Bastiat’s Bastions

Last year, at this blog site I wrote about the terrible drought facing Atlanta and their trouble dealing with it.  And now, after facing two years of below average rainfall, Gov. Schwarzenegger has declared a drought in California. (And see this article on California’s problems, too.)

The availability of a sufficient supply of fresh water is getting to be a more frequent problem in the U.S. and in the rest of the world, and the problem is likely to be getting worse, not just because of global warming, though that may be a contributing factor, rather because of our institutions governing or perhaps, failing to govern the way we extract and use water from our aquifers, well water.

The financial gurus of New York and London are now seeing shortages of water as the major problem of this next century (as suggested in this article from the U.K.’s The Telegraph), as being more of a problem than rising food prices or rising energy costs.

Our energy troubles and rising food prices are making things even worse for our water prospects.  With more emphasis being placed on agriculture for “growing” energy, the water tables, our aquifers, will get tapped more and more as many farmers continue to tap into those aquifers, our main source of pristine water, for wells for irrigation rather than for human consumption as drinking water. 

Lord Stern in the Telegraph article was right that water from aquifers is not a renewable resource and that the problem is that we have never priced water, especially water from aquifers, well water, in a way that reflects its scarcity (by contrast, surface water is renewable through regular evaporation and condensation cycles).

Another problem with water from aquifers is that aquifers are an open-access common property resource. In legal terms, this is referred to as res nullius property rights.  Anyone can take water from aquifers and face no charge for the depletion of this resource.  As far as I know, no state charges those who deplete aquifers.  Such a charge, a depletion allowance, would be cause for farmers and others who mine our aquifers for one of our most crucial resources, water, to be careful of how they use it.  Since it is now almost free to the user, the way that sunlight is, those who mine it pay no attention to the future value of the water, because they cannot profit by that future value—if they don’t use it now, somebody else will.  Unlike sunlight, our aquifers are replenished at a such a slow rate that the replinishment rate is of little consequence relative to our use.  Of course, also unlike sunlight, our aquifers have been built up over centuries, but are being depleted rather rapidly. 

Farmers have more incentive to use underground water to irrigate fields, where much of the water evaporates, than to divert water from streams in canals or pipelines, relying on less pristine surface water.  Of course, cities and suburban residents also contribute to this depletion as well.  Some businesses, such as some electricity generating firms, are also contributing to this overuse of water.  The problem is not who is depleting it, but rather that we all refuse to face the real cost of using water from wells, rather treating it as free.  However, the more water we pump from our aquifers, the less will be available in the future.  Cities that rely on water wells will be in for a shock when they drill ever deeper and still can find no subsurface water.

This is the same problem that led to the over-hunting of the American Bison.  A hunter could not own the beast alive, but could own any bison he killed.  To the society as a whole, the bison were worth more alive, but to the individual hunter, they were only worth something dead.  Water left in the aquifer is worth more to society than water that is mostly allowed to evaporate in a field.  Farmers and otherw who use well water can only get value from the water they pump out of the ground rather than the water they keep in the ground.  Hence, water from our aquifers is being pumped out at alarming rates, mostly to evaporate into the air and fall as rain elsewhere.  We need to change the property rights concerning sub-surface water.

-MC

This entry was posted on Thursday, June 5th, 2008 at 9:46 pm and is filed under Agriculture, Blogroll, General, Political Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.