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> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low margina

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of useful goods sold. Seems like every country everywhere has the same issue: they don't want to sell water at the price it is actually worth, so it gets wasted and people complain about water security issues. (Then if it's a city residential area, they introduce rules like "no watering your lawn" in the hope that it will reduce waste, instead of canceling the 90% off all-year-round water sale.)

freeone3000 9y ago
Your inclusion of a city residential area is problematic. Selling water at the price it is actually worth would increase the price of necessities for humans. Differential billing by amount consumed is already a thing. Use restrictions are a stop-gap measure to conserve water when you wouldn't trigger the higher price due to high consumption. Our water security solution should not stop us from growing food. Increasing the price of water used for drinking, washing, and bathing is the outcome we want here.
- pas 9y ago
  No, we want water efficiency. Agriculture has access to cheap water, thus no incentive (nor the economic ability to invest for equipment) to conserve it. If they would get water at the normal price, their goods would all increase in price, but from a higher price with the same profit margin they'll be able to save for water saving technologies, which will allow them to increase their margin further (or offer lower prices - as eventually everyone will invest in water conservation methods). And then cities will have more water and food will cost a bit more.
jimmywanger 9y ago
You subsidize one way or another. Farmers are land rich and cash poor. You can subsidize them for their water, or capital investments, or you can not get food. Domestic food security is a national security issue.
- etaioinshrdlu 9y ago
  From a free market perspective, I would think it to be more efficient to directly subsidize farmers, ie, with generous tax credits, than to subsidize water. Then you get to subsidize food but still have an efficient allocation of water. Farmers might be more incentivized to grow crops with less water requirements but more food value.
- yorwba 9y ago
  The point is that subsidies should not be proportional to water use, but to food production. Otherwise there is little incentive to make more efficient use of water, and that leads to farmers planting crops that sell at a higher price but require disproportionally more water.
  - adventured 9y ago
    It's an extremely important point when you consider the water going to things like almonds in California, the majority of which are then exported. Their almond crop alone consumes enough water to supply Los Angeles and San Francisco combined. Only 20% of California water is for non-agricultural purposes. Or put another way, the total economic value of all exported almonds from California is about $3.5 to $4 billion. The water use is about on par with the entire city of Los Angeles for that almond export crop. The metro area of LA has a trillion dollar economy by comparison (250+ fold larger than the almond exports). That's an economically irrational imbalance. The obvious question becomes: is that what California wants to do with its scarce water resources, export large parts of it at an extremely low value basis? At some point in the near future it's likely some hard choices will need to be made, including whether to invest extremely large sums of money into more desalination plants or to begin restricting the most voracious water consumers (cattle are another one, although I'm unsure of their export ratios).
raverbashing 9y ago
While subsidies might be incentivizing waste, this is better than the alternative, which is not having enough food. The "free market" solution to take food out of people's table is a very good way to have some politicians at the gallows in no time (see Arab Spring)
- WalterBright 9y ago
  > The "free market" solution Free market agriculture has been far more successful at eliminating hunger than any other system.
  - throw2016 9y ago
    Every country heavily subsidizes and protects their agriculture market. There is no free market in agriculture. World hunger has not been 'solved' and any success cannot simply be credited to 'free markets' for a such a large scale complex human social problem.
    - SamReidHughes 9y ago
      The subsidies are actually minuscule, compared to welfare spending and other transfer payments to the needy.
    - WalterBright 9y ago
      Hunger is a solved problem everywhere there is a free market. It makes sense for countries to protect their domestic food production as a military asset - cutting off the food supply is a common warfare tactic. Subsidies also come about because of powerful agricultural lobbying interests. As to if subsidies reduce hunger, the evidence is scant to none. There is plenty of evidence, however, that they result in inefficient misallocation of resources, such as water.
      - WalterBright 9y ago
        Also, many subsidies in the US are in the form of price supports, and paying farmers to not farm. These are designed to increase costs to consumers, because the free market was allegedly too successful in reducing the price of food. Check out the great American pig slaughter during the Depression: https://livinghistoryfarm.org/farminginthe30s/crops_17.html https://livinghistoryfarm.org/farminginthe30s/crops_17.html
danmaz74 9y ago
