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Part of the issue is not systematically using a pricing structure that charges disproportionately more for usage above high thresholds. The 101-level "solution

Part of the issue is not systematically using a pricing structure that charges disproportionately more for usage above high thresholds. The 101-level "solution" is to just raise the price to account for demand. The problem with that is that it treats all usage the same, whether it's a residence's first gallon or an alfalfa field's last gallon. But the former is something we need to protect. It makes sense to price water, and electricity, in a fashion where the first X costs a certain amount, and the next X has a higher rate, and above some percentile of usage it has a much higher rate, and at some percentile of usage, customers should be very nearly paying for new required utility infrastructure themselves. That allows using pricing to solve supply problems, without penalizing normal levels of usage. Some utilities already do this. But if there are actual issues with having enough supply for both datacenters/farms/smelters/etc and residential usage, then they're not doing this well enough, or don't have the pricing correct.

jlebar 6mo ago
> Part of the issue is not systematically using a pricing structure that charges disproportionately more for usage above high thresholds. We don't do this for gasoline (in most countries), even though it is also vital for life. And yet people can still drive, afford to eat food grown with fertilizers, use plastic, and so on. Turns out markets are pretty good when you leave them alone. But when they're not left alone (as is the case with water today!!) you get some weird shit.
- deleted 6mo ago
  [deleted]
- da_chicken 6mo ago
  > We don't do this for gasoline No, but commercial trucks use diesel, which carries about 25% higher taxes per gallon. And vehicle registration on semi-trailer trucks is significantly higher as well. They pay, on average, between $25,000 and $30,000 in taxes and fees each year. > Turns out markets are pretty good when you leave them alone. No, they aren't. They're ridiculously bad when you leave them alone because someone captures the market, ramps up anti-competitive practices, and immediately begins rent-seeking as hard as possible. Free markets are pretty good at finding good prices. Markets that are left alone do not remain free. That lauded "self-interest" encourages businesses that have reached nearly 100% market share to increase profit in other ways.
  - cma 6mo ago
    Heavier commercial trucks that run on diesel tend to cause more damage. Scales with roughly 4th power of axle load.
    - AnthonyMouse 6mo ago
      That's a bad argument. There are gasoline trucks with a GVWR of ~20,000 pounds and diesel cars that weigh less than a Honda Accord. If you actually wanted to do that then you'd instead do something like tax based on axle weight and miles traveled, e.g. by reading the odometer during inspections. The better argument is that diesel is worse for air quality and then it's a pigouvian tax in proportion to how much you burn. The realpolitik argument is that fewer people have diesel vehicles and democracy is two wolves and a sheep voting on what's for dinner. But taxing commercial trucks is also a pretty sneaky way of taxing ~everything while pretending to not, so it's also the principal/agent problem. Legislators want to spend money while pretending not to take it from you.
      - cma 6mo ago
        > diesel cars that weigh less than a Honda Accord. It is taxed less than gas in lots of Europe where that is more common. You also need to factor in mpg vs gas, where it is higher, so more road-wear pCO2 was part of the debate in Europe, even though it is longer carbon chain so worse co2 ratio per calorie, the engines are more efficient. Diesel is worse for local air, better for long term co2. There are a mixture of factors and lobbying behind the differencs, road wear is one. Farm fuel with no road wear isn't taxed much at all in lots of places and is more often diesel.
        AnthonyMouse 6mo ago
        > It is taxed less than gas in lots of Europe where that is more common. But then it's even worse at recovering the cost of road maintenance from heavy trucks. > You also need to factor in mpg vs gas, where it is higher Passat TDI (diesel), ~3500 pounds, ~45MPG. Toyota Camry Hybrid (gas), ~3500 pounds, ~50MPG. In theory diesel hybrids would be even more efficient but diesel engines and hybrid transmissions both add up-front cost and further efficiency improvements have diminishing returns because reducing a $100 fuel cost by 30% isn't as much money as reducing a $70 fuel cost by 30%. > There are a mixture of factors and lobbying behind the differencs, road wear is one. Road wear is the irrelevant one in terms of fuel. Because of the fourth power law, essentially all road wear is from full-size buses and semi trucks. The contribution from passenger cars and even the likes of diesel pickup trucks rounds to zero. Meanwhile the largest vehicles use a minority of the fuel because there are several times more passenger cars than semi trucks.
- thephyber 6mo ago
  Gasoline is absolutely rationed when it becomes scarce after having been plentiful. When hurricanes come to South Florida, the well off migrate North to wait out the storm while the poor suffer the dangerous conditions. Part of this is due to the price spikes of gasoline in the local market as supplies dwindle due to fewer truck shipments and refineries shutting down for the storm. Water is similar. Both water rights and water utilities are gamed by people who have resources. The people that are hurt are usually poor utilities bill payers, rural residents who are the first to lose service when wells dry up, and anyone who thinks they have water rights until an upstream user exhausts their expected supply. The “markets work” heuristic is frequently wrong if you don’t glaze over the very many counterexamples.
  - roenxi 6mo ago
    Yeah but that response is stupid, irrational, makes shortages more likely and discourages people from taking action when they need to do something different right now. In an emergency situation, people who can provide more of something that is in desperately short supply should be paid more. People consistently adopt a strategy of trying to not pay them more and it's one of those really annoying cases where people's instincts are primed to make them band together and do something predictably foolish. Rationing is an inevitable response. But to say that is like saying witch hunts are inevitable - they are. They're still bad ideas. People who can maintain access to their higher reasoning should resist them.
  - jlebar 6mo ago
