The New York Times paints an apocalyptic image of California’s drought, but California has plenty of water, Alex Tabarrok notes — just not enough to satisfy every possible use of water that people can imagine when the price is close to zero:
As David Zetland points out in an excellent interview with Russ Roberts, people in San Diego county use around 150 gallons of water a day. Meanwhile in Sydney Australia, with a roughly comparable climate and standard of living, people use about half that amount. Trust me, no one in Sydney is going thirsty.
So how much are people in San Diego paying for their daily use of 150 gallons of water? About 78 cents. As Matt Kahn puts it, “Where in the Constitution does it say that the people of California have the right to pay 0.5 cents per gallon of water?”
Water is such a small share of most people’s budgets that it could double in price and the effect on income would still be low. Moreover, we don’t even have to increase the price of water for residential or industrial uses. As The Economist points out, “Agriculture accounts for 80% of water consumption in California, for example, but only 2% of economic activity.”
What that means is that if agriculture used 12.5% less water we could increase the amount available for every residential and industrial use by 50% — grow those lawns, fill those swimming pools, manufacture those chips! — and the cost would be minimal even if we simply shut down 12.5% of all farms.
Moreover, we don’t have to shut down that many farms, we just have to shut down the least valuable farms and use water more efficiently.
I asked J, the Israeli Water Engineer to comment on this, his reply was:
“California has many open canals and primitive irrigation systems. It does not recycle wastewater. And it enjoys the luxury of directing resources to artificially maintain the environment for the delta smelt sardine.
There is no real serious water crisis in California. What there is, is a left-wing environmentalist hysteria of forbidding lawn irrigation and swimming pools.”
It’s really funny, they actually grow rice in California, RICE! The most water intense crop on the planet, you need like 400 gallons of water for every pound of rice produced!
But why not, at .5 cents (subsidized) per gallon water is still basically free, talk about market distortion… and again J:
“We don’t grow rice (in Israel), although there are technologies that would allow to grow it with not much water. We grow specialty crops like flowers in winter, and buy commodities in the world market.”
Or like the Peggy Noonan quote goes: “Put a federal agency in charge of the Sahara Desert and it would run out of sand.”