Why doesn't California just raise the price of water?

[Axulus]

As an FYI, the numbers I gave you, unless someone can show a bust, aren't analogous, but real and what your plan would pay out in the end. Personally, getting a $1000+ check from the water company would be a welcomed thing... maybe not as much for businesses though.

Your numbers looked fine. However, the actual check would be based on how much the price of water increased under the water conservation plan (the amount needed to get water usage to the sustainable level). Whatever is currently being charged for water would still need to be charged and not rebated - to pay for the infrastructure and ongoing costs.

According to your plan, people could afford to use 4 times the amount of water and break even.

Yes, that kind of rebuts the whole idea that the poor would be screwed by this, doesn't it? In fact, it would help them out quite a bit. They wouldn't have to cut back on their water usage if they didn't want to but, if they did and could, they'd get even more money back, money that could be used to pay for other bills.

 

[Axulus]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air. Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

People with plenty of money would go ahead and use the water as they pleased. People who were barely getting by would not be able to do that....rebate or no. There is no reason to give the water vendor the distinction of being a holder of everybody's money. Regulation makes sense...direct regulation....no speculative money fix.

Stop the presses! The rich can buy more stuff? Who knew?

The people who are barely getting by are those who aren't using much water in the first place - they'd get extra money with this plan, money that could be used to pay for other bills (and they wouldn't have to cut back a drop of their water usage if they didn't want to).

 

[Loren Pechtel]

According to what I have read, the State of California is asking water authorities to consider raising water rates. It is easy for an economist to wave his hand and say "Raise the price" but it is politically and socially harder for a government to do so.

Yup. Agriculture is going to scream bloody murder if they raise the water rates enough to address the issue.

- - - Updated - - -

Why put in these onerous regulations when it could simply raise the price of water?



http://gregmankiw.blogspot.com/2015/04/california-should-raise-price-of-water.html

You do understand that we are talking about people and not economics models, right?

And you think a cheap dry tap is superior to expensive water?

- - - Updated - - -

People need water. But there needs to be a supply of the water in order for them to have it. I think raising the price would work very well because with the higher resources they can create more water from thin air.

80 percent of the water is used by farmers. Higher prices would force farmers to pay their fair share. It's crazy to grow alpha and almonds in the desert!

It's worse than that. A farmer who doesn't use all his water loses it permanently.

 

[Loren Pechtel]

You seem to assume there is some magical alternative that has few downsides.

In the liberal world there's always a good solution, you just have to look hard enough.

 

[Bronzeage]

Yup. Agriculture is going to scream bloody murder if they raise the water rates enough to address the issue.

- - - Updated - - -

Why put in these onerous regulations when it could simply raise the price of water?



http://gregmankiw.blogspot.com/2015/04/california-should-raise-price-of-water.html

You do understand that we are talking about people and not economics models, right?

And you think a cheap dry tap is superior to expensive water?

Water is a commodity which cannot be owned, in the conventional sense of the word. A coal mine owner, owns the coal he mines. The traditional way to set the price for water is to consider the water to be free and consider only the cost of storage and delivery.

Raising water costs to levels high enough to force conservation is the harshest form of rationing and in reality is an unworkable plan. What does the water company do when a customer cannot pay the bill? A house without water is uninhabitable. Imagine a renter whose water bill is included in the lease. What happens when the landlord does not pay the bill? Does any municipal water company want to be responsible for making people homeless?

Detroit already has this kind of crisis and they have Lake Michigan to draw water from.

 

[credoconsolans]

Ever since the days right after Hurricane Katrina, and all the buzz about living in a city built below sea level, I am mildly amused when other parts of the nation discover they are living in a place which nature did not intend for humans to inhabit.

Is there any place free from destructive acts of nature?

Guess what parts of NOLA survived a category 4 hurricane and the bursting of some dikes?

The old part of NOLA built on the highest ground.

 

[arkirk]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air. Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

People with plenty of money would go ahead and use the water as they pleased. People who were barely getting by would not be able to do that....rebate or no. There is no reason to give the water vendor the distinction of being a holder of everybody's money. Regulation makes sense...direct regulation....no speculative money fix.

Stop the presses! The rich can buy more stuff? Who knew?

The people who are barely getting by are those who aren't using much water in the first place - they'd get extra money with this plan, money that could be used to pay for other bills (and they wouldn't have to cut back a drop of their water usage if they didn't want to).

