Scarce resources need to be exposed to market forces. The purpose of markets is to allocate scarce resources and price them appropriately.

Even when those resources could be bought by someone who will waste them? We're not talking about something like gold here, we're talking about a resource that is essential for human life. Would you really want someone who's wealthier than you to buy all the water around you just because they can?

No, I certainly wouldn't! Still, the drought is on my mind, and while I recognize the need to conserve, I am frustrated by my government's response to the problem so far.

So far, we've been responding to the crisis in a way that doesn't really allow people to make good trade-offs. For instance, I went to my parents house in a nice warm place, after a week in the fog, and my kids kind of wanted to play in the inflatable pool. My parents were bummed but asked us not to, because they're under mandates to cut back.

To feel better, we all went out for california raised beef burgers and gorged on walnuts. Several dozen inflatable pools of sheer deliciousness, all externalized.

Just kidding (sort of) about that last part, but this is the frustrating thing. Nobody is saying we can't use any water, we just can't use unlimited amounts of it. If someone goes vegan, avoids other water-heavy food sources, and doesn't wash his or her car, well, is it so bad that they might water a small patch of lawn or fill up the inflatable pool now and then?

This is what is so nice about markets, when people have to pay what something actually costs, they are unlikely to use as much of it.

Except, of course, you can now and then end up in a situation where someone rich buys "all" the water. One way to handle this is tiered rates, where it's cheap for the first bit, and perhaps very expensive after that.

http://www.sfwater.org/index.aspx?page=168

Looks like the first 4 units (1 unit = 748 gallons per month) is $5.45, so once you get the tap flowing (sunk cost), I'd say that drinking water is "free". Even showers are pretty cheap.

The problem is that it doesn't go up by much. After those first 4, it's only $7.31. Still pretty cheap for something that we are supposedly in desperate need of.

I suppose we could just crank up that second tier - in theory, that would keep showers, drinking water, and so forth affordable, while properly pricing the use of water to produce burgers, walnuts, swimming pools, lush gardens, golf courses, and clean cars. Now that I think of it, rich people already consume more of that sort of thing anyway...

Tier option sounds smart. I think we have a similar system in place in Germany.

Unfortunately tiered rates in California have been ruled illegal. A bunch of anti-government people got a ballot measure passed which mandates that government services must be priced in line with their costs. Not a terrible idea in thought, but doesn't really help with situations like this.

Honest question: shouldn't the cost of replenishing the aquifers be considered as part of the cost of water? In other words, internalize the cost of externalized costs of water consumption.

Also, it is my understanding that there're already two different rates for water in California depending on whether you get in a tap in your house or you use it to water a field by the acre-foot. I'm guessing that legally it is something different than tiered rates, but it barely makes sense.

    This post is known to the State of California to cause cancer.

That is the beauty of the market: you do stupid things like that and you aren't rich enough to do so much longer.

If it was regulated and you used your buddy connections to appropriate all the water usage rights then you still have your buddy connections once you have taken my water.

There has to be a balance between government regulation/oversight and market forces. Just look at what happened with Wallstreet. You think no intervention at all would have been a good idea there?

It's not about disallowing the other guy from doing stupid things and not being rich anymore, it's about not allowing someone to waste precious resources essential for human life, so as to not make it harder for others in need to have access (at accessible and fair prices) to said resources in the future.

Not unless the cost of water is super, super expensive. Which it won't be.

Up to a point. If the resource is the difference between life or death it should be rationed or regulated if there is a risk to those without the means or resources to acquire it.

EXACTLY. Governments and other non-market forces need to regulate and step-in when market forces fail to regulate themselves.

That's great for pricing most commodities, but for necessities it is disastrous.

It works pretty well for food.

No it doesn't. Subsidies, social programs and massive regulations hold up our market for food.

I disagree completely with your assertion, especially when the market forces are applied to vital natural resources tied to some sort of ridiculous notion like human money.

I'm at the point now mentally where the entire monetary system should be reset to allow a natural relationship between real value and fiat currency to exist. If that means that a bunch of wealthy people are left with nothing, then so be it.

This comment is ridiculous. The horrible water situation in CA is a result of years of water being exposed to market forces. Do you actually feel no sense of cognitive dissonance between your beliefs and this very clear reality or are you just being disingenuous?

No. Markets are not the be-all, end-all of allocation. Especially for scarce resources that are vital for living. The market would simply have the rich get all the water, rather than letting everyone have some.

If anything, that's an argument for cutting off non-essential (read: landscaping) water use entirely and prioritizing drinking water and agricultural irrigation (i.e. the things that actually tangibly benefit wealthy and not-wealthy people alike). We need drinking water and food. We don't need golf courses.

Regulation is where scarce resources go to die. Why not find a way to produce more?

Do you seriously think the answer isn't "produce more, and stop using so much until we do"?

The "and stop using so much" part is misplaced if you're really looking to the agricultural industry, of all things, to do that stopping. We need food and drinking water. We don't need green lawns and golf courses.

Not to say that water efficiency improvements in the agricultural space wouldn't be welcome, but rather that landscaping is arguably less important than even the relatively-unimportant foods, let alone the important ones.

Landscaping should be the first to go, but it's also a relatively minor part of the problem. Agriculture is the primary cause of water depletion--not just use, but depletion.

If the tradeoff is unsustainable and as-we-currently-know-it-irreparable biosphere destruction and more expensive almonds and beef (through higher alfalfa prices), I'm really okay with that trade-off and I think if you dig into the situation you probably will be too. People aren't gonna starve because dead cow costs more--because beef is already nearing "too expensive" for Americans in situations of food insecurity as is.

I seriously have no faith that a group of people can regulate things efficiently. It sounds hopeful of course. I have more faith in desalination or some other engineering solution.

So you are advocating the continued unsustainable use of a scarce common resource, in a way not provably necessary to the good of that commons, because we might be able to efficiently create more of that resource at an unspecified point in time.

Well, I'm convinced. I'll burn my house down this winter to keep warm, too.

Well the regulations only need to be a little wrong for things to continue to be just as bad as they are now. Isn't California already teaming with ineffective regulations?

If no one waters their lawn will you be happy? Is solving the problem your goal or is this just a thrilling political device? That would really suck.

Read "The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth’s Future" and learn why this sort of thinking has been shown to be wrong again and again.

Or you could actually back up your post instead of a blind cite. But to save you the trouble of formulating an argument--because I looked through your recent posting history, it's mostly two-sentence talking-points stumping, I'm reasonably sure I won't actually get one--I happen to already know about Ehrlich and Simon's bet, even without Sabin's book, and I also know that that the lessons generally drawn from that by conservative thinkers--and ones not without merit on a sufficiently long time horizon--has remarkably little relevance to a literally incipient disaster scenario. There is simply no time left for human ingenuity to pull one out of our collective posterior. We have ignored the warning signs and we have committed probably irreparable damage, right now. It would be stupid to assert that water use reduction in California is not a solution, which is why it's very fortunate that I didn't make that assertion. Water limits exist to buy time for solutions to be formulated. And I'd bet against long odds that those solutions can be formulated. But not by next Wednesday.

Your black-and-white thinking--and the assumption that mine is as black-and-white as yours--kind of sucks, as does your cite-and-run dismissal. Can you please try to do better?