Great Example of the Completely Insane Way We Manage Water

Virtually every product and service we purchase has its supply and demand match by prices.  Higher prices tell buyers they should conserve, and tell suppliers to expend extra effort finding more.

Except for water.

Every water shortage you ever read about is the result of refusing to let prices float to dynamically match supply and demand.  And more specifically, are the result of a populist political desire to keep water prices below what would be a market clearing price (or perhaps more accurately, a price that maintains reservoir levels both above and below ground at target levels).

So, some groups in Arizona are offering a$100,000 prize to help solve the water shortage.  And what is it they are looking for?  A better price system?  Nah:

A $100,000 prize awaits the group that comes up with the most innovative ­campaign to push water scarcity into the forefront of public ­conversation...

The competition wants to create a public-service campaign that raises awareness about the challenges facing Arizona's long-term water supply so residents will feel an urgency to start working on them now.

If Arizonans don't change how they consume water and start brainstorming new solutions for dwindling supplies, shortages won't be a choice, they will be an unavoidable reality. Planning for the future of water now will help ensure there is enough water for future generations, Brownell said.

The message isn't new; it has been taught with puppets, posters, television spots, brochures and landscape-design classes for years.

But experts, researchers and industry workers agree that as long as taps gush clear,drinkable water, it's hard to keep water scarcity part of public conversation.

"One challenge is getting people to take ownership of their decisions and how they contribute to the demand side of the equation," said Dave White, co-director of Arizona State University's Decision Center for a Desert City, which studies water use and sustainability....

Possible solutions to meeting Arizona's future water needs include:

• Desalination of sea water, which requires large financial investment and collaboration between government agencies and possibly Mexico.

• Rebates for water-efficient systems. Tucson offers up to $1,000 for households that install gray-water recycling systems to reuse water from sinks, showers and washing machinesfor irrigation.

• Increasing the use of recycled or reclaimed water. Arizona already uses this water to irrigate landscaping and recharge aquifers, but not as drinking water.

• Cloud seeding. The Central Arizona Project has spent nearly $800,000 to blast silver iodide into clouds to try to increase snowfall in Colorado, Utah and Wyoming, where the snowpack feeds the Colorado River.

I will say that it is nice to see supply side solutions suggested rather than the usual demand side command and control and guilt-tripping.   But how can we possibly evaluate new water supply solutions like desalinization if we don't know the real price of water?  Accurate prices are critical for evaluating large investments.

If I find the time, I am going to tilt at a windmill here and submit an entry.  They want graphics of your communications and advertising materials -- I'll just show a copy of a water bill with a higher price on it.  It costs zero (since bills are already going out) and unlike advertising, it reaches everyone and has direct impact on behavior.  If you want to steal my idea and submit, you are welcome to because 1. The more the merrier and 2.  Intelligent market-based solutions are never ever going to win because the judges are the people who benefit from the current authoritarian system.

PS-  the site has lots of useful data for those of you who want to play authoritarian planner -- let some users have all the water they want, while deciding that other uses are frivolous!  Much better you decide than let users decide for themselves using accurate prices.

  • KevinM

    WTF? Haven't you guys been having epic floods for the past couple weeks?

  • frankania

    drink whiskey instead of water; that'l save some.

  • http://aguanomics.com/ David Zetland

    It seems that many SW states suffer delusion (http://www.aguanomics.com/2012/02/anyone-listening-in-las-vegas.html) -- maybe it's all the salt in the Colorado River?

  • Ward Chartier

    A decade or so ago some folks in Singapore reclaimed sewer water, purified it, and started selling it as NEWater. Per Wikipedia, customers needing large quantities of highly purified water are major users. After hearing about NEWater, I wondered if NEWfood was not far behind (two horrible puns in the same clause!).

  • mahtso

    I think the blogger fails to understand that water rights are property rights.

  • http://itsaboutliberty.com/index.php MNHawk

    I take it desert dwellers aren't looking for the kind of snark I'd give them, mocking their green lawns, imported northern vegetation, and golf courses, would they?

