Water-The Third Rail Part X

Whenever the subject of raising water rates comes up, politicians head for
the exits, despite the fact that essentially water pricing is established by
government fiat. When Bill Gates published the Version 1.0 of Microsoft
Windows November 20, 1985, what would have happened if some government bureaucrat had decided
that “for the common good” pricing of Windows would be capped in 1985 at say
$25.00, and put into the public domain administered by political appointees?
Do you think Gates would have invested his time and resources into
successive versions? Would anyone else have been interested?

That is where we are with water pricing. Some would say the analogy doesn’t
work since water is public and computer software is in the private
marketplace. The counterargument is that markets work when government keeps its hands off.

What we need in ourdaily lives is priced based on how much we need a commodity (value) and its
scarcity. Over the years software has slide into commodity status. . Edward
Lazear wrote in the June 26th Wall Street Journal why, when government puts
a ceiling on a commodity it becomes even scarcer. So it is with water.

Analogies do have limits, and with software there is no limit to human
ingenuity, unlike water which is a finite resource that causes even more
distortion between the cost of delivering it and its real value.

To set aside the idea of whether water is a basic human right or not, there
is no question a basic lifeline price must be set for the economically
disadvantaged, but for the rest of us, Pat Mulroy sums it up by answering
the question this way… “Sure”, the former Las Vegas water czar said, “it’s
a basic right. Just take your bucket to Lake Mead and fill it up.”

Is it fair to subsidize agricultural corporate interests with revenue from
the using public? That is exactly what is happening with water.
Agri-business pays $60 an acre-foot (don’t worry about how much water that
is for the moment) and water users in San Diego County pay about $1,000 an
acre foot for the water delivered to their homes and businesses.

Mr. Lazear has a recipe for reducing the scarcity of water in California and
elsewhere, using market forces. The only problem, and it is huge, is to
overcome the “balkanization” that has taken place over the past one hundred
years with the various water fiefdoms and water tribal warfare. It is not
that much different than the news out of the Middle East currently.

There is, however, “light at the end of the tunnel” to use a well-worn
phrase. Water users vote. And when voters are made aware of what is really
happening (not spin from bureaucrats) but what is really going on, they will
take care of the price-fixers who cause water to be so scarce. The big “IF”
is how to get reliable information to water users (and voters).

So, political appointees and office holders, pay attention. As the drought
deepens, lip service will not carry the day. If a few voters in Virginia can
turn out a Republican Majority Whip (Eric Cantor) for the first time in
recent history, your jobs are on the line. Do not run for the exits the next
time someone shouts “Water Pricing”, stay In your seats and pay attention to
people like Edward Lazear. The time is coming for you to clear your calendar
of electioneering and go to work resolving our water problems.

Milt Burgess