In my last post I promised a report on water in Australia, and now that I have returned from the trip (OK, a couple weeks ago, but I had work to do!), this is the first of hopefully several posts. It was a great tour; I met many wonderful people and learned much.
In celebration of Earth Day 2010, I am dedicating this post to … money. Or, more accurately, economics and how the “dismal science” is used in conversations about water resources. I think it is useful to understand the ways in which economics is used, because it helps to draw out connections between water management techniques that might not be apparent otherwise. Note that I am not writing here about different movements within economics (although that might be interesting at another time), but about the use of economics and economic concepts in water resources management. This post describes three primary uses of economics, although these are undoubtedly too few, too broad and too narrow. My observations are certainly not unique, and many of you have thought about these categories before. I would love to hear your comments below.
It’s not surprising, but a group of Democratic politicians and environmental organizations has come out against the California water bond scheduled for the ballot this November. The group has formed an organization simply titled “No on the Water Bond” and started a website and public relations campaign. It is interesting to see the differences of opinion that water causes even within political groups, and how they shift over time, since the bond package was approved by both houses of the Democrat-controlled Legislature last November. Last week, No on the Water Bond issued an open letter to the California Democratic Party Convention listing some of their reasons for opposing the bond measure.
It has become increasingly common to note, under the general law that no good deed goes unpunished, that successful implementation of water conservation measures by utilities and their customers generally leads to higher commodity rates for water. This phenomenon occurs because water utilities have significant fixed costs, and as the amount of water decreases, those costs must be collected by increasing water commodity rates. The concept is simple, but it causes consternation among some who feel that water conservation is a moral good that should be rewarded rather than punished. While I am more inclined to view water conservation in economic rather than moral terms, undoubtedly the phenomenon has an impact on customer attitudes toward conservation and thus water resource management under conditions of scarcity.
Several commentators have recently criticized the proposed California water bond for allowing private companies to own, operate and profit from water infrastructure paid for with bond proceeds. These criticisms have appeared in the San Francisco Chronicle and California Progress Report, and have been repeated in a number of other publications. The $11.14 billion water bond was adopted by the California Legislature and signed by Governor Schwarzenegger in SB2 (7x), and will be submitted to the voters at the statewide general election on November 2, 2010. I think these private profit criticisms are generally unfounded, but there are legitimate questions about public benefits from the bonds.