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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 p

by Straw 5mo 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 5mo 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.
- Straw 5mo ago
  These all seem fine in a normal market? If the Native Americans have water rights, they can also sell them. They can choose to use it inefficiently on subsistence farming, or they could sell at the going rate. A normal market itself doesn't imply any particular allocation of water rights, just that they should be as fungible and transferable as possible. Why are the laws that govern the infrastructure particularly important? It only matters now because its a tangle of regulation. Yes, big users can often get bulk discounts or other special arrangements by committing to use. This happens in many areas. There's no law governing what products my grocery store must carry. Yet, I can still choose a store with many things I like, at affordable prices. My store may (and frequently does) exclude all products containing some chemical considered harmful even if it isn't banned. Of course, water has more of a natural monopoly problem, but that's more for last mile infrastructure and not broader supply. I don't understand the details of the riparian vs prior appropriation doctrine. How does this create an issue? If the water rights are defined somehow, in a usage-independent way, only in terms of the net water removal, to account for runoff from local use, and the water from them can be traded, then a market can work regardless of the specific nature of the right. Any association holding the rights could allocate its water internally as it sees fit. Just like any other asset? Or it could decide to sell it and distribute the money instead- perhaps even better for fairness to it's members!
  - eesmith 5mo ago
    > If the Native Americans have water rights, they can also sell them. You've just described the standard practice for taking over Native American lands by economic coercion instead of direct force. Take away land and water using market forces, and a culture based on land and water shatters. That's precisely why the Native Americans protected their rights by treaty, not market forces. Econ 101 was created to justify British colonial expansionism. Econ 101 justifies indentured servitude. Econ 101 justifies vote selling. Econ 101 justifies rule by the rich. We've collectively decided that some part of life are off-limits to Econ 101. Water is not simply a commodity. Water is life. Water is culture. > How does this create an issue? Water rights in the West are at least a Econ 400 level course, if not graduate school.

by Straw 5mo ago

eesmith 5mo 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.

Straw 5mo ago
These all seem fine in a normal market? If the Native Americans have water rights, they can also sell them. They can choose to use it inefficiently on subsistence farming, or they could sell at the going rate. A normal market itself doesn't imply any particular allocation of water rights, just that they should be as fungible and transferable as possible. Why are the laws that govern the infrastructure particularly important? It only matters now because its a tangle of regulation. Yes, big users can often get bulk discounts or other special arrangements by committing to use. This happens in many areas. There's no law governing what products my grocery store must carry. Yet, I can still choose a store with many things I like, at affordable prices. My store may (and frequently does) exclude all products containing some chemical considered harmful even if it isn't banned. Of course, water has more of a natural monopoly problem, but that's more for last mile infrastructure and not broader supply. I don't understand the details of the riparian vs prior appropriation doctrine. How does this create an issue? If the water rights are defined somehow, in a usage-independent way, only in terms of the net water removal, to account for runoff from local use, and the water from them can be traded, then a market can work regardless of the specific nature of the right. Any association holding the rights could allocate its water internally as it sees fit. Just like any other asset? Or it could decide to sell it and distribute the money instead- perhaps even better for fairness to it's members!
- eesmith 5mo ago
  > If the Native Americans have water rights, they can also sell them. You've just described the standard practice for taking over Native American lands by economic coercion instead of direct force. Take away land and water using market forces, and a culture based on land and water shatters. That's precisely why the Native Americans protected their rights by treaty, not market forces. Econ 101 was created to justify British colonial expansionism. Econ 101 justifies indentured servitude. Econ 101 justifies vote selling. Econ 101 justifies rule by the rich. We've collectively decided that some part of life are off-limits to Econ 101. Water is not simply a commodity. Water is life. Water is culture. > How does this create an issue? Water rights in the West are at least a Econ 400 level course, if not graduate school.