    > Gasoline is absolutely rationed when it becomes scarce after having been plentiful. Sure, but OP is advocating that we should "systematically [use] a pricing structure that charges disproportionately more for usage above high thresholds." They're not arguing that this is something to be applied only in emergencies. Similarly in your post, you use the need to ration gas after a hurricane to argue that we should ration water all the time. This does not follow. > Both water rights and water utilities are gamed by people who have resources. The people that are hurt are usually poor utilities bill payers, rural residents who are the first to lose service when wells dry up, and anyone who thinks they have water rights until an upstream user exhausts their expected supply. The logical extension of your argument here is that the world would be better if we subsidized gasoline for "poor utilities bill payers" and "rural residents". But why gasoline and water specifically? Why not also healthcare, food, childcare, and other necessities? Then consider, if we have a budget of $X per family to subsidize necessities, surely the government is not best suited to decide how to split up those dollars between water, gas, healthcare, food, and childcare? There's no right answer universally, some people need food more than they need gas, and vice versa. Surely an individual family would be better equipped to decide for themselves? We have now invented "giving money to poor people instead of subsidizing demand", which I wholeheartedly support.
- thrance 6mo ago
  Gasoline is heavily regulated and subsidized. Leaving the oil market alone resulted in Standard Oil, and we obviously don't want that again.
  - Straw 6mo ago
    Standard oil not only reduced consumer prices for gasoline, but was already losing its monopoly to competitors during the antitrust trial.
  - jlebar 6mo ago
    I am not saying that there should be no regulations on monopolies. We are discussing a very specific market intervention, namely the proposal to > systematically [use] a pricing structure that charges disproportionately more for usage above high thresholds. This is what I'm arguing is a bad idea, by using gasoline as an example. If you want to argue that imposing this pricing structure systematically is good because it would help prevent a bad monopoly like Standard Oil, you'd need to explain (a) how this market intervention would prevent monopolies and (b) how it's a "better" way (according to however we decide to measure "better") to prevent monopolies than the alternatives. I don't see how this is true, though.
    - thrance 6mo ago
      Your claim was: > Turns out markets are pretty good when you leave them alone. But when they're not left alone (as is the case with water today!!) you get some weird shit. https://en.wikipedia.org/wiki/Motte-and-bailey_fallacy https://en.wikipedia.org/wiki/Motte-and-bailey_fallacy
- cybercatgurrl 6mo ago
  excuse me? leave the markets alone? to do what? continue screwing people over with the cost of living? at some point the government needs to step in when greed outstrips the ability of the consumer to meet the demand. capitalism on it’s own will demand ever increasing profits and that is simply unsustainable for any civilisation
anubistheta 6mo ago
I disagree. A large part of the cost of a utility is fixed per customer. Or any product really. That's how bulk purchasing makes sense. I can get 4x the product at a bulk store for 2x the price. Instead of being prejudicial about the use case, let's just charge what the utility actually costs. Include capital, operation, and decommissioning costs. That way, if you get a sudden spike in demand, you have the cash flow to issue a bond a scale up.
- XorNot 6mo ago
  This would be an extremely regressive pricing structure that still has the same punchline: somehow residential users pay more to still not have any water.
Straw 6mo ago
This causes major market distortions and worse outcomes than the econ 101 solution. The problem is that water isn't traded on a normal market at all. Lots of people have historical water rights and pay nearly nothing for their water use. There's byzantine regulation and many have the right to use for some purpose on their land but not to resell, so the market cannot allocate to more efficient use. If you just let the 101 level solution actually work, water prices will rise until inefficient uses like water-intensive agriculture (not even all crops!) are pushed out. Urban users easily outbid almost all agricultural use, even at what any person would consider dirt cheap prices. For example, desalinated water, which is considered expensive for agriculture, can be 40 cents per cubic meter of water. That's a lot of water! Usually the last mile of urban water delivery costs more than that. The amount required to satisfy all urban use, including water hungry lawns etc, and datacenters, corresponds to a very minor reduction in agriculture. Perhaps even just changing which crop is grown or switching irrigation techniques. Charging more to higher users, price discrimination, causes several problems. First, it creates an incentive to cheat. I'm not using all this water myself, its for this whole group of people who "live" here. Don't allow this kind of spreading (somehow...)? Now you actually screw any business or institution that serves a lot of people. A farm produces food for thousands- do they count as one user? A park uses much more water than a garden but serves many more people. Whatever framework you create will require another bureaucracy to run. Lobbyists will find or insert loopholes for their friends. The heavy users actually improve the system robustness, in both electricity and water. Their higher demand pays for more supply infrastructure, which itself often benefits from economies of scale, and in a shortage they may even be more responsive to price increases due to their high use.
- eesmith 6mo ago
  The 101 level solution means that Native Americans who were granted water rights by the Spanish, and guaranteed those rights by US treaties, would have to outbid urban users in order to grow subsistence crops. The heavy users have more influence over the laws which govern the infrastructure, as the history of water rights in the West clearly shows. We see it now when secretive organizations negotiate with water companies under NDA to get water for new data centers - something a smaller water user couldn't do. The riparian doctrine of the East, with its high rainfall, don't work so well in the dry West, which is why it generally uses the prior appropriation doctrine. Water management was traditionally under a communal system. Some of these still exist as acequia associations, which include equity and fairness in their decisions, which doesn't follow the prior appropriation doctrine. Econ 101 doesn't handle these issues.
atoav 6mo ago
I think it makes sense to have a continuum of: 1. You're thirsty and need a sip of water? That should be free 2. You're an household and use water? That should cost progressively more the more you use if you use more than typically needed 3. Your business model requires you to evaporate every last drop of water in a desert region? That should be so prohibitively expensive that your business model does not work This is basically just a low amount threshold and a exponential function. You just need to select the exponent.