It is water we would try to regulate, not other people's incomes. It needs to be portioned out according to society's needs, not the needs of the imaginary market. Taking poor peoples' money and maybe giving it back to them is an exercise we do not need in order to deal with water apportionment. Even if the rich could afford to water their golf courses, that needs to stop. Even if frackers could afford billions of gallons of water to mix with hydrofluoric and hydrochloric acids and pump into the ground (certainly polluting some usable aquifers with either the initial fracking or with leaching from their waste pools), they should not be allowed to have it at ANY PRICE...INCLUDING BUYING BREAD FOR THE POOR.

Acute water shortage is not some kind of economic opportunity for either free bread or golf courses. It is complex enough to deal with without overlaying the problem with the "let's make a deal" economic idea you are proposing.

 

[Axulus]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air. Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

People with plenty of money would go ahead and use the water as they pleased. People who were barely getting by would not be able to do that....rebate or no. There is no reason to give the water vendor the distinction of being a holder of everybody's money. Regulation makes sense...direct regulation....no speculative money fix.

Stop the presses! The rich can buy more stuff? Who knew?

The people who are barely getting by are those who aren't using much water in the first place - they'd get extra money with this plan, money that could be used to pay for other bills (and they wouldn't have to cut back a drop of their water usage if they didn't want to).

It is water we would try to regulate, not other people's incomes. It needs to be portioned out according to society's needs, not the needs of the imaginary market. Taking poor peoples' money and maybe giving it back to them is an exercise we do not need in order to deal with water apportionment. Even if the rich could afford to water their golf courses, that needs to stop. Even if frackers could afford billions of gallons of water to mix with hydrofluoric and hydrochloric acids and pump into the ground (certainly polluting some usable aquifers with either the initial fracking or with leaching from their waste pools), they should not be allowed to have it at ANY PRICE...INCLUDING BUYING BREAD FOR THE POOR.

Acute water shortage is not some kind of economic opportunity for either free bread or golf courses. It is complex enough to deal with without overlaying the problem with the "let's make a deal" economic idea you are proposing.

There is way more water in CA, even with the drought, than is needed to cover the population's bare necessities (drinking, cooking, toilet, taking a quick shower, washing clothes, doing dishes). Thus, your whole rant makes absolutely no sense - we are talking about allocating the water for non-necessary use. The rebate itself I am proposing will be far more than what's needed to buy enough water to cover ones' bare necessity. In fact, according to Higgins' plausible math, several times more than enough - enough for the typical poor person to increase their water usage several-fold if they really wanted to.

 

[arkirk]

Yup. Agriculture is going to scream bloody murder if they raise the water rates enough to address the issue.

- - - Updated - - -

Why put in these onerous regulations when it could simply raise the price of water?



http://gregmankiw.blogspot.com/2015/04/california-should-raise-price-of-water.html

You do understand that we are talking about people and not economics models, right?

And you think a cheap dry tap is superior to expensive water?

Water is a commodity which cannot be owned, in the conventional sense of the word. A coal mine owner, owns the coal he mines. The traditional way to set the price for water is to consider the water to be free and consider only the cost of storage and delivery.

Raising water costs to levels high enough to force conservation is the harshest form of rationing and in reality is an unworkable plan. What does the water company do when a customer cannot pay the bill? A house without water is uninhabitable. Imagine a renter whose water bill is included in the lease. What happens when the landlord does not pay the bill? Does any municipal water company want to be responsible for making people homeless?

Detroit already has this kind of crisis and they have Lake Michigan to draw water from.

Actually, most coal comes from mining claims on public land. The laws both surface mining and subsurface mining laws allow the coal mining company to develop a deposit that actually originates in the commons. Home owners often do not own the mineral resources beneath their property. That is what is wrong with most of the mining laws in this country. Mining has traditionally had a priority over other land uses based on how much the mining firm can profit from it. You may not think water can be owned but if an agency or a company controls the distribution of the water and has the power to demand payment for it, is that not "owning it," regardless of the technicality?

 

[Axulus]

According to what I have read, the State of California is asking water authorities to consider raising water rates. It is easy for an economist to wave his hand and say "Raise the price" but it is politically and socially harder for a government to do so.

They just need to sell it to the public in a populist manner: cash rebates for all, far larger than the amount needed to cover the typical household's increased water bill (~4x or so according to Higgins' math), the big water hogs and fat cat 1%ers of agriculture and industry will have to pay for it and cut back the most.

 

[arkirk]

My spidey sense is tingling. My mind is saying the math doesn't work for that. That the average rebate, based on the average extra spent would greatly benefit residential accounts, a lot. Goodness I need to get a hobby!

