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Comment by blake8086 | Hacker News Reader

I wish there was some way to change prices to alter demand. Maybe a "task force of thought leaders" can crack open an Econ 101 textbook and look at the supply and demand curve on the first page.

Sorry for the sarcasm, I'm just disappointed in the "reach for regulation first" approach to dealing with shortages.

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Perhaps you should crack open that Econ 101 textbook first, because that same Econ 101 textbook would likely have water as the canonical example used to explain elasticity of demand. Demand for water is inelastic, both for agriculture and home use, so letting the "supply and demand curve" take care of it would likely cause a sharp increase in price in a very short period of time, which, from a policy perspective, seems like a terrible idea that would cause panic and economic instability.

Would it cause more panic and economic instability than California having zero water next year, but at a great price?

I'm assuming the alternative that the grandparent is against is forced sharing, ie., regulation which would keep the situation from reaching that state where there is zero water next year. I don't think anyone supports CA doing nothing and to keep using water at the current rate.

Agricultural and home use are inelastic, but irrigation of suburbs and similar luxury uses are not.

Irrigation of lawns is a tiny percentage. Agriculture is definitely elastic! If water prices go up, they just plant less.

Then people in other places grow food instead. It's a slow change, but it's certainly elastic.

This is not true. Demand for water is inelastic in the short term only.

The (obvious) effect of increasing water prices over the medium and long term would be the displacement of water hungry crops such as almonds and rice, as it would no longer be economical to farm them in California. The equilibrium level of water consumption would be much lower as a result.

A sharp increase in price is exactly how to gain focus. The only damage to policy will be the at-last recognition that this can has been kicked down the road by every policy setter for the last two decades.

Wheat and other grains, because of how water intensive they are to grow, are considered an international water trading market.

Agricultural subsidies are common and significant, especially in rich developed nations. This is for various reasons, but it does have some significant knockdown effects such as exasperating third world poverty. There are numerous complaints brought to the UN, the WTO, by various poor nations but they are generally ignored or swept under the rug.

There are some obvious fixes here, like subsidizing the first N gallons/person/month (where N is some amount sufficient for basic human needs) and then charging market rate for water use above that level. You could even use a soft cliff, with a partial subsidy remaining up to 2N g/p/m, and let the generosity of the subsidy gradually decrease over time to "phase in" the adoption of market-rate prices and give people time to adjust their water usage.

You're right, if people can't afford water to drink, they're clearly not valuable enough to live. If a farm can't afford water for crops, the crops weren't profitable enough to grow anyway. And if the rest of the nation can't afford food since some foods will be scarce without California farms, they should just be more productive. No need for regulation!

It makes more sense to farm in places that have reliable sources of water. I don't see why we need to subsidize California's crops, especially when we have so much great soil wasted on corn. Farming, in general, in the US is fairly messed up. Perhaps this crisis will lead to a fix. Maintaining the status quo and pretending everything is okay via regulation and political corruption is what got us here. Lets not continue that.

That's a great argument for moving farms, but that would take years. It won't prevent a shortage in the next year.

Why not? Prices would rise, producers in wetter areas would produce more to take advantage, and everyone eats. We'd pay more for food, but we're already paying it, just indirectly and in a more damaging fashion with subsidized water.

Producers in wetter areas can't create a farm, plant crops (especially trees like almonds), and harvest in one year.

Even if we just grant that agriculture should be moved away from CA, no one wants to just see it stop immediately for the same reason that the government didn't demolish all buildings that were made with asbestos when they determined that it was harmful to human health.

I would rather see agriculture move immediately than water to literally run out.

Define "reliable". California DOES have a reliable source of water. There's a reason the crops are grown here in the first place! The problem is, it's not a reliable source of water for the demands being placed on it. Which is something you'll find, oh, anywhere you start trying to move this agriculture project. It'll work great, and there will be enough for everyone, right up until there isn't.

Maybe we should get our almonds from somewhere else?

http://www.slate.com/articles/technology/future_tense/2014/0...

Maybe California wouldn't have such a problem if they didn't plant crops that required so much water?

Good thought; Marcona almonds from Spain are much better anyway.

The first argument is specious, because the government could just pay for drinking water for people who can't afford it, like they do for food. Drinking water is a small percentage of the overall usage anyway.

As for your other points, yes. Allowing farmers to use a common resource for free effectively subsidizes them. It'd make a lot more sense for everyone to grow those crops in places like Florida instead of in the middle of the desert.

Having the government pay is regulation. It effectively sets the price of water.

There are hybrid systems. To pick one off the top of my head, you could have market-priced water generally, but then every household gets the first N gallons of water usage at a state-subsidized rate. It's a kind of regulation in the sense of the state mucking with the water-delivery system, but some kinds of regulation have more room for price signals than others. It does require the political decision to not subsidize agricultural usage, though (only household usage).

No it doesn't. The government pays market prices for lots of things.

Rare things?

Fresh water isn't particularly rare. I don't understand what the point of your question is.

California's demand for water at current prices greatly exceeds supply. Continuing to farm at current rates will deplete water reserves within a year. That's why I mean by rare.

Ah yes. Well this just indicates that the government regulation of the price is leading to a mispricing. The gov't could simply let the price float just like most other products and then buy it at that rate just like most of the other things it buys.

The fact that demand exceeds supply when water is basically free doesn't mean it's rare or would be unaffordable if priced correctly. There are tons of affordable things where demand would exceed supply if you priced it at ~0.

> If a farm can't afford water for crops, the crops weren't profitable enough to grow anyway.

I suppose you're trying to be sarcastic but this is the plain truth. Government should make some effort to help people prosper. It shouldn't be propping up unsustainable business because of short term economic benefits.

agree, but also people prosper better if they dont have to worry about how to feed themselves.

Come on, you're not even trying to engage in a rational discussion. I've seen figures that put 1,000 gallons of water at around $1.50, so even doubling the price leaves water