Did it ever occur to you that pricing hundreds of millions of poor Chinese farmers out of their ability to grow food to eat, so that much richer exporting industries can have more water, while being a "market solution", might not be an acceptable - even a humane - solution?
- rukittenme 9y ago
  Did it ever occur to you that by not pricing out poor, upstream farmers that hundreds of millions of poor Chinese workers will die of thirst? I think its perfectly reasonable to value a scare resource at a market rate. If the rate is too high to be tolerable then the government has an incentive to invest in water infrastructure. And people have an incentive to move where resources are under less strain. Or we could just rape the environment for short term gain. It seems to be everyone's solution on every side.
  - WillReplyfFood 9y ago
    Has it ever occured to you, that nature ingrained not only a prison dilemma optimal solution into our behaviours, but also a really nice set of instincts to go full circle in a overpopulated, exausted environment? We are really savage murdermonkeys once all bananas have been eaten. After that has happened for a few millenia, nothing occurs to nobody..
- Retric 9y ago
  Depends on the implication. If you supplied the same water in the same way then allowed resale farmers would strictly be better off. (Ignoring graft.) The water shortage will not take hundreds of millions of farmers to equalize. Price rises by 0.01 cents per gallon and many farmers will will become more water efficient while selling freed up water on the open market. This, assuming some water vs trade off, would also raise food prices giving more money to farmers who do nothing differently. The poor and everyone else would get higher food prices, but access to more reliable sources of water.
- golergka 9y ago
  If richer exporting industries are richer than hundreds of millions farmers, doesn't it mean that they are more effective, and may be a large industrial farm would be more effective than individual farmers, too?
nlperguiy 9y ago
Imagine if farmers were growing luxury vegetables like tomatoes, potatoes, beans, instead of growing several magnitudes more of cheap crappy grains that are then filtered through bodies of animals. Of course issues exist, because inefficiency is subsidized. For example, growing quinoa is a freaking gold mine yet there's still not enough competition. Yet growing corn and wheat is a life living on the edge of bankruptcy yet it is heavily subsidized by the state everywhere. There's no free market in farming, probably never will be because the ruling class is afraid of food shortages and set-in-stone food luxury standards.
- chiefalchemist 9y ago
  Not to get off topic (but to support your point), I once read an op-ed that made an argument that the increase in obesity (in the USA) was due to farm subsidies. That is, cheap corn is used to make high-fructose corn syrup, and that low cost sweetener in turn ends up in everything. And of course, as you mentioned, grains make cows, pigs, etc. cheaper. Again, not ideal for the human body and even less so for Mother Nature. The free-market might lead to the same, but it certainly seems less likely.
  - mlrtime 9y ago
    There is also a national security issue to make sure a nation can feed itself. The government's responsibility is towards long term sustainable food supply for it's citizens.
    - nlperguiy 9y ago
      Still, subsidies given do not really indicate long-term sustainable food supply. The most efficient way to guarantee food for the population is by growing plants directly. If it turns out that the farmer that uses the water for his grain fed factory-farm animals, then the allocation of that money was useless. There's much more protein/carbs/fiber calories per energy wasted in vegetables than it is in meat in the case of factory farmed meat. To me it just looks as if luxury foods like meat have large industry players that have influenced the law and the politicians to get subsidies they need to keep their products as cheap as ordinary poor-man food (potatoes, beans, dark greens etc.).
posterboy 9y ago
you are talking about the current value as offered by the industry, but the actual value it will have down the line is not messured in monetary terms. Or at least, if you think money were happinies, you argue for inflation. Differential equations are often used to model dynamic systems. What you mention is only one first order solution to a partial deq only (ok, i'm pretending, sew me), implying a linear relation, but you omit the other dimension. Who is going to buy from the industry, in case the inflation rises to the point of starving most of the country? Point being, this is not as simple as you imply, by a long shot.
Shivetya 9y ago
See the American West, water was sold cheaply and is still for the most part under priced resulting in waste. throw in laws preventing farmers from one area selling their own well water or stream water to other farmers who merely may be a county line away and it just exaggerates usage from reservoirs

freeone3000 9y ago

Your inclusion of a city residential area is problematic. Selling water at the price it is actually worth would increase the price of necessities for humans. Differential billing by amount consumed is already a thing. Use restrictions are a stop-gap measure to conserve water when you wouldn't trigger the higher price due to high consumption. Our water security solution should not stop us from growing food. Increasing the price of water used for drinking, washing, and bathing is the outcome we want here.