80% of water is usage is industrial, so just doing a quick run of the numbers. Average household use in California is about 362 gpd (from wiki). There are about 13,000,000 households in California (from census). This leads to 1.7e+12 gallons a year. Households only use 20% for the state, so that means business's/farms use 4 times that at 6.9E+12 gallons a year.

Assuming water costs $0.002 per gallon (from google) that means household usage is $3.4E+9 and Industrial/whatever is $14E+9 a year. If you double the price, you make the same amount in bulk. Assuming 13,000,000 households and 1,000,000 businesses (doubt its that high), the average rebate for the increase is $1225. The increase for the average household was only $264. Unless my math is busted, which it may be, your plan would need a little tweaking. I want to say weighted averages are boning your plan.

Also, if you can't afford the higher rate, how does a rebate help?

You will be able to afford it so long as you don't use more water than the average usage across the entire state. If you use less than the average, you'll earn extra.

But you have to pay up front. If you are barely making it by, you can't afford the increase.

That comes after the fact.

No, it needn't do so. Monthly water bill: $100 usage. Statewide credit: $40. Net payment due: $60.

Where is the incentive then to use less water then? If you never actually pay more, there is no incentive.

You pay more or get less money back the more you use, in direct proportion to the amount you use. That's the incentive. The credit you receive has no bearing on the amount you yourself used, but is rather calculated based on how much everyone in the state used and the associated additional charges resulting from that usage.

As far as the specific amounts households get back, I'm not sure on that, I'm just throwing up numbers in the air. Yes, the residential households would be net beneficiaries of this, and the industrial uses, the biggest water hogs, would both pay the most and also likely end up cutting back the most. Doesn't mean that we wouldn't see household behavior also change as time goes on, in order to reduce their own water bills.

People with plenty of money would go ahead and use the water as they pleased. People who were barely getting by would not be able to do that....rebate or no. There is no reason to give the water vendor the distinction of being a holder of everybody's money. Regulation makes sense...direct regulation....no speculative money fix.

Stop the presses! The rich can buy more stuff? Who knew?

The people who are barely getting by are those who aren't using much water in the first place - they'd get extra money with this plan, money that could be used to pay for other bills (and they wouldn't have to cut back a drop of their water usage if they didn't want to).

It is water we would try to regulate, not other people's incomes. It needs to be portioned out according to society's needs, not the needs of the imaginary market. Taking poor peoples' money and maybe giving it back to them is an exercise we do not need in order to deal with water apportionment. Even if the rich could afford to water their golf courses, that needs to stop. Even if frackers could afford billions of gallons of water to mix with hydrofluoric and hydrochloric acids and pump into the ground (certainly polluting some usable aquifers with either the initial fracking or with leaching from their waste pools), they should not be allowed to have it at ANY PRICE...INCLUDING BUYING BREAD FOR THE POOR.

Acute water shortage is not some kind of economic opportunity for either free bread or golf courses. It is complex enough to deal with without overlaying the problem with the "let's make a deal" economic idea you are proposing.

There is way more water in CA, even with the drought, than is needed to cover the population's bare necessities (drinking, cooking, toilet, taking a quick shower, washing clothes, doing dishes). Thus, your whole rant makes absolutely no sense - we are talking about allocating the water for non-necessary use. The rebate itself I am proposing will be far more than what's needed to buy enough water to cover ones' bare necessity. In fact, according to Higgins' plausible math, several times more than enough - enough for the typical poor person to increase their water usage several-fold if they really wanted to.

There is no cutback on agribusiness in this state drawing down aquifers in the San Joaquin Valley to the point of collapse and they are growing high water demand products for EXPORT. They are using 80% of the water the state uses and will have no interest in your rebate plan whatever. It really is a matter that has to be dealt with directly through regulation not money shell games to control the usage by the poor. Water is a fundamental need for millions of human beings living here and agribusiness and the oil companies are NOT CUTTING BACK...just joe householder with his little lawn. Your idea is silly.

 

[Jolly_Penguin]

Why not just... get more water? Isn't most of the planet covered in the stuff? You just have to clean it and un-salt it.

 

[Axulus]

There is no cutback on agribusiness in this state drawing down aquifers in the San Joaquin Valley to the point of collapse and they are growing high water demand products for EXPORT. They are using 80% of the water the state uses and will have no interest in your rebate plan whatever. It really is a matter that has to be dealt with directly through regulation not money shell games to control the usage by the poor. Water is a fundamental need for millions of human beings living here and agribusiness and the oil companies are NOT CUTTING BACK...just joe householder with his little lawn. Your idea is silly.

