginal cost of production is some number approaching zero and there's no argument for price-rationing given consumption is almost perfectly non-rivalrous. In effect, the government is levying a very narrowly based sales tax at a rate approaching infinity per cent. Not particularly efficient.
That aside, and more on your example (roads): I agree that road-usage is mis-priced by the government and it would be economically efficient to levy a 'variable congestion charge' (like Singapore, as you note). This would also naturally put a brake (heh) on government over-provision of road infrastructure. However, and this is what led the government into trouble in the previous example, when setting the price for using the road, the government's objective should not be profit maximisation. Rather, the government's objective should be maximisation of total social welfare (total social benefit - total social cost). In your specific example (roads) it's a near-certainty that the profit maximising price (i.e. private market price) and social welfare maximising price are very different, as roads tend to be natural monopolies.
So I'd suggest the phrase 'market price' in this context is probably not the best one to use: if public roads were privatised, the 'market-price' would be the 'monopolist profit-maximising price'. This produces a socially sub-optimal outcome as well as an economically inefficient one (i.e. monopoly pricing results in deadweight loss, except in the extremely unlikely edge-case of perfect price discrimination).
Lastly, it's pretty disingenuous for you to say I'm just picking out 'edge-cases'. Yes, you're correct that water is abundant at the moment (and therefore has a low market price). And yes, sometimes acts of charity by the rich (which are commendable) can alleviate minor equity concerns or correct minor market failures. But if you'd like me to choose something you might consider a 'non-edge case', I'm willing to give it the old college try:
It is estimated (conservatively) that 13% of the world's population suffer from undernourishment, and 9.6 per cent live in 'absolute poverty' (again using a conservative estimate i.e. the World Banks'). Reductions in global mal-nutrition and absolute poverty have been achieved, in part, due to massive government expenditures on overseas development aid (ODA), estimated at $160 billion in 2013 by the OECD. Private charities contributed an additional 15-20 per cent on top of this figure.
Even in the United States (a country noted for its culture of private philanthropy), it is estimated that roughly 1 in 4 children live in a state of 'food-insecurity'. It should be pretty obvious that (relatively minor) 'private charity' expenditures are hilariously inadequate for solving huge (and ongoing) equity problems like 'global hunger'.
So you'll have to pardon me when I say: your assertion that private charity can deal with 'edge-case' inequities and market failures is utterly insane.
I think it makes sense for a community to own its local roads, the last mile. But I don't think government control makes sense for highways, except perhaps where there is no competition. There are many ways to get to most places.
Even with a monopoly, there is a price level where the road makes the most money. You can't raise prices above that without losing money.
Even then, it is possible for communities to have contracts with road providers that pay a provider for each mile travelled but that give the community the proceeds of the surge pricing. And certainly communities have to agree to connect to and use a road for it to be profitable.
And we certainly don't want to have a situation like that privately owned bridge connecting the US and Canada where there are no other bridges nearby. But I pay an even higher bridge toll to drive to Queens.
I'm all for maximizing the benefits. That is the reason we should have to pay to use roads, especially at peak times. Because we waste a lot of time on them when they are free.
It's not about collecting the most money for the government. It's about maximizing the flow of traffic when demand is highest.
And yes, its hard to eat in places without strong markets and property rights. And things have improved greatly over the last 30 years where people now have more rights and markets set the prices for food rather than political decisions.
I've drank desalinated water before, many times. It's absolutely awful, tastes soft and doesn't quench your thirst like water normally does.
hard to describe, it's like a mage cast a "create water" spell to make it, and it tastes like something that's wet and should be water, but just really isn't.
Desal can potentially alleviate drought in urban environments -- at a steep energy and environmental cost -- but is simply not in the running for producing food at a large scale. For example, ag in California alone consumes ~30 million acre-feet (MAF) a year [1]. The total installed desal capacity worldwide is around 35 MAF/yr [2].