pas 9y ago
No, we want water efficiency. Agriculture has access to cheap water, thus no incentive (nor the economic ability to invest for equipment) to conserve it. If they would get water at the normal price, their goods would all increase in price, but from a higher price with the same profit margin they'll be able to save for water saving technologies, which will allow them to increase their margin further (or offer lower prices - as eventually everyone will invest in water conservation methods). And then cities will have more water and food will cost a bit more.

jimmywanger 9y ago

You subsidize one way or another. Farmers are land rich and cash poor. You can subsidize them for their water, or capital investments, or you can not get food. Domestic food security is a national security issue.

etaioinshrdlu 9y ago
From a free market perspective, I would think it to be more efficient to directly subsidize farmers, ie, with generous tax credits, than to subsidize water. Then you get to subsidize food but still have an efficient allocation of water. Farmers might be more incentivized to grow crops with less water requirements but more food value.
yorwba 9y ago
The point is that subsidies should not be proportional to water use, but to food production. Otherwise there is little incentive to make more efficient use of water, and that leads to farmers planting crops that sell at a higher price but require disproportionally more water.
- adventured 9y ago
  It's an extremely important point when you consider the water going to things like almonds in California, the majority of which are then exported. Their almond crop alone consumes enough water to supply Los Angeles and San Francisco combined. Only 20% of California water is for non-agricultural purposes. Or put another way, the total economic value of all exported almonds from California is about $3.5 to $4 billion. The water use is about on par with the entire city of Los Angeles for that almond export crop. The metro area of LA has a trillion dollar economy by comparison (250+ fold larger than the almond exports). That's an economically irrational imbalance. The obvious question becomes: is that what California wants to do with its scarce water resources, export large parts of it at an extremely low value basis? At some point in the near future it's likely some hard choices will need to be made, including whether to invest extremely large sums of money into more desalination plants or to begin restricting the most voracious water consumers (cattle are another one, although I'm unsure of their export ratios).

raverbashing 9y ago

While subsidies might be incentivizing waste, this is better than the alternative, which is not having enough food. The "free market" solution to take food out of people's table is a very good way to have some politicians at the gallows in no time (see Arab Spring)

WalterBright 9y ago
> The "free market" solution Free market agriculture has been far more successful at eliminating hunger than any other system.
- throw2016 9y ago
  Every country heavily subsidizes and protects their agriculture market. There is no free market in agriculture. World hunger has not been 'solved' and any success cannot simply be credited to 'free markets' for a such a large scale complex human social problem.
  - SamReidHughes 9y ago
    The subsidies are actually minuscule, compared to welfare spending and other transfer payments to the needy.
  - WalterBright 9y ago
    Hunger is a solved problem everywhere there is a free market. It makes sense for countries to protect their domestic food production as a military asset - cutting off the food supply is a common warfare tactic. Subsidies also come about because of powerful agricultural lobbying interests. As to if subsidies reduce hunger, the evidence is scant to none. There is plenty of evidence, however, that they result in inefficient misallocation of resources, such as water.
    - WalterBright 9y ago
      Also, many subsidies in the US are in the form of price supports, and paying farmers to not farm. These are designed to increase costs to consumers, because the free market was allegedly too successful in reducing the price of food. Check out the great American pig slaughter during the Depression: https://livinghistoryfarm.org/farminginthe30s/crops_17.html https://livinghistoryfarm.org/farminginthe30s/crops_17.html

danmaz74 9y ago

Did it ever occur to you that pricing hundreds of millions of poor Chinese farmers out of their ability to grow food to eat, so that much richer exporting industries can have more water, while being a "market solution", might not be an acceptable - even a humane - solution?

