Make Water Policy Work Like Water

As California’s water situation continues to cause problems, well-intentioned analyses continue to promote misguided solutions while missing some obvious simple steps.

Mike Taugher of the Contra Costa Times recently related California’s water woes to the nation’s economic troubles. “In both cases,” he says, “lax regulatory oversight was a factor in the collapse.” More aggressive regulation, however, is not the answer to California’s water challenges, but part of the problem. California’s history of water management has resulted in a complicated system of water rights and prohibitions on transfers, exacerbating problems in times of shortage.

If there is an analogy to the financial situation, economist and blogger David Zetland of gets it right when he analyzes the operating procedures of the Department of Water Resources’ (DWR) 2009 Water Bank, a variation on the successful water banks of the mid-nineties. The 2009 Water Bank seems already poised for failure and contentiousness, with perhaps as little as 150,000 acre-feet of water or less available from willing sellers to meet estimated demand of 600,000 acre feet. It also suffers from bureaucratic problems typical of California’s overall water management approach.

“In theory,” says Zetland, “the Water Bank should work like water does, i.e., it should be: transparent, cool (logical), easy flowing. But, instead it is opaque (buyers and sellers must qualify via DWR’s beauty contest), hot (political negotiations) and dammed (bureaucratic allocation, price, etc.) As a result, water (like credit) is not flowing to those who value it most, but to those who have the best political connections, bureaucratic friends, and/or ability to manipulate the ‘allocation formulae’ in their favor.”

Writing in the San Francisco Chronicle, Rep. George Miller (D-Martinez), almost hits the nail on the head. “Smart government,” he says, “will mean leaving behind the dam-building and pipeline-laying federal bureaucracy of the last hundred years. If we put our money into proven and cost-effective strategies . . . we can dramatically improve the reliability of our existing clean water supplies without wasting time and energy chasing the cumbersome and expensive infrastructure dreams of the past century.”

But then, Rep. Miller turns to tired and needlessly centralized strategies to address these problems while missing a simple approach that is perhaps the most powerful.

“Expanded federal incentives, improved research and development, and stronger federal efficiency requirements can help us reduce our reliance on dwindling or unstable water supplies, while driving innovation, saving money and adding to the economy.” Rep. Miller makes no mention of the biggest driver of improving efficiency and conservation: the cost of the resource.

Zetland has suggested a graduated rate structure designed to encourage conservation, in which a modest per-capita allocation of water is free of charge, with consumption beyond that allocation charged at a rate about twice what residential users in Los Angeles pay. In this way, a household’s minimum needs are met, but users are encouraged to conserve because the cost of waste is high. Individuals and households are then free to make their own decisions about the relative value of the long shower or the lawn irrigation.

Research from the University of California, Davis, has suggested that economically-based water management is effective at regional and statewide scales, and that existing infrastructure and resources may be enough to meet demands when optimally managed. California needs a water policy that works not like a dam but, as Mr. Zetland suggests, like water itself: transparent, and flowing downhill toward value, not pumped uphill toward politics.

Transforming this approach from theory to practice is more realistic than huge infrastructure projects, for which California has no money. Meanwhile, those who cling to the bureaucratic-regulatory approach give new meaning to a slogan once popular in the Golden State. If you are not part of the solution, you are part of the problem.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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