Wednesday, July 16, 2008

The water shortage myth

We have been told for months that there is a water shortage in California. However, I have always contended that the price of water is too cheap in California; the price is set by municipal water districts. Because water is so inexpensive, any calls by state officials to conserve go unheeded. Residents simply do not have the incentives to really conserve. And like I always say--incentives always matter. A recent article at Forbes summed up the situation and a solution rather nicely:

California is perpetually portrayed as suffering from a shortage of water. Case in point: Gov. Arnold Schwarzenegger recently declared a statewide drought, telling citizens to prepare for rationing. But the state's problems are not a result of too little water.

The real problem is that the price of water in California, as in most of America, has virtually nothing to do with supply and demand. Although water is distributed by public and private monopolies that could easily charge high prices, municipalities and regulators set prices that are as low as possible. Underpriced water sends the wrong signal to the people using it: It tells them not to worry about how much they use.


Shan-ul-Hai said...

This is just like the gas problem... the price will keep going up until people learn to limit their consumption. It's simple economics; if people use something without lending any consideration to the cost, it means that the price is too low.

tashabud said...

We have water shortage here in Cheyenne, Wyoming as well. We have scheduled times for watering our lawns. The city takes serious actions to violators. I don't like it, but it has something to be done if we want our water supply to last and sustain us until next spring. Perhaps California should do the same.

Marla said...

Until the secret water diverting has been exposed, why should anyone believe anything these people say. After Mayor Alan Autry’s Fresno Dept. of Public Works was caught conspiring with a former employee in one of the most heinous and barbaric operations in history, he had them issue a R.O. against me - committing perjury to discredit the city’s own sewer layout, which verifies EXACTLY what is taking place. Residents are being annihilated in order to carry this out. I was previously employed by the ringleader - for 25 yrs I heard him talk of secretly diverting the water supply but until he and the Dept. of Public Works were caught in action, I did not believe it.

Click here for Autry's Atrocities