4 ms·

No but perhaps the negative externalities of water overextraction should start to get priced in.

• rubyfan 4y ago
  Seems hard to put a price on some of those negative externalities. A tariff or something doesn’t really fix or curb the problem.
  • silon42 4y ago
    Has the tariff been tried? Increase it if the aquifer levels are dropping.
  • vkou 4y ago
    It's pretty easy, just charge ruinous usage rates for any water use that is beyond replenishment rates. It doesn't matter if these soybeans are going to China, Mars, or Washington state, the only thing that matters is whether the people growing them are exhausting their region's water supply.
• dahart 4y ago
  How? When it comes to pricing the environment, we have a long history of missing the mark by orders of magnitude, due in part to the extremely long delays between cause and effect, and also due to markets and financial vested interests preventing accurate information about costs, and even preventing the analysis of costs. https://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=1326&context=facpub https://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?a...
  • richk449 4y ago
    If the externality currently has no cost, then even pricing it low by orders of magnitude should be better than the status quo. Pricing it high by orders of magnitude would have negative consequences, but that seems unlikely to happen in practice.
    • dahart 4y ago
      > even pricing it low by orders of magnitude should be better than the status quo. No, while this assumption seems econ 101 logical for a second, it’s not really true and the paper I linked above explains why. The pricing has to match the approximate order-of-magnitude cost of externalities for it to actually prevent any of the consequences we’re discussing here (or more likely be regulated so that Saudi Arabia can’t buy all the water regardless of price). There’s enough price flexibility over water and high enough demand that increasing prices 2x or even 10x today will not slow consumption at all. Water in the US west is already over-subscribed, and people with more money have already lined up to buy whatever becomes available. Increasing prices a little will only change who buys water, not whether it gets used. It has to be high enough that people start choosing not to buy it, which with water is an extremely high bar. In the mean time, draining our aquifers has ramifications for the next several thousand years. This is the whole problem with cost-benefit analysis and free market thinking. When it comes to things that all humans need, like air and water, we have never yet managed to calculate either the true costs or the true benefits correctly, and reducing the equation to money loses all sense of proportion, and more or less always frames things in terms that let rich people and corporations win and take whatever they want.
      • richk449 4y ago
        I don’t think it is as black and white as you make it out to be. Yes, there will be large demand for water even at higher prices. But less than at lower prices. Maybe a little less, maybe a lot less, but either way we are better off than now. Also, there are many other effects to consider besides how much the demand will change. As the price increases, alternative water sources become more economic - trucking water in, building pipelines and canals, building water capture systems, desalinization, etc. Rather than solving the problem by using less water it may be possible to solve the problem by using water that has less environmental impact. Generally speaking, I find your framework hard to parse. Free market thinking and cost benefit analysis are orthogonal, not two parts of a whole. Pricing externalities, as we are discussing here is not the same thing as cost benefit analysis. Cost benefit analysis is a bureaucrat sitting in an office and deciding what policies should be enacted. Pricing an externality means assigning a cost to use of some scarce resource, and letting the market decide if and when the resource is worth the cost.