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Perhaps you should crack open that Econ 101 textbook first, because that same Econ 101 textbook would likely have water as the canonical example used to explain
by victoro 12y ago
Perhaps you should crack open that Econ 101 textbook first, because that same Econ 101 textbook would likely have water as the canonical example used to explain elasticity of demand. Demand for water is inelastic, both for agriculture and home use, so letting the "supply and demand curve" take care of it would likely cause a sharp increase in price in a very short period of time, which, from a policy perspective, seems like a terrible idea that would cause panic and economic instability.
- baddox 12y agoWould it cause more panic and economic instability than California having zero water next year, but at a great price?
- noobermin 12y agoI'm assuming the alternative that the grandparent is against is forced sharing, ie., regulation which would keep the situation from reaching that state where there is zero water next year. I don't think anyone supports CA doing nothing and to keep using water at the current rate.
- api 12y agoAgricultural and home use are inelastic, but irrigation of suburbs and similar luxury uses are not.
- ars 12y agoIrrigation of lawns is a tiny percentage. Agriculture is definitely elastic! If water prices go up, they just plant less. Then people in other places grow food instead. It's a slow change, but it's certainly elastic.
- acslater00 12y agoThis is not true. Demand for water is inelastic in the short term only. The (obvious) effect of increasing water prices over the medium and long term would be the displacement of water hungry crops such as almonds and rice, as it would no longer be economical to farm them in California. The equilibrium level of water consumption would be much lower as a result.
- thrill 12y agoA sharp increase in price is exactly how to gain focus. The only damage to policy will be the at-last recognition that this can has been kicked down the road by every policy setter for the last two decades.
- shit_parade 12y agoWheat and other grains, because of how water intensive they are to grow, are considered an international water trading market. Agricultural subsidies are common and significant, especially in rich developed nations. This is for various reasons, but it does have some significant knockdown effects such as exasperating third world poverty. There are numerous complaints brought to the UN, the WTO, by various poor nations but they are generally ignored or swept under the rug.
- davmre 12y agoThere are some obvious fixes here, like subsidizing the first N gallons/person/month (where N is some amount sufficient for basic human needs) and then charging market rate for water use above that level. You could even use a soft cliff, with a partial subsidy remaining up to 2N g/p/m, and let the generosity of the subsidy gradually decrease over time to "phase in" the adoption of market-rate prices and give people time to adjust their water usage.