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I always cringe when I hear markers and water in the same sentence. I’m not sure what exactly you mean by “markets” but the history of water rights in CA is a g
by jshen 8y ago
I always cringe when I hear markers and water in the same sentence. I’m not sure what exactly you mean by “markets” but the history of water rights in CA is a great lesson highlighting how spectacularly “markets” can fail to handle water.
- pdonis 8y agoAs I understand it, the history of water rights in CA, and indeed in the US west generally, is a history of lack of markets; it's all been political maneuvering by various factions to make sure they aren't the ones who go short when the water gets divided up. There has never been an actual market to allocate the limited supply of water to the highest value uses. If there were, agriculture in much of CA wouldn't exist, since much of CA is a desert and it makes no sense to do agriculture in a desert when you can ship in food from elsewhere at lower cost.
- jshen 8y agoHow do you determine who owns water in the first place.
- ip26 8y agoA real & important question, but by no means an impossible problem. E.g. suppose "the public" (e.g. gov't, as with public lands) owns all of it in the first place, sells it, and uses the proceeds to fund water projects. A less radical option would be to keep the system of water rights we have today and simply allow the water to be bought and sold. Currently if you sell it, someone can take you to court & say "well you didn't use it, so you should lose your water rights" (because California follows the doctrine of first use). Would run the risk of creating wealthy water czars overnight, but less radical.
- jshen 8y agoWho sets the price and what stops the very wealthy from buying it all and selling it for a giant profit. The further we go down this train of thought the less market-like it becomes very quickly.
- ip26 8y agoIt's a market. The first owner sets the price at whatever point they like, balancing their interests of revenue, protecting the resource, and so forth. If people are arbitraging & selling the water for increased prices, the first owner increases their price and eliminates the arbitrage opportunity.
- jshen 8y agoHow do you get a first owner for water?
- ip26 8y agoAre you being intentionally obtuse? I just described two ways. There's Right of first use, Riparian rights, and my pet illustrative example of treating it as a publicly held asset to be sold... There's other ways beyond those three, but the first two are how ownership is assigned in the US today.
- cbnotfromthere 8y agoYou're arguing with extreme left about markets.
- jshen 8y agoriparian rights is what led to the CA water wars where the wealthy from LA bought land up stream of the farmers in the owen's valley. It didn't solve the problem we're talking about regarding rich people buying up the water. I have no idea how first use could work for water, would be happy to read more if you link me to something about it. A quick googling returned nothing. The last one requires a lot more specifics to talk about meaningfully, but I'll bet that most of the free marketers wouldn't consider it a free market.
- pdonis 8y agoIn a world in which transaction costs are sufficiently low, Coase's Theorem says it doesn't matter: you make the best initial choice you can, and then people execute free market trades to get to the overall most efficient allocation. So one way of looking at the whole problem is to ask why transaction costs are too high to make this feasible. And the obvious answer is politics.
- jshen 8y agoefficiency and humanity are sometimes at odds. Slavery was very efficient.
- pfdietz 8y agoI mean that if resources were reallocated by a market, literally EVERYONE would be better off. The current situation is not Pareto-optimal. To put it another way: if the users being asked to conserve water could just pay farmers to use their water, both would come out ahead. The farmers would get more value than from using it for farming, and the other consumers would get more water for a lower price than from alternatives. In any case, it's bizarre you cringe at the word "markets". Societies that try to avoid markets are horror shows. Markets are an utterly essential social technology for the modern world.
- jshen 8y agoI love market based economies, but not the idea that markets solve all problems. You said something about “their water”, and that’s the problem. Going back to the history of CA water rights, there is no clear concept to determine who owns water. If I buy the house on the river upstream from your house on the river, who owns the river water? I went to college in CA and had to take a bunch of CA history classes. I highly recommend reading up on CA water rights and it’s history. It’s a fascinating and enlightening topic.
- pfdietz 8y agoAre you saying there are no water rights in the current system? If there are, what's wrong with being able to trade them?
- rayiner 8y agoWhat are you talking about? The Western water rights system (prior appropriation) is the opposite of markets. It basically lets the first person to tap the public resource use unlimited amounts of it for free. That’s not a market.
- jshen 8y agoI think you might have replied to the wrong person. I agree with you.
- BurningFrog 8y agoYou're wildly contradicting yourself. California is both an example of how markets can't handle water, and has also never had markets in water.
- jshen 8y agoI never said they had markets in water.
- cbnotfromthere 8y agoYou implied this when claiming the rich are buying all the water rights.
- jshen 8y agoI didn’t say that. I said they would IF we had an open “market” for water.