jlebar 6mo ago

> Part of the issue is not systematically using a pricing structure that charges disproportionately more for usage above high thresholds. We don't do this for gasoline (in most countries), even though it is also vital for life. And yet people can still drive, afford to eat food grown with fertilizers, use plastic, and so on. Turns out markets are pretty good when you leave them alone. But when they're not left alone (as is the case with water today!!) you get some weird shit.

deleted 6mo ago
[deleted]
da_chicken 6mo ago
> We don't do this for gasoline No, but commercial trucks use diesel, which carries about 25% higher taxes per gallon. And vehicle registration on semi-trailer trucks is significantly higher as well. They pay, on average, between $25,000 and $30,000 in taxes and fees each year. > Turns out markets are pretty good when you leave them alone. No, they aren't. They're ridiculously bad when you leave them alone because someone captures the market, ramps up anti-competitive practices, and immediately begins rent-seeking as hard as possible. Free markets are pretty good at finding good prices. Markets that are left alone do not remain free. That lauded "self-interest" encourages businesses that have reached nearly 100% market share to increase profit in other ways.
- cma 6mo ago
  Heavier commercial trucks that run on diesel tend to cause more damage. Scales with roughly 4th power of axle load.
  - AnthonyMouse 6mo ago
    That's a bad argument. There are gasoline trucks with a GVWR of ~20,000 pounds and diesel cars that weigh less than a Honda Accord. If you actually wanted to do that then you'd instead do something like tax based on axle weight and miles traveled, e.g. by reading the odometer during inspections. The better argument is that diesel is worse for air quality and then it's a pigouvian tax in proportion to how much you burn. The realpolitik argument is that fewer people have diesel vehicles and democracy is two wolves and a sheep voting on what's for dinner. But taxing commercial trucks is also a pretty sneaky way of taxing ~everything while pretending to not, so it's also the principal/agent problem. Legislators want to spend money while pretending not to take it from you.
    - cma 6mo ago
      > diesel cars that weigh less than a Honda Accord. It is taxed less than gas in lots of Europe where that is more common. You also need to factor in mpg vs gas, where it is higher, so more road-wear pCO2 was part of the debate in Europe, even though it is longer carbon chain so worse co2 ratio per calorie, the engines are more efficient. Diesel is worse for local air, better for long term co2. There are a mixture of factors and lobbying behind the differencs, road wear is one. Farm fuel with no road wear isn't taxed much at all in lots of places and is more often diesel.
      - AnthonyMouse 6mo ago
        > It is taxed less than gas in lots of Europe where that is more common. But then it's even worse at recovering the cost of road maintenance from heavy trucks. > You also need to factor in mpg vs gas, where it is higher Passat TDI (diesel), ~3500 pounds, ~45MPG. Toyota Camry Hybrid (gas), ~3500 pounds, ~50MPG. In theory diesel hybrids would be even more efficient but diesel engines and hybrid transmissions both add up-front cost and further efficiency improvements have diminishing returns because reducing a $100 fuel cost by 30% isn't as much money as reducing a $70 fuel cost by 30%. > There are a mixture of factors and lobbying behind the differencs, road wear is one. Road wear is the irrelevant one in terms of fuel. Because of the fourth power law, essentially all road wear is from full-size buses and semi trucks. The contribution from passenger cars and even the likes of diesel pickup trucks rounds to zero. Meanwhile the largest vehicles use a minority of the fuel because there are several times more passenger cars than semi trucks.
thephyber 6mo ago
Gasoline is absolutely rationed when it becomes scarce after having been plentiful. When hurricanes come to South Florida, the well off migrate North to wait out the storm while the poor suffer the dangerous conditions. Part of this is due to the price spikes of gasoline in the local market as supplies dwindle due to fewer truck shipments and refineries shutting down for the storm. Water is similar. Both water rights and water utilities are gamed by people who have resources. The people that are hurt are usually poor utilities bill payers, rural residents who are the first to lose service when wells dry up, and anyone who thinks they have water rights until an upstream user exhausts their expected supply. The “markets work” heuristic is frequently wrong if you don’t glaze over the very many counterexamples.
