Today’s guest blogger is David Zetland of the Aguanomics blog, who wrote this exclusively for Maven’s Notebook:
“California is gripped by yet another drought. Citizens are concerned, farmers are desperate and politicians are looking for quick fixes.
The quickest fix is to allow water trading in markets.
The drought has reduced supplies. In the past, we would take water from the environment to allow business as usual. It’s gotten harder to take water from the environment, so the agricultural sector — which uses 80 percent of the “developed water” Californians consume — is getting squeezed.*
Some farmers have responded by calling for relaxed environmental standards, pumping more groundwater from stressed aquifers or fallowing land. Those actions are unsustainable on environmental, economic, and social terms.
Others farmers are using markets to reallocate scarce water.
I’ve supported markets for water for about a decade now because they provide so many advantages:
- Markets make it easier to move water from those who have to those who need
- Markets allocate water based on price, which will maximize the value of water in use
- Markets prices to rise and fall according to supply and demand
- Market prices help farmers balance among water and other inputs
- Markets make it easier to choose conservation or fallowing
- Markets help farming communities get by without bailouts
- Market prices induce farmers to protect their valuable groundwater
Markets do not just “pop up.” They work only with property rights, defined quantities of water and a means of transferring water from seller to buyer.A market among farmers in the same irrigation district is far easier to run than a market transferring water from north of the Delta to the south.Markets can take many forms. In many parts of the state, it is possible to establish a market overnight without waiting for outside approval (many are probably functioning right now.)
Bottom Line: Markets will minimize the harm from the drought by allowing farmers to redistribute water among themselves, reducing pressure on aquifers, buffering rural communities, and turning down the pressure to DO SOMETHING in Sacramento.
* Cities can buy water from farmers but they have plenty of water, if we take green lawns as a sign of abundance.
Note from Maven: You can read more from David Zetland at the Aguanomics blog. A worthy bookmark!
