Thursday, March 19, 2009

Water pricing redux

Mike dissents:
Perhaps I'm missing something John, but I see it as the exact opposite problem - state laws, some more than a century old, remove the right to private property, not grant it. Holststrom has had the right to use the water on her own property and the title has been granted by fiat of the government to cronies and collectives.

This is more of a government enforced cartel, rather than private property rights. In absence of state laws and regulations, could any of those companies, farmers or developers claim the water as there?

I was rushed in writing the post, so let me elaborate on the argument on why I think this kind of absurdity (prohibiting rain barrels) is an inescapable part of water markets, especially when they succumb to stress like droughts.

Nobody bought the particular right to the water flowing on one person's ranch, roof, or whatnot. The water rights sold in Colorado and elsewhere in the US instead refer mainly to water flowing through rivers, streams, and lakes. (Colorado is usually near the front of the line, while California and Texas go begging. Mexico goes entirely without water from some parts of the Rio Grande, thanks in large part to American ranchers and farmers.) But what the rights need to guarantee, if they mean anything, is that someone can't interrupt that water at a point further up the river -- this is why state and federal laws dictate how much water Colorado can withdraw from a river before it flows downhill.

The legal principle applies on the micro level as well. Whether you own the house is immaterial if you haven't bought the right to the water that falls on it, and if the market is to function well, it can't matter. Else private landholders could substantially interfere with the market to the detriment of the rightsholders.

Of course, I'm deeply suspicious of water privatization on any number of grounds, not the least of which is philosophical: consumers of water neither create it nor add value to it (usually the opposite) so I don't think it's something they should be able to buy a right to. If they want to buy water, they can build a desalination plant and a pipeline and buy shares in that. (The expense of a venture would also guarantee the most efficient use.) But freshwater is something that a) serves innumerable environmental purposes and b) nobody has to invest in, so this is one of those areas where I favour a more command-and-control model of regulation, which to work would probably have to ration out water much more strictly than we do now. I'm obviously skeptical that any of the "market" solutions will work any better than the current pseudo-market that exists in the American west.

Incidentally, one of the clear ways in which solar and wind power are vastly preferable to not only conventional power sources and nuclear power is that they consume much, much less water in their production and operation. Thermal power plants (Coal, gas, and nuclear) all suck in an enormous amount of water, which is one of the reasons they're usually situated near large bodies of water.

Plug-in hybrids, if powered with conventional electricity, could make our global warming problem less dire while making our water stresses much worse. The only solution is the one this blog has been pounding on since the beginning: use electricity wherever possible, and use renewable sources of electricity for everything.


Mike said...

Ah, but you are talking about a "market solution" in the context of government laws and regulation that fly in the face of what would actually be property rights otherwise.

So why is it if I buy land in say, Sharbot Lake Ontario, I don't own the water, or the uranium or the oil that may be found on it?

Why is it that someone else can purchase "rights" to land I own?

Because quite contrary to common sense, governments have somehow separated the owning of land with the rights to minerals or water or forests on that same land - you get to own the topsoil and the weeds. That makes no sense.

What you are describing then is an open market in rights that are artificially created by the government and severed unnaturally from the land to which they are logically attached.

So, again, the issue is not "privatization" of water - since clearly without state regulations the rights would not be artificially severed from the land. What this is a a privileged market in a "commodity" created completely artificially by government fiat - so called land rights that are separate from the land itself.

I would suggest that something far more simple be used, like when you own land that you own all of the minerals and water that flow on it. But at the same time you would be estopped by common law from damming the water in a river on your property. for instance, since doing so would harm others on the waterway. But if you owned a lake or decided to invest your labour in digging a well or catching rain water, why not own it?

The way I see it, those laws weren't put into place to protect little folks, but to bestow undue privilege on the few, in the name of "water rights" (as has been done elsewhere and for time immemorial under the title of "mining rights").

IMHO the danger is if they can do this kind of unnatural severance of water rights from you as a land owner, what's to stop them from doing the same thing to sunlight in the future?

john said...

Mike: the common-law approach that you talk about is basically what the current system flowed out of (pardon the pun) quite naturally. Written laws followed decisions by various courts: they didn't create the situation, they recognized a problem that already existed and tried (and failed) to rationalize it.

(See Dry Spring for a decent summary of the past and future of North American water woes.)

It's true that it's an artificial market, but water can only ever be an artificial market for the reasons that I mentioned (freshwater is neither created nor improved by the works of man.)

I don't think you can describe a marketized water system that wouldn't either a) eventually succumb to abusive monopoly, or b) need massive government intervention, or c) both. Especially in the modern world, where stopping up huge rivers with massive, artificial lakes is a realistic proposition, the ability to manipulate water markets will always be there.

Brad F said...

" Thermal power plants (Coal, gas, and nuclear) all suck in an enormous amount of water, which is one of the reasons they're usually situated near large bodies of water."

And in most cases they return it to the large body of water, slightly warmed. I'd hardly call that 'consumed.' Granted where wet cooling towers are used there is water lost to evaporation, but I'm pretty sure Ontario's CANDUs don't use cooling towers since they can use deep lake water for cooling and I know for a fact that no thermal plants where I live use cooling towers, nor do they use fresh water.

The "fresh water is consumed" argument is applicable to only a subset of sites, and is not necessarily applicable to the technology used.