Desalination seems perfectly capable of creating enough fresh water for agriculture. Desal requires plenty of electricity but with a big investment into new nuclear power plants these demands could be easily met. Switching to irrigation with desal water will come at a cost but I don't think it will be dramatic in the developed world.
Nuclear power has been ideologically poisoned, partly for good reasons, partly for bad (I'm not taking sides here). Whatever the reasons, the effect is that most politicos won't risk a voter stampede to the guy who didn't support reactor building, and as a result, not just in the US, nuclear energy is on its deathbed.
There's some irony in this, because one consequence is that a country's oldest (and hence least safe) reactors will be kept online for longer than planned.
Happily, desal can be powered by solar as well, and in fact this is one application that's OK to run just in the daytime, as the daytime's fresh water can be buffered overnight.
Is there ever talk about passive solutions? I.e. Just pumping vast quantities of sea water over open channels and letting evaporation take its course. It sounds infeasible but maybe there's a way to make an evaporative option viable.
Well, that's because desalination is not nearly as good a solution as computer programmers think it is.
Not picking on you specifically, but I wish that the default hacker mindset, when it comes across a complicated subject that it thinks it has an easy answer for, would be, "what is it about this problem that I don't understand?"
Let's do a quick overview of what desalination would mean for one of the state's central valley agricultural counties. I picked San Joaquin county, because it's a large producer, but not the largest, and because all of the other problems it would have with desalination -- rate of consumption and the challenge of getting fresh water into the county -- put it roughly in the middle of the set. There are counties that produce more agriculture, and there are counties that would be harder to feed water to. We'll just go with San Joaquin for now.
California is large and mountainous. To get water into San Joaquin county, you have to pump it 1300 feet uphill, twice (!), over a distance of nearly 50 miles, to get over the coastal range that lies between San Joaquin county and the San Mateo bay. I made a map with an elevation profile for you [2]. And that's taking a short, as-the-bird-flies route, and putting the desal plant into the bay, which I'm sure a few people would have something to say about.
San Joaquin county uses somewhere in the neighborhood of 1500 million gallons per day of water. [3] Firm official numbers are hard to come by, because the nature of agricultural water consumption makes it difficult to measure and also because it's a political hot potato, but this appears to be a number that's somewhere within the range of plausible.
The billion-dollar, ultra-modern, newly-constructed Carlsbad desalination plant can produce around 50 million gallons per day of fresh water (and an equal amount of briney waste water) [4]. It would cost 10 billion dollars to reduce San Joaquin county's agricultural water draw by just 30% through desalination, and that doesn't include any of the expense or logistical challenges of actually getting the water into that county or dealing with the massive ecological problem the waste would create.
And that's just one county.
In one state.
That's why the people that are in charge of the state's water issues -- the most complex such in the world [5] -- don't take desal as a serious solution to the state's water problems.
I have no idea how you'd apply desal to a situation like Kansas.
This is a good point, and an important one to note. Desal is cool and all, but in pretty much every scenario, other than one where electricity is clean and cheap, water recycling is way cheaper and much more environmentally friendly.
"Rising temperatures and growing demands for thirsty grains like rice and wheat could drain much of the world’s groundwater in the next few decades, new research warns."
Wait, what? A global water shortage is one problem that global warming would actually help fix. There might be local droughts, but it's meteorologically obvious that higher temperatures = higher evaporation = higher global rainfall. A warm ocean pumps out more water vapor, and warm air can hold more moisture (which is why Antarctica is so dry).
Agriculture is not just a way to make food, but a source of livelihood for millions of people. Most non-developed countries depend on agriculture to provide work for their people. This would affect them the most, putting most of them out of work.
There's also the simple factor that countries want to be self-sufficient in their food production.
That is, rain is more or less useful depending on where it falls. More to rainforests, mountains and the seas would not be useful.
This is part of why people say "climate change" instead of "global warming", because while the world warms on average local temperatures depend on disruptable weather patterns.