rukittenme 9y ago
Did it ever occur to you that by not pricing out poor, upstream farmers that hundreds of millions of poor Chinese workers will die of thirst? I think its perfectly reasonable to value a scare resource at a market rate. If the rate is too high to be tolerable then the government has an incentive to invest in water infrastructure. And people have an incentive to move where resources are under less strain. Or we could just rape the environment for short term gain. It seems to be everyone's solution on every side.
- WillReplyfFood 9y ago
  Has it ever occured to you, that nature ingrained not only a prison dilemma optimal solution into our behaviours, but also a really nice set of instincts to go full circle in a overpopulated, exausted environment? We are really savage murdermonkeys once all bananas have been eaten. After that has happened for a few millenia, nothing occurs to nobody..
Retric 9y ago
Depends on the implication. If you supplied the same water in the same way then allowed resale farmers would strictly be better off. (Ignoring graft.) The water shortage will not take hundreds of millions of farmers to equalize. Price rises by 0.01 cents per gallon and many farmers will will become more water efficient while selling freed up water on the open market. This, assuming some water vs trade off, would also raise food prices giving more money to farmers who do nothing differently. The poor and everyone else would get higher food prices, but access to more reliable sources of water.
golergka 9y ago
If richer exporting industries are richer than hundreds of millions farmers, doesn't it mean that they are more effective, and may be a large industrial farm would be more effective than individual farmers, too?

nlperguiy 9y ago

Imagine if farmers were growing luxury vegetables like tomatoes, potatoes, beans, instead of growing several magnitudes more of cheap crappy grains that are then filtered through bodies of animals. Of course issues exist, because inefficiency is subsidized. For example, growing quinoa is a freaking gold mine yet there's still not enough competition. Yet growing corn and wheat is a life living on the edge of bankruptcy yet it is heavily subsidized by the state everywhere. There's no free market in farming, probably never will be because the ruling class is afraid of food shortages and set-in-stone food luxury standards.

chiefalchemist 9y ago
Not to get off topic (but to support your point), I once read an op-ed that made an argument that the increase in obesity (in the USA) was due to farm subsidies. That is, cheap corn is used to make high-fructose corn syrup, and that low cost sweetener in turn ends up in everything. And of course, as you mentioned, grains make cows, pigs, etc. cheaper. Again, not ideal for the human body and even less so for Mother Nature. The free-market might lead to the same, but it certainly seems less likely.
- mlrtime 9y ago
  There is also a national security issue to make sure a nation can feed itself. The government's responsibility is towards long term sustainable food supply for it's citizens.
  - nlperguiy 9y ago
    Still, subsidies given do not really indicate long-term sustainable food supply. The most efficient way to guarantee food for the population is by growing plants directly. If it turns out that the farmer that uses the water for his grain fed factory-farm animals, then the allocation of that money was useless. There's much more protein/carbs/fiber calories per energy wasted in vegetables than it is in meat in the case of factory farmed meat. To me it just looks as if luxury foods like meat have large industry players that have influenced the law and the politicians to get subsidies they need to keep their products as cheap as ordinary poor-man food (potatoes, beans, dark greens etc.).

posterboy 9y ago

you are talking about the current value as offered by the industry, but the actual value it will have down the line is not messured in monetary terms. Or at least, if you think money were happinies, you argue for inflation. Differential equations are often used to model dynamic systems. What you mention is only one first order solution to a partial deq only (ok, i'm pretending, sew me), implying a linear relation, but you omit the other dimension. Who is going to buy from the industry, in case the inflation rises to the point of starving most of the country? Point being, this is not as simple as you imply, by a long shot.

Shivetya 9y ago

See the American West, water was sold cheaply and is still for the most part under priced resulting in waste. throw in laws preventing farmers from one area selling their own well water or stream water to other farmers who merely may be a county line away and it just exaggerates usage from reservoirs