- roenxi 6mo ago
  Yeah but that response is stupid, irrational, makes shortages more likely and discourages people from taking action when they need to do something different right now. In an emergency situation, people who can provide more of something that is in desperately short supply should be paid more. People consistently adopt a strategy of trying to not pay them more and it's one of those really annoying cases where people's instincts are primed to make them band together and do something predictably foolish. Rationing is an inevitable response. But to say that is like saying witch hunts are inevitable - they are. They're still bad ideas. People who can maintain access to their higher reasoning should resist them.
- jlebar 6mo ago
  > Gasoline is absolutely rationed when it becomes scarce after having been plentiful. Sure, but OP is advocating that we should "systematically [use] a pricing structure that charges disproportionately more for usage above high thresholds." They're not arguing that this is something to be applied only in emergencies. Similarly in your post, you use the need to ration gas after a hurricane to argue that we should ration water all the time. This does not follow. > Both water rights and water utilities are gamed by people who have resources. The people that are hurt are usually poor utilities bill payers, rural residents who are the first to lose service when wells dry up, and anyone who thinks they have water rights until an upstream user exhausts their expected supply. The logical extension of your argument here is that the world would be better if we subsidized gasoline for "poor utilities bill payers" and "rural residents". But why gasoline and water specifically? Why not also healthcare, food, childcare, and other necessities? Then consider, if we have a budget of $X per family to subsidize necessities, surely the government is not best suited to decide how to split up those dollars between water, gas, healthcare, food, and childcare? There's no right answer universally, some people need food more than they need gas, and vice versa. Surely an individual family would be better equipped to decide for themselves? We have now invented "giving money to poor people instead of subsidizing demand", which I wholeheartedly support.
thrance 6mo ago
Gasoline is heavily regulated and subsidized. Leaving the oil market alone resulted in Standard Oil, and we obviously don't want that again.
- Straw 6mo ago
  Standard oil not only reduced consumer prices for gasoline, but was already losing its monopoly to competitors during the antitrust trial.
- jlebar 6mo ago
  I am not saying that there should be no regulations on monopolies. We are discussing a very specific market intervention, namely the proposal to > systematically [use] a pricing structure that charges disproportionately more for usage above high thresholds. This is what I'm arguing is a bad idea, by using gasoline as an example. If you want to argue that imposing this pricing structure systematically is good because it would help prevent a bad monopoly like Standard Oil, you'd need to explain (a) how this market intervention would prevent monopolies and (b) how it's a "better" way (according to however we decide to measure "better") to prevent monopolies than the alternatives. I don't see how this is true, though.
  - thrance 6mo ago
    Your claim was: > Turns out markets are pretty good when you leave them alone. But when they're not left alone (as is the case with water today!!) you get some weird shit. https://en.wikipedia.org/wiki/Motte-and-bailey_fallacy https://en.wikipedia.org/wiki/Motte-and-bailey_fallacy
cybercatgurrl 6mo ago
excuse me? leave the markets alone? to do what? continue screwing people over with the cost of living? at some point the government needs to step in when greed outstrips the ability of the consumer to meet the demand. capitalism on it’s own will demand ever increasing profits and that is simply unsustainable for any civilisation