They will have to pay for that water usage just like everyone else. You think they can make export profits when they have a huge water bill come due, and they have to spend $2 on water to sell $1 of almonds or pistachios?

- - - Updated - - -

Why not just... get more water? Isn't most of the planet covered in the stuff? You just have to clean it and un-salt it.

It makes no sense whatsoever for one group to pay $5 to clean and unsalt water so farmers can keep using that same amount of water to sell $1 worth of almonds or pistachios.

 

[AthenaAwakened]

You seem to assume there is some magical alternative that has few downsides.

In the liberal world there's always a good solution, you just have to look hard enough.

And in Loren World, there never is.

 

[arkirk]

Why not just... get more water? Isn't most of the planet covered in the stuff? You just have to clean it and un-salt it.

That sounds easy doesn't it? There are approximately five levels of treatment necessary to make heavily polluted water into potable water. Primary...removes settleables. Secondary....biological (ativated sludge etc.) Tertiary (where it starts to get expensive....various chemical treatments to agglomerate light particles and filter them out with basic sand filtration) Quaternary...coagulation and chemical reactions to render some soluble solids filterable and ultrafiltration. Quininary...removal of some persistent dissolved contaminants mostly organic, by a variety of methods including adsorption on ion exchange media. Water thus treated is very expensive and the production of media to treat this water is also energy and resource intensive in its own right.

We need to use the water we get without all this stuff as if it were valuable and not waste it by polluting it because it is valuable. We need to quit letting polluters get away with wasting it. Regulation and Enforcement of Regulations I feel will have to be the answer for a long time. This idea of controlling the usage of water by some method other than direct observation and dealing with actual uses leaves us continuing to pollute our water environment and continuing to move toward very harsh living conditions for human beings.

 

[arkirk]

In the liberal world there's always a good solution, you just have to look hard enough.

And in Loren World, there never is.

If we continue as we have been going, there are no easy answers. On the other hand, conservation is the very best bang for the buck possible. The idea of being frugal and not wasting just seems so alien to Loren. The idea of ever growing economic activity is just so ingrained in his psyche he appears to fear that the world will simply stop if we slow our damaging growth. He is still in the warrior mode. I sometimes think he considers a rapid decrease in world population by some means is the only answer. That idea frightens me.

 

[Loren Pechtel]

Yup. Agriculture is going to scream bloody murder if they raise the water rates enough to address the issue.

- - - Updated - - -

Why put in these onerous regulations when it could simply raise the price of water?



http://gregmankiw.blogspot.com/2015/04/california-should-raise-price-of-water.html

You do understand that we are talking about people and not economics models, right?

And you think a cheap dry tap is superior to expensive water?

Water is a commodity which cannot be owned, in the conventional sense of the word. A coal mine owner, owns the coal he mines. The traditional way to set the price for water is to consider the water to be free and consider only the cost of storage and delivery.

Raising water costs to levels high enough to force conservation is the harshest form of rationing and in reality is an unworkable plan. What does the water company do when a customer cannot pay the bill? A house without water is uninhabitable. Imagine a renter whose water bill is included in the lease. What happens when the landlord does not pay the bill? Does any municipal water company want to be responsible for making people homeless?

Detroit already has this kind of crisis and they have Lake Michigan to draw water from.

The reality is that setting water rates to enforce conservation would actually be better for the homeowners than the current farce. (It's only a 4% cut--nowhere near enough.) Most of the effect would show up in farmers not planting crops or planting less thirsty crops.

- - - Updated - - -

In the liberal world there's always a good solution, you just have to look hard enough.

And in Loren World, there never is.

The reality is that when there is a good solution it's usually implemented and thus not an issue. The contentious issues are generally those lacking good solutions.

- - - Updated - - -

And in Loren World, there never is.

If we continue as we have been going, there are no easy answers. On the other hand, conservation is the very best bang for the buck possible. The idea of being frugal and not wasting just seems so alien to Loren. The idea of ever growing economic activity is just so ingrained in his psyche he appears to fear that the world will simply stop if we slow our damaging growth. He is still in the warrior mode. I sometimes think he considers a rapid decrease in world population by some means is the only answer. That idea frightens me.

I'm not objecting to being frugal. I'm saying the current proposal isn't anything like a solution.

I also object to your small-is-beautiful fantasy that can't come close to sustaining the world's current population levels. Who chooses the ones to die?

 

[laughing dog]

We need to use the water we get without all this stuff as if it were valuable and not waste it by polluting it because it is valuable.

One way to get people to treat something as more valuable and not to waste it is to charge a higher price for it. But that assumes you can monitor the water usage - something that is not always easy to do with groundwater.