Like fossil fuels, fossil water is not a self-renewing, i.e. sustainable resource. When it's used up, we're back where we started. Also, it seems this stuff isn't really convenient to come by.
Granted, though, if 100 centuries' worth of water is really extractable, this may be pushing the problem so far into the future that we can buy a lot of timer for better solutions.
The point of view of "business friendly" Republicans is generally that if the resource lasts for 25 years, that will make life better for people who live now. In that viewpoint, why would you prioritize some theoretical future people's needs over the needs of people right now?
I think many knee jerk liberals haven't yet internalized this viewpoint, and don't (yet) have great answers to that question.
(Or turn it around: if you think this is wrong, but don't have a good answer, that makes you a knee jerk liberal!)
Food shock =~ meat shock. 95% of our agriculture is dedicated to raising meat. Cutting meat production immediately relieves any and all water problems.
95% sounds over the top but it's certainly true that raising animals for human consumption is resource intensive.
Yes, there is and should be a concern. The problem with predictions like this - e.g., "We need GMOs..." - is they presume we'll continue to be completely stupid. Yes, change is difficult. But it's not impossible.
I don't want to minimize the concerns of groundwater loss, but I don't see it resulting in a food shortage as the article suggests. It just means we'll have to desalinate. Yes that will mean food prices go up, but they also go up in relation to other things like rising gas prices.
Preserving ground water is important, but tying it to looming food shortages seems alarmist.
Well, in another 25 to 35 years, we'll hit the 3 degrees C warming that will start collapsing the global food supply system.
Wars have been fought over less.
Just to throw it out there, there are alterative types of agriculture such as ultra-local production, aeroponics, hydroponics, vertical farming, etc. that _could_ be significantly less resource intensive if executed correctly on a large scale.
I'm not saying that I am sure they will use less water but we could try and if we focus on being efficient with electricity and land it could make a big difference. For example aeroponics doesn't have to use artificial lighting.
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... and that is apparently already a thing XD [1].
[1]: https://en.wikipedia.org/wiki/Aquifer_storage_and_recovery
[0] http://www.wpr.org/great-lakes-compact-councils-oks-waukesha...
But, even further away from the Great Lakes, the midwest seem roughly okay for now - IA, IL, OH, IN, WI, all seem to have okay rainfall and ground water levels. But the great plains states, KS, OK, TX, etc, which were historically less arable, are set to experience greater changes for the worse :(
[1] https://en.wikipedia.org/wiki/Great_Lakes_Charter
Now, contamination is another question I presume.
According to the United Nations yearly availability of less than 1.700 cubic meters of water per year per capita is the lower limit [1].
[0]: http://data.worldbank.org/indicator/ER.H2O.INTR.PC?year_high...
[1]: http://ec.europa.eu/eurostat/statistics-explained/index.php/...
http://www.wcc.nrcs.usda.gov/ftpref/data/water/wcs/gis/maps/...
They currently have the capacity to satisfy 30% of water demand using 'reclaimed water' (i.e. recycled) and 10% using desalinated. Although I don't think they actually need to fully utilise these capacities as 50-75 per cent of their water needs are met by man-made rainfall catchments.
The solution is to make the industrial system sustainable.
If there was a power crisis, you wouldn't make everyone use pocket calculators instead of computers, you'd figure out how power generation alternatives.
In actual water crises, such as the one in California, limiting and controlling consumption is the response. Obviously, it's always better to come up with an alternative before you reach the crisis. But once you've gotten to the crisis, you're already exhausted all other options and have to be realistic.
At the cost of luxury, economic development and social stability.
It's an emergency option, not a sustainable one.
New generation and leaps and conservation technology allow for the same options while improving future sustainability.
The east coast has no water issues compared to the west, yet farmland is fallow everywhere.
No doubt beef requires much more water than wheat but let's not oversimplify.
