Why Do We Manage Water Via Command and Control? And Is It Any Surprise We Are Constantly Having Shortages?

In most commodities that we consume,  market price signals serve to match supply and demand. When supplies are short, rising prices send producers looking for new supplies and consumers to considering conservation measures.  All without any top-down intervention by the state.  All without any coercion or tax money.

But for some reason water is managed differently.  Water prices never rise and fall with shortages -- we have been told in Phoenix for years that Lake Powell levels are dropping due to our water use but our water prices never change.  Further, water has become a political football, such that favored uses (farmers historically, but more recently environmental uses such as fish spawning) get deep subsidies.  You should see the water-intensive crops that are grown in the desert around Phoenix, all thanks to subsidized water to a favored constituency.   As a result, consumers use far more water than they might in any given year, and have no natural incentive to conserve when water becomes particularly dear, as it is in California.

So, when water is short, rather than relying on the market, politicians step in with command and control steps.  This is from an email I just received from state senator Fran Pavley in CA:

Senator Pavley said the state should consider measures that automatically take effect when a drought is declared to facilitate a more coordinated statewide response.

“We need a cohesive plan around the state that recognizes the problem,” Pavley said at a committee hearing. “It’s a shared responsibility no matter where you live, whether you are an urban user or an agricultural user.”

Measures could include mandatory conservation, compensation for farmers to fallow land, restrictions on the use of potable water for hydraulic fracturing (“fracking”), coordinated publicity campaigns for conservation, increased groundwater management, and incentives for residents to conserve water. Senator Pavley noted that her hometown Las Virgenes Municipal Water District is offering rebates for customers who remove lawns, install rain barrels or take other actions to conserve water.

Pavley also called for the state to create more reliable, sustainable supplies through strategies such as capturing and re-using stormwater and dry weather runoff, increasing the use of recycled water and cleaning up polluted groundwater basins.

Note the command and control on both sides of the equation, using taxpayer resources for new supply projects and using government coercion to manage demand.  Also, for bonus points, notice the Senator's use of the water shortage as an excuse to single out and punish private activity (fracking) she does not like.

All of this goes to show exactly why the government does not want a free market in water and would like to kill the free market in everything else:  because it gives them so much power.  Look at Ms. Pavley, and how much power she is grabbing for herself with the water shortage as an excuse.  Yesterday she was likely a legislative nobody.  Today she is proposing massive infrastrure spending and taking onto herself the power to pick winners and losers (farmers, I will pay you not to use water; frackers, you just have to shut down).  All the winners will show their gratitude next election cycle.  And all the losers will be encouraged to pay protection money so that next time around, they won't be the chosen victims.

  • Another_Brian

    When the only tool you've got is a hammer, all those serfs start to look like nails.

  • mahtso

    Water is not a commodity like all others because no one is
    producing it. Granted, people are cleaning and delivering water, but that is not producing it like one produces copper.

    For water there is a list of “owners,” the more senior gets her water before the juniors and if there is none left for the juniors, too bad. But if the senior does not use her water, she cannot stop the juniors from using that same water. And because there are generally more people/owners on the list (i.e. demands) than there is water (supply), market forces cannot work unless one wants to radically alter the existing law.

    A key point is that water rights are property rights, but unlike other forms of property the ownership is limited to a right to use the water, not a right to exclude others from using what you do not use. For example, even if I am not using my home, I can exclude you from using it.

    Water (in the west) has been subsidized and has favored agricultural uses. But bear in mind that when these policies were instituted, the government was also giving away most (or much) of the land in the west in an effort to have people move here.

  • Daublin

    It's a good question. I'd be very interested in hearing about any locale that opened up its water supply to multiple suppliers. If the supply side worked that way, you would think it easier to tell consumers that their prices are going to float around.

  • marque2

    Interesting. Why do you think it WS the government's land to give away in the first place.

    Farmers in CA do not have a property right to water from the Sacramento river or the CO river. Those rights were manufactured.

  • Gil G

    Water easement rights are natural unless Libertarians believe everyone upstream can dictate water rights to those downstream.

  • Matthew Slyfield

    CA water claims on rivers that go nowhere near CA are not natural, they are a creation of the federal government.

