The picture above is the bathroom sink in my Las Vegas hotel. As you can see, the sink is running. I turned the sink on when I checked in last night and haven’t turned it off since. I also turned on the shower, the kitchen sink, and have flushed the toilet 34 times. Why not? Zero signs exist about conserving water at the hotel and using all the water I want doesn’t increase my room rate.
The point of the story is.. if Las Vegas had a water problem, I wouldn’t be able to do this.
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.
I wanted to take a step out of the water market and share a fascinating video on drive and what motivates us. Enjoy!
The private sector is essential to the emergence of a viable water market – take for example the Environmental Water Markets. In Brandon Scarborough recent piece, Environmental Water Markets: Restoring streams through trade, he states:
“Transactions tend to be more common in states that permit and encourage private involvement, including Oregon, Washington, and Montana (see image above). By comparison, far fewer voluntary transactions have occurred in the other western states.”
Granted, there are many other factors that play into this equation, but the impact of private participation is obvious. Actually, I’m willing to argue the participation of the private sector was and is vital to the development of all markets. Try to name one market that didn’t emerge through the leadership, vision, and execution of the entrepreneurial private sector. If you can, let me know.
Also, if you are looking for a blog on private sector solutions to water, I’d like to direct you to the Private Water Law Blog: A blog about water law and policy. The author, Wes Strickland, does a great job of covering the private sector in the world of water. He is also active on twitter.
Enjoy!