anubistheta 6mo ago

I disagree. A large part of the cost of a utility is fixed per customer. Or any product really. That's how bulk purchasing makes sense. I can get 4x the product at a bulk store for 2x the price. Instead of being prejudicial about the use case, let's just charge what the utility actually costs. Include capital, operation, and decommissioning costs. That way, if you get a sudden spike in demand, you have the cash flow to issue a bond a scale up.

XorNot 6mo ago
This would be an extremely regressive pricing structure that still has the same punchline: somehow residential users pay more to still not have any water.

Straw 6mo ago

This causes major market distortions and worse outcomes than the econ 101 solution. The problem is that water isn't traded on a normal market at all. Lots of people have historical water rights and pay nearly nothing for their water use. There's byzantine regulation and many have the right to use for some purpose on their land but not to resell, so the market cannot allocate to more efficient use. If you just let the 101 level solution actually work, water prices will rise until inefficient uses like water-intensive agriculture (not even all crops!) are pushed out. Urban users easily outbid almost all agricultural use, even at what any person would consider dirt cheap prices. For example, desalinated water, which is considered expensive for agriculture, can be 40 cents per cubic meter of water. That's a lot of water! Usually the last mile of urban water delivery costs more than that. The amount required to satisfy all urban use, including water hungry lawns etc, and datacenters, corresponds to a very minor reduction in agriculture. Perhaps even just changing which crop is grown or switching irrigation techniques. Charging more to higher users, price discrimination, causes several problems. First, it creates an incentive to cheat. I'm not using all this water myself, its for this whole group of people who "live" here. Don't allow this kind of spreading (somehow...)? Now you actually screw any business or institution that serves a lot of people. A farm produces food for thousands- do they count as one user? A park uses much more water than a garden but serves many more people. Whatever framework you create will require another bureaucracy to run. Lobbyists will find or insert loopholes for their friends. The heavy users actually improve the system robustness, in both electricity and water. Their higher demand pays for more supply infrastructure, which itself often benefits from economies of scale, and in a shortage they may even be more responsive to price increases due to their high use.

eesmith 6mo ago
The 101 level solution means that Native Americans who were granted water rights by the Spanish, and guaranteed those rights by US treaties, would have to outbid urban users in order to grow subsistence crops. The heavy users have more influence over the laws which govern the infrastructure, as the history of water rights in the West clearly shows. We see it now when secretive organizations negotiate with water companies under NDA to get water for new data centers - something a smaller water user couldn't do. The riparian doctrine of the East, with its high rainfall, don't work so well in the dry West, which is why it generally uses the prior appropriation doctrine. Water management was traditionally under a communal system. Some of these still exist as acequia associations, which include equity and fairness in their decisions, which doesn't follow the prior appropriation doctrine. Econ 101 doesn't handle these issues.

atoav 6mo ago

I think it makes sense to have a continuum of: 1. You're thirsty and need a sip of water? That should be free 2. You're an household and use water? That should cost progressively more the more you use if you use more than typically needed 3. Your business model requires you to evaporate every last drop of water in a desert region? That should be so prohibitively expensive that your business model does not work This is basically just a low amount threshold and a exponential function. You just need to select the exponent.