  • Matthew Slyfield

    "Why Do We Manage Water Via Command and Control?"

    Why, because historically people have been willing to fight wars over water rights.

  • Canvasback

    Hey Coyote, Instead of grumbling about the government; talk to the cotton, alfalfa and beef growers in Arizona. That desert down there would hardly produce tequila if it wasn't for the giant supply of water those guys use.

  • Joshua Vanderberg

    A person living in a suburb in AZ or NV should have no water rights, other than perhaps to whatever they can store in a rain barrel. Water is a product they pay to have prepared and delivered to their house, no different than electricity or gas.

  • mesocyclone

    One of the more obnoxious political effects on Phoenix area water is "conservation" incentives (put in for environmentalists when uber-environmentalist Bruce Babbitt was governor). These punish homeowners by perversely increasing the water rate as usage goes up. I once had a $750 monthly water bill because of a dripping faucet! Meanwhile the golf courses are happily watered, and the cotton farmers are using flood irrigation with their cheap Salt River Project water and their near zero subsidized electric rates for pumping.

    But, as other commenters have pointed out, water cannot be free of government meddling. It is an unusual commodity with strong public utility characteristics.

  • mahtso

    "Why do you think it was the government's land to give away in the first place." The law of conquest.

  • mahtso

    Maybe so, but that is not the law. I see the ownership of water rights as no different than the ownership of any other property (recognizing that what we can do with our property varies).

  • mahtso

    "Farmers in CA do not have a property right to water from the Sacramento river or the CO river. Those rights were manufactured."

    My comment was general in nature and it would take many hours to cover all of water law (each state's law is different). As to the Colorado, I believe your statement is too general as there are some farmers (and others) who do have property rights. Although you could spend a lot of money on lawyers arguing (in court) over property rights v. contract rights to the Colorado River, strictly speaking rights dating after 1928 may be contract rights, not property rights.

    I once heard the lawyer for an irrigation district in California answer the question "why do you get the water" by saying because the predecessors dug canals with mules and by hand an used the water. That is prior appropriation, which is the basis of much western water law, in a nut shell.

  • Jess1

    "Water is not a commodity like all others because no one is
    producing it. Granted, people are cleaning and delivering water, but that is not producing it like one produces copper."
    WTH? Copper (along with other resources, including water) is moved from one place to another, treated in some fashion to create utility, then marketed and sold to users. It is exactly a "commodity" - but water "rights" law is a nonsensical web of convoluted silliness that seriously needs to be completely struck down, nothing more.

  • marque2

    I wasn't talking from a legal view. I understand the runoff from your property could be yours - but I don't see how farmers wanting to grow lettuce in the middle of Imperial valley have a NATURAL right to water artificially rerouted from 100 - 500 miles away.

    These laws have little to do with property rights and more to do with government meddling and government giveaways to appease constituents.

  • marque2

    Yeah - it is more of a government pander to certain constituents.

  • marque2

    I think you are confusing pandering laws with actual rights. There is no right for me in San Diego to drink Colorado river water - than the fact that some agency said I could and the government granted rights to favored individuals. I am sure I would get very far claiming my personal natural right to that CO water.

  • marque2

    I don't think the use of the water is what he is complaining about. He is complaining about the subsidized prices which cause unnatural shortages. Creating dams and irrigation is fine - just charge market prices for the water. (This would actually cause city prices to go down) And if we did charge market prices the water would end up going to more productive uses and technically our taxes would go down - since subsidies really come out of taxpayer's pockets.

  • mahtso

    You (marque 2) are mistaken (if the conventional view of history is accepted) -- these laws stem from miners acting among themselves in areas that did not have benefit/detriment of government oversight and it was later that the government(s) adopted the customs of the miners into law.

    I am not sure how one could have a rational discussion about property rights without looking at it from a legal point of view. Nevertheless, this is the first reference I see to NATURAL rights and I no of no one who asserts that water rights are NATURAL rights.

    From both a practical and a legal perspective, the reason for allowing the right to accrue miles from the source was to foster settlement of the entire west, not just the narrow bands near the rivers.

  • mahtso

    I have copper on my mind for reasons unrelated to the blog and if you think that is a bad example, so be it. But that example is instructive because there is no "copper cycle" and there is a hydrologic cycle.

