Super blogger and world water economist, David Zetland, has recently self-published his first book: The End of Abundance. Knowing this, I couldn’t help but ask David a few questions. Here they are with David’s answers.
Why a book?
The End of Abundance (TEoA) summarizes material from my blog, research and discussions with people in the water business, but everything was written to fit into a concise and logical narrative that will (hopefully) give readers a decent overview of water economics applied across many topics (from tap water to irrigation to environment to human rights, and so on).
What are the five most important concepts presented in the book?
1) The end of abundant water means that institutions for managing water that evolved in an era of abundant water may not be appropriate for managing scarce water.
2) Markets and prices can be quite effective in revealing the value of water and improving the allocation of water to maximize its social value.
3) Community/bureaucratic and political organizations are often better at managing water that has a common or social element (e.g., environmental water).
4) It’s important to consider the incentives that people face when managing water and match organizational structure to water’s characteristics (held in common vs. private property, for example).
5) Shortages caused by a lack of feedback (via higher prices, community pressure, etc.) may help some people (some water users and some water managers) but harm others. They are costly in terms of conflict, misallocation and harmful spillovers.
How do water markets overcome regulatory challenges?
Markets need regulations to work. There will not be markets without property rights or contract law. But markets can reduce the burden of meeting a target, e.g., cap and trade reductions in local water pollution or markets to reallocate water remaining after environmental flows are deducted. They can reduce the cost (or harm) from meeting these targets by allocating water to those willing to pay the most for water.
Remember that we are talking about markets for bulk water here — not urban water management, which requires prices. I cover that topic in Chapters 1-3 of the book.
What is the future for water markets?
“Bright.” We are learning how to use markets in more places, and scarce water is increasing the demand for ways to move water to higher values.
What do you see as the most exciting trends in the water market?
Specifying water rights net of environmental flows; using markets to increase agricultural production; using markets to voluntarily balance urban, environmental, industrial and agricultural demands.