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

[Axulus]

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

This would do more than any set of regulations ever could. For example, the governor is not going to force people to replace their old toilets with newer, more water-efficient ones. But a higher price of water would encourage people to do that. A higher price would also give farmers the right incentive to grow the most water-efficient crops. It would induce entrepreneurs to come up with new water-saving technologies. And so on.

Some may worry about the distributional effects of a higher price of a necessity. But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

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

 

[barbos]

I agree.

 

[laughing dog]

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.

 

[Jimmy Higgins]

Or the Governor could lose the next election when the other candidate says he'll return the price of water to where it should be and save water by promoting new regulations.

 

[NobleSavage]

What would be the current cost of desalination?

 

[Jimmy Higgins]

What would be the current cost of desalination?

Homeopathic desalination or regular desalination?

 

[AthenaAwakened]

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

This would do more than any set of regulations ever could. For example, the governor is not going to force people to replace their old toilets with newer, more water-efficient ones. But a higher price of water would encourage people to do that. A higher price would also give farmers the right incentive to grow the most water-efficient crops. It would induce entrepreneurs to come up with new water-saving technologies. And so on.

Some may worry about the distributional effects of a higher price of a necessity. But the revenue from a higher price could be rebated to consumers on a lump-sum basis, making the whole system progressive. We would end up with more efficiency and more equality.

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?

 

[Jimmy Higgins]

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?

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.

 

[bleubird]

Pee in a short shower,put a brick in your toilet tank.Give intensives to get rid of lawns and plant drought resistant landscapes.KILL GOLF!Tax bottled water up the ass.

 

[Derec]

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.

The idea is that people will voluntarily save more if there is a financial incentive to do so without onerous government regulation.
I mean, it certainly would beat Gov. Moonbeam mandating low flow shower heads.

In any case, I see a great new pick up line "hey babe, want to save some water by taking a shower with me?" taking off.

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Pee in a short shower,put a brick in your toilet tank.Give intensives to get rid of lawns and plant drought resistant landscapes.KILL GOLF!Tax bottled water up the ass.

 

[Harry Bosch]

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!

 

[Derec]

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!

Yes, that's a good point. 1 almond takes about 5 gallons to grow. More expensive water would make less water intensive crops and water saving measures more attractive to farmers.

 

[Axulus]

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?

You do realize that 80% of the water is used for farming, which is only 4% of the economic activity? You support the 1% using all the water to get rich while the people have to do without?

 

[Tigers!]

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!

We have a similar problem in Australia. We try to grow cotton and rice in semi-arid areas with irrigation. Never understand the rationale.

 

[Harry Bosch]

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.

Raising prices would decrease waste. Agreed? Most cal homes pay a flat monthly fee.

 

[Harry Bosch]

We have a similar problem in Australia. We try to grow cotton and rice in semi-arid areas with irrigation. Never understand the rationale.

Farmers have always had great political power.

 

[AthenaAwakened]

http://www.democracynow.org/2015/4/2/after_warmest_winter_drought_stricken_california

As California’s record drought continues, Gov. Jerry Brown has ordered residents and non-agricultural businesses to cut water use by 25 percent in the first mandatory statewide reduction in the state’s history. One group not facing restrictions under the new rules is big agriculture, which uses about 80 percent of California’s water. The group Food & Water Watch California has criticized Brown for not capping water usage by oil extraction industries and corporate farms, which grow water-intensive crops such as almonds and pistachios, most of which are exported out of state and overseas. Studies show the current drought, which has intensified over the past four years, is the worst California has seen in at least 120 years. Some suggest it is the region’s worst drought in more than a thousand years. This comes after California witnessed the warmest winter on record. We speak with environmental reporter Mark Hertsgaard, author of the book, "Hot: Living Through the Next Fifty Years on Earth."

 

[Nice Squirrel]

For those unfamiliar with almonds and water:
http://www.bbc.com/news/magazine-30052290

And yes, agriculture is big business and has a lot of political clout.

Here is another article talking with a family of almond farmers that discuss how in a drought they make more money:
http://www.esquire.com/news-politics/a9936/almond-farming-california-desert-feature/

 

[SimpleDon]

Another problem is dynamics. The differential change that you need, over the differential time that it takes. You want water consumption to come down but changing prices will take years or even in some cases decades to do it, in the case of having to develop new technologies, drought resistant crops, or changing consumers preferences to the drought resistant foods, for example.

Higher prices will lower consumption. The questions like always are how much and how fast.

Raising prices is a blind feedback mechanism. Like all feedback mechanisms the further you go and the faster you go you risk instability. Instability is bad, viable businesses go bankrupt, people lose jobs, etc. 2008 all over again

Feedback mechanisms take time to act. They overshoot, over correct. The faster you go the further it will overshoot. The more you suppress the overshooting the longer it takes to correct.

And feedback mechanisms have another drawback, they work on the error between what you want and what you have. Depending on the dynamics of the system and of the corrective mechanism you can have a situation where you are only able to supply a linear correction. This means that you always have to have an error, you are guaranteed of never obtaining your goal. What you want.

Rather than relying on prices to indirectly suppress water consumption through an uncertain feedback mechanism it is better to directly suppress water consumption through direct means, like through regulations. Especially if this is a temporary problem. There is no question that regulations cause distortions in the economy. But this is not necessarily bad. Our need for food is much greater than our need for clean cars and green lawns.

We are not trying to prefect an economic system. We are trying to get an economic system that provides us what we need and what we want.

You are trying to apply a small amount of knowledge to a complex problem, really not more than your belief, your faith that regulations are always bad and the market mechanism is always good.

Now you can go back to your fantasies. I am sorry to intrude on them.

 

[coloradoatheist]

Another problem is dynamics. The differential change that you need, over the differential time that it takes. You want water consumption to come down but changing prices will take years or even in some cases decades to do it, in the case of having to develop new technologies, drought resistant crops, or changing consumers preferences to the drought resistant foods, for example.

Higher prices will lower consumption. The questions like always are how much and how fast.

Raising prices is a blind feedback mechanism. Like all feedback mechanisms the further you go and the faster you go you risk instability. Instability is bad, viable businesses go bankrupt, people lose jobs, etc. 2008 all over again

Feedback mechanisms take time to act. They overshoot, over correct. The faster you go the further it will overshoot. The more you suppress the overshooting the longer it takes to correct.

And feedback mechanisms have another drawback, they work on the error between what you want and what you have. Depending on the dynamics of the system and of the corrective mechanism you can have a situation where you are only able to supply a linear correction. This means that you always have to have an error, you are guaranteed of never obtaining your goal. What you want.

Rather than relying on prices to indirectly suppress water consumption through an uncertain feedback mechanism it is better to directly suppress water consumption through direct means, like through regulations. Especially if this is a temporary problem. There is no question that regulations cause distortions in the economy. But this is not necessarily bad. Our need for food is much greater than our need for clean cars and green lawns.

We are not trying to prefect an economic system. We are trying to get an economic system that provides us what we need and what we want.

You are trying to apply a small amount of knowledge to a complex problem, really not more than your belief, your faith that regulations are always bad and the market mechanism is always good.

Now you can go back to your fantasies. I am sorry to intrude on them.

But even with regulations you have the problems of measurement of enforcement and that's just trying to do what the price signal of water would do if it goes up and people have to pay for what it really costs to get the water.