    Maybe the laws related to water rights should be stricken, but unless you also strike the takings clause that is going to cost a lot of tax payer money. Should we also strike down the laws that gave people rights to mine copper on federal land? Or that allowed them to patent that land?

    What would people say if I espoused the view that the laws that granted ownership of land are outmoded or outdated because the land is all owned by the privileged who enjoyed the pandering of the government? How is that different than the ownership of water rights? (To get the ball rolling, one answer is "hydrologic cycle.")

  • marque2

    Miners were in general more interested in removing water. I think it was Sutro who made big bucks constructing water removal systems for the mines in Virginia City as an example.

    I am sure the miners create Hoover dam just for that purpose.

  • NormD

    You also have a problem with who "owns" water that needs to be discharged for the environment. While I may think we are discharging too much for the environment now, I also don't want to see rivers run dry because everyone upstream has claimed their full "rights".

  • kidmugsy

    When I lived in Christchurch NZ I joined in a conversation about water shortage. My contribution was to ask how much a householder paid per cubic metre of water. They looked at me aghast: meter water? I now live in part of England with an annual rainfall of 22.5"; naturally my water is metered and I pay accordingly.

  • FelineCannonball

    see hydraulic mining

  • MingoV

    I live in Newark, Delaware. We have no water shortage. Nonetheless, we pay full costs (including maintenance and depreciation of equipment) for our water. The same was true when I lived in Omaha, Nebraska. I never understood why some communities charged token amounts for water and paid most of the expenses through general taxes (mostly on property).

  • FelineCannonball

    More rights than water this year.

    I agree there's a need for more economic incentives -- for both storage (i.e. revising groundwater rights so pumped storage during wet years is actually incentivized) and use. But contracts are what contracts are.

  • marque2

    So that is why the Hoover dam was created. Who knew. Again you guys are getting extraneous. The point is - due to politics government sells water below cost to politically connected groups and gives them the right to water from government projects to appease a constituency. This Is the cause of all the water shortage. We get misallocation due to incorrect pricing signals.

    in ñ

  • marque2

    In Omaha water is relatively easy to get since it precipitates all year. C A in a good year is dry 8 months out of the year - so since there are fewer rivers and fewer sources of water it would be prohibitively expensive to grow rice or raise cattle if the water were not heavily subsidized. I don't agree with this subsidy - but that is what is happening.

    Farmers are going out of business though in CA because some judge decided a worthless fish which is found everywhere is "rare" and needs protecting - so you actually see a lot of dead orchards if you drive through.

  • Canvasback

    Tough call on this one. Water is a community resource, after all, it came with the planet. The capitalists aren't always the best managers for a community resource. Here in my small, western California community Golden State Water is one of the local, private providers. They don't own the water, just control of the infrastructure and the delivery contract - granted decades ago. Service has been problematic and the rate increases have been relentless. They plead their case to the PUC as often as they can. Bottom line is their customers got together and voted to buy them out and contract with the local public water district for service. Of course Golden Fleece is putting up a fight, but the original grant is revocable.

    Capitalism works, but community self-reliance works sometimes too. Check the news archives for examples of over-reaching and avarice from private actors. The market isn't always a level playing field.

  • Not Sure

    "Water is a community resource, after all, it came with the planet."
    Didn't just about everything aside from the occasional asteroid come with the planet? So- is everything a community resource? Just wondering...

  • Canvasback

    No, no, no. 'Dr. Zhivago" didn't come with the planet. Victor Hugo had to create it. Other examples may occur to you.

  • Tom

    Water is collected in reservoirs. That is a kind of production. Water found by drilling similar to oil. Where water is plentiful there is not as great a need for a pricing system. But where water is scarce a pricing system would be useful.

  • http://matthewjudebrown.com/ Morven

    And for some reason water rates seem to bear no relation to the difficulty of obtaining water.

    I used to live in Anaheim, CA. Water rates there are 50 cents per hundred cubic feet. I now live in Seattle. Water rates here are something like $4.75 at the lowest tier, going up to almost $10 at the highest.

    This makes no sense at all.

    My household water bill in Seattle is generally bigger than my electric bill.