Does wheat produce a sugar laden liquid that can be replenished by the cow every few days that is macrobiotic as all get out?
And yes, I know about beer.
Now, as for the giant feed lots that you probably think all cattle are raised in, those are a thing. But so are open range cattle.
Such prices would signal to users the actual scarcity of the resource, giving them incentive to reduce waste and find alternatives. It would also spur development of desalination and other technologies.
That is one reason public ownership of a resource doesn't work very well. And shared private ownership doesn't either, if you can use as much as you want. These aren't really different. Just the size of the group.
But both could work if everybody pays a market price for what they use and owners/taxpayers get paid for their share of what is used.
I don't think the supply of ground water and the demand for it vary wildly. And that is what market prices are based on.
But a sudden change in prices would definitely occur when it is depleted.
Rain water is a different thing. The supply varies greatly. But it is also completely renewable. Industries that use it should adapt to its potential scarcity and prices help to do that.
You can't get industry to conserve without them. Because, as you pointed out, they don't have the same incentives as governments do. And industry is the biggest user in many places.
I understand that this is not your primary point, and I even understand the sense in which it is true, but I think it's short-sighted.
People will die without oil, electricity and silicon chips because we've come to depend on them for such things as medicine, agriculture, waste processing, etc.
Things like your run-of-the-mill plastics are very much a matter of life and death.
Every person gets a free daily "survival" quota. Above that, you pay market. The latter subsidises the former. You pay less for your drinking water and more for your lawns and alfalfa.
When water is cheap, you may see people spraying down a sidewalk during a drought when they could use a broom. Raise the price and their behavior changes.
And if you're worried that people can't afford water for they personal use, what I advocated was each citizen getting paid their share of the water revenue.
And that actually would go UP during a drought, more than the cost of their own direct personal use. That's because INDUSTRY uses the most water.
They would, of course, pay more for the products of industry.
And things like shipping bottled water from California during a drought might become a thing of the past. As it probably should.
If everybody in the Middle East were paying a market price for water, there would be less conflict, not more.
Instead of having to fight for a resource, they compete to sell it to you.
I remember grade school being so cold in the winter because they used gas to heat the school. The US only used domestic natural gas back then, so it couldn't be blamed on some embargo.
Another way to model this which some people will prefer and others will think is worse is that you just charge the correct/high rate for water at all scales but then hand people cash to subsidize their expected requirement for water, which they could choose to spend on water or which they could spend on something else, which maintains incentives to use less than the expected amount of water but which also doesn't cause weird effects in the market itself where people start trying to sell each other water from their different rate brackets.
(edit: Actually, I guess this is sort of how California has been trying to deal with this, with penalties to larger users... but in practice these penalties are of course being given to the people already not using much water and are not being levied against the richer people who are using tons of water :/. Here is an article about this from the New York Times, "In California, Stingy Water Users Are Fined in Drought, While the Rich Soak".)
http://www.nytimes.com/2015/11/22/us/stingy-water-users-in-f...
Its much simpler to have one price per water source and pay citizens their share of the proceeds after costs.
And if we don't, the change will be forced upon us and at higher cost with more disruption and risk.
But that's true of most of the problems we fail to understand/choose to ignore.
Wikipedia says an externality "imposes a negative effect on an unrelated third party". For example, pollution from a coal-fired power plant that pollutes the air of people living somewhere else.
yes, and i'd argue that is certainly the case here.
but the two are closely related.
http://ipeatunc.blogspot.com/2011/08/negative-externalities-...
i think the above is a bit over the top for my taste:
> Secondly, is it really clear that people in Bangladesh (say) have a rights claim to an climate environment that is not two or three degrees warmer than it is right now? How did they acquire this right?