  • MikeBruner

    Warren, this is a bit of a tangent, but I've always marveled at the progressive water consumption pricing that water departments here in NE Ohio employ. Would be interested in your thoughts. In my area of Ohio, we pay a low rate for the first X gallons of water each month, and then about 3Xs that rate for any thing above that amount. This has always seemed contradictory with the way other aspects of water service are billed.

    - Water rate hikes in NE Ohio are almost always attributed to LESS water consumption. While we have the huge freshwater Lake Erie, we also have a smaller population than decades past. As a result, the average rate is higher in order to maintain the existing infrastructure.

    - There is a flat "meter fee" on bills that is intended to be used for infrastructure cost, but clearly it does not represent the true cost of the infrastructure (otherwise the rate hikes would not be due to "less consumption").

    - By that logic, using more water through the same infrastructure should result in LOWER rates. Delivering the 1000th gallon to a household is way less costly than delivering the first gallon. But that's not the way it is billed.

    - This policy discourages any household set-up that results in more people per water meter. I used to rent out a multi-family home that had a single water meter (common around here). Accounting for water usage was always a huge pain. A lot of landlords would try and bill back water usage to tenants and it was never straightforward because if one tenant used 70% of the water, you can't just bill that tenant 70% of the bill amount. Most landlords just pay for the water and try and roll it into the rent, but inevitably you get some tenants who use tons of water and you wind up eating hundreds and hundreds of dollars in a year.

    - Another effect of this policy is imposes much higher costs on families. Families with kids tend to use a lot of water giving baths and doing laundry. These families might use twice as much water as their childless neighbors but pay 3-4 times as much on their monthly bill.

  • WarwickBoy

    Warren,

    You're are on the ball. I live in Bermuda and we have no central water supply system on the island. Each house collects water on its roof and stores it in a cistern below the house. The cisterns range from about 8K gallons up to 45K gallons for newer and larger houses. If you run low on water and have to buy it, you pay $80 for a truckload of one thousand gallons. Nobody here likes to buy water, but if there's been little rainfall for a spell, you are forced to. Owning and operating a water truck here is an avenue that many have used to make very good lives for themselves.

    No one born and raised in Bermuda ever wastes water. If you so much as leave the water running when you are brushing your teeth, you will hear a shout from someone demanding you shut it off! The real, and high, price of water forces us to treat it as the scarce resource it is, and it has shaped behavior for hundreds of years here.

    I laugh when I hear from friends or relatives about how expensive their water is. I see their monthly water bills and bust a gut!!

  • marque2

    There are some cities that have proposed doing just that, freebies get the population all excited and have the projects stopped or shutdown before they are started. It is easy to scare people about drinking their own poop.

    Of course without the right price signals it is hard to determine whether that is worthwhile either.

  • David in Michigan

    Although there is plenty of water in and surrounding the state of Michigan, free potable water is now claimed as a human right by the United Nations BECAUSE so many people in Detroit "can not afford to pay for it" and are not paying for the system. Does that sound illogical and, dare I say it, insane?

    Now, what was your idea again??

  • jdgalt

    Letting prices float is part of the answer, but I can't see it helping Arizona so long as both the major water supplies themselves, and the business of bringing more water to markets, are government monopolies.

    Floating prices will help when most of Arizona's water comes from companies that can legally create or expand water sources, whether by building new dams, pipelines, desalinization plants, or plants to treat and reuse waste water. Floating prices won't do diddly to alleviate the shortage so long as nearly all of Arizona's water comes from federally owned Hoover Dam. (And any scheme for pricing that the feds approve will certainly exempt the biggest users, thus preventing any significant conservation. Rationing home users while letting farmers go on paying 1% of the residential price is insanely stupid, unless you're in the farm lobby's pay.)

  • Matthew Slyfield

    Maybe it's something else coming from Colorado.

  • Ann_In_Illinois

    In Hong Kong, they have a separate 'flush water' system that uses saltwater.

    I've also read of salt-tolerant grasses that could be used on golf courses, so that they could be irrigated with seawater.

    But I agree that the main step is to allow the price to be more accurate, so people have an incentive to use it well.