... because yes, I'd say they do have that right, but the point about the expectations being tied to some kind of property rights [physical or fundamental] as a differentiating factor seems to be a strong one.
here they describe the tragedy of the commons as a specific sub category of negative externality (in direct contradiction to the preceding link):
http://web.mit.edu/11.203/www/econ/index.php%3Fid=14.html
But is there such an externality in the use of water? Is there some side effect that doesn't involve the use of water itself? Isn't the tragedy, the depletion of the supply, the problem? That isn't external.
> You can argue that some ongoing tragedy of the commons also has externalities.
sure, two of the preceding opinions [wikipedia, mit], argue that the tragedy of the commons is a specific type of negative externality, rather than the other way around. one [north carolina] gravitates more towards your interpretation.
the fundamental issue remains though: our conception of time and consequence is woefully limited in scope.
An important point, actually, if I understand correctly. Thanks.
Water rights in California are not at all market based, because of historical reasons and a previously mistaken notion of property/mineral rights.
EDIT: To put it another way, if 'depleting a finite resource' is considered to be imposing a negative externality, then pretty much every act of consumption generates negative externalities. While I guess we can define it like this if we want, it turns it into a pretty uninformative concept.
Thanks for externalizing that.
Although economic efficiency is all well and good, it's worth remembering that there are cases where another thing should be considered: equity. While it might be 'allocatively efficient' to charge high prices for water when water is scarce, the result could very well be that rich people can still fill their swimming pools while poor people die of thirst.
In the desert of San Jose, California where I live, water costs a half cent per gallon. Even if the market price is 10 times that, a gallon of drinking water would only cost a nickel.
In the US there is $300 billion a year in charitable giving. I'm not worried that no one will give free drinking water people who can't afford a nickel a day for water. In fact, there are free water fountains already.
So I don't think that is a serious consideration. The problem we would help solve by adopting more market oriented prices is vastly more important than edge cases that are already handled by other efforts.
As to your first point, public ownership generally does not set market prices for resources. Governments often don't even have the means to determine what the market price is. And then they don't change them in response to conditions.
Or they just give them away for free, making it impossible for the private sector to compete. Free things result in greater demand and shortages. And pressure to create more of the resource to give away, more than the population would use if there were a market price.
Our roads are a good example. At rush hour they are clogged with traffic. Drivers pay nothing more for traveling at 5 pm than they do at 5 am. More roads are built so more can be given away. And the additional capacity is only needed part of the time, making it even more expensive.
By contrast, a road with demand-based prices would be most profitable if the price was high enough to keep too many drivers from getting on the road. Too many drivers and traffic slows to a crawl.
And that happens every day. And that only happens because of the public ownership.
But you are right. One can say that if the decision makers understood this issue, public ownership would not be a problem. Roads would have market prices.
And they do in Singapore. It's not a democracy. The decision makers do understand the issue and you pay more to drive at rush hour there.
A concrete example (from Australia), although you might again accuse me of 'picking edge-cases': the Australian government charges between $20 to $40 for downloading information from the national corporate registry (e.g. per-corporation information about shareholders, directors, company address etc.). This 'product' is very obviously provided by an automated script pulling information from the corporate registry database and shoving it in to a PDF template. In other words, the marginal cost of production is some number approaching zero and there's no argument for price-rationing given consumption is almost perfectly non-rivalrous. In effect, the government is levying a very narrowly based sales tax at a rate approaching infinity per cent. Not particularly efficient.
That aside, and more on your example (roads): I agree that road-usage is mis-priced by the government and it would be economically efficient to levy a 'variable congestion charge' (like Singapore, as you note). This would also naturally put a brake (heh) on government over-provision of road infrastructure. However, and this is what led the government into trouble in the previous example, when setting the price for using the road, the government's objective should not be profit maximisation. Rather, the government's objective should be maximisation of total social welfare (total social benefit - total social cost). In your specific example (roads) it's a near-certainty that the profit maximising price (i.e. private market price) and social welfare maximising price are very different, as roads tend to be natural monopolies.
So I'd suggest the phrase 'market price' in this context is probably not the best one to use: if public roads were privatised, the 'market-price' would be the 'monopolist profit-maximising price'. This produces a socially sub-optimal outcome as well as an economically inefficient one (i.e. monopoly pricing results in deadweight loss, except in the extremely unlikely edge-case of perfect price discrimination).
Lastly, it's pretty disingenuous for you to say I'm just picking out 'edge-cases'. Yes, you're correct that water is abundant at the moment (and therefore has a low market price). And yes, sometimes acts of charity by the rich (which are commendable) can alleviate minor equity concerns or correct minor market failures. But if you'd like me to choose something you might consider a 'non-edge case', I'm willing to give it the old college try:
It is estimated (conservatively) that 13% of the world's population suffer from undernourishment, and 9.6 per cent live in 'absolute poverty' (again using a conservative estimate i.e. the World Banks'). Reductions in global mal-nutrition and absolute poverty have been achieved, in part, due to massive government expenditures on overseas development aid (ODA), estimated at $160 billion in 2013 by the OECD. Private charities contributed an additional 15-20 per cent on top of this figure.
Even in the United States (a country noted for its culture of private philanthropy), it is estimated that roughly 1 in 4 children live in a state of 'food-insecurity'. It should be pretty obvious that (relatively minor) 'private charity' expenditures are hilariously inadequate for solving huge (and ongoing) equity problems like 'global hunger'.
So you'll have to pardon me when I say: your assertion that private charity can deal with 'edge-case' inequities and market failures is utterly insane.
Even with a monopoly, there is a price level where the road makes the most money. You can't raise prices above that without losing money.
Even then, it is possible for communities to have contracts with road providers that pay a provider for each mile travelled but that give the community the proceeds of the surge pricing. And certainly communities have to agree to connect to and use a road for it to be profitable.
And we certainly don't want to have a situation like that privately owned bridge connecting the US and Canada where there are no other bridges nearby. But I pay an even higher bridge toll to drive to Queens.
I'm all for maximizing the benefits. That is the reason we should have to pay to use roads, especially at peak times. Because we waste a lot of time on them when they are free.
It's not about collecting the most money for the government. It's about maximizing the flow of traffic when demand is highest.
And yes, its hard to eat in places without strong markets and property rights. And things have improved greatly over the last 30 years where people now have more rights and markets set the prices for food rather than political decisions.
https://www.youtube.com/watch?v=jbkSRLYSojo
The more accurate prices are, the more sensible our decisions can be and the more opportunity there is, especially for the poor.
I've drank desalinated water before, many times. It's absolutely awful, tastes soft and doesn't quench your thirst like water normally does.
hard to describe, it's like a mage cast a "create water" spell to make it, and it tastes like something that's wet and should be water, but just really isn't.
[1] http://www.ppic.org/main/publication_show.asp?i=1108 [2] https://www.researchgate.net/figure/272756219_fig2_Figure-2-...
There's some irony in this, because one consequence is that a country's oldest (and hence least safe) reactors will be kept online for longer than planned.
Happily, desal can be powered by solar as well, and in fact this is one application that's OK to run just in the daytime, as the daytime's fresh water can be buffered overnight.
Not picking on you specifically, but I wish that the default hacker mindset, when it comes across a complicated subject that it thinks it has an easy answer for, would be, "what is it about this problem that I don't understand?"
Let's do a quick overview of what desalination would mean for one of the state's central valley agricultural counties. I picked San Joaquin county, because it's a large producer, but not the largest, and because all of the other problems it would have with desalination -- rate of consumption and the challenge of getting fresh water into the county -- put it roughly in the middle of the set. There are counties that produce more agriculture, and there are counties that would be harder to feed water to. We'll just go with San Joaquin for now.
San Joaquin county produces almonds, apples, apricots, blueberries, cherries, grapes, olives, peaches, pears, walnuts, "biomass", beans, corn, hay, rice, safflower, wheat, asparagus, cucumbers, melons, onions, peppers, potatoes, pumpkins, and tomatoes. [1]
California is large and mountainous. To get water into San Joaquin county, you have to pump it 1300 feet uphill, twice (!), over a distance of nearly 50 miles, to get over the coastal range that lies between San Joaquin county and the San Mateo bay. I made a map with an elevation profile for you [2]. And that's taking a short, as-the-bird-flies route, and putting the desal plant into the bay, which I'm sure a few people would have something to say about.
San Joaquin county uses somewhere in the neighborhood of 1500 million gallons per day of water. [3] Firm official numbers are hard to come by, because the nature of agricultural water consumption makes it difficult to measure and also because it's a political hot potato, but this appears to be a number that's somewhere within the range of plausible.
The billion-dollar, ultra-modern, newly-constructed Carlsbad desalination plant can produce around 50 million gallons per day of fresh water (and an equal amount of briney waste water) [4]. It would cost 10 billion dollars to reduce San Joaquin county's agricultural water draw by just 30% through desalination, and that doesn't include any of the expense or logistical challenges of actually getting the water into that county or dealing with the massive ecological problem the waste would create.
And that's just one county.
In one state.
That's why the people that are in charge of the state's water issues -- the most complex such in the world [5] -- don't take desal as a serious solution to the state's water problems.
I have no idea how you'd apply desal to a situation like Kansas.
--
[1]: https://www.sjgov.org/WorkArea/DownloadAsset.aspx?id=25373 [pdf]
[2]: http://i.imgur.com/tD4hMYu.jpg
[3]: http://webcache.googleusercontent.com/search?q=cache:_uwTsIh... [pdf; original doesn't load]
[4]: https://en.wikipedia.org/wiki/Carlsbad_desalination_plant
[5]: https://en.wikipedia.org/wiki/Water_in_California
In Israel, desal water is not used (read: wasted) on irrigation. That does not make any economic sense.
We use purified wastewater (output of sewer systems) for that. About 85% of wastewater is reused.
Wait, what? A global water shortage is one problem that global warming would actually help fix. There might be local droughts, but it's meteorologically obvious that higher temperatures = higher evaporation = higher global rainfall. A warm ocean pumps out more water vapor, and warm air can hold more moisture (which is why Antarctica is so dry).
It doesn't help the Southern US if Central America has higher rainfall.
i.e. there is no guarantee that the rain falls where it's needed for farming. Much the opposite, as it turns out.
Agriculture is not just a way to make food, but a source of livelihood for millions of people. Most non-developed countries depend on agriculture to provide work for their people. This would affect them the most, putting most of them out of work.
There's also the simple factor that countries want to be self-sufficient in their food production.
To adapt a popular saying: All rain is local.
That is, rain is more or less useful depending on where it falls. More to rainforests, mountains and the seas would not be useful.
This is part of why people say "climate change" instead of "global warming", because while the world warms on average local temperatures depend on disruptable weather patterns.
Granted, though, if 100 centuries' worth of water is really extractable, this may be pushing the problem so far into the future that we can buy a lot of timer for better solutions.
I think many knee jerk liberals haven't yet internalized this viewpoint, and don't (yet) have great answers to that question. (Or turn it around: if you think this is wrong, but don't have a good answer, that makes you a knee jerk liberal!)
PS: I say this as a centrist liberal.
That's a really tall claim, and I don't believe we don't dedicate resources to grow wheat, rice, corn etc. Do you have sources for that?
Yes, there is and should be a concern. The problem with predictions like this - e.g., "We need GMOs..." - is they presume we'll continue to be completely stupid. Yes, change is difficult. But it's not impossible.
Preserving ground water is important, but tying it to looming food shortages seems alarmist.
I'm not saying that I am sure they will use less water but we could try and if we focus on being efficient with electricity and land it could make a big difference. For example aeroponics doesn't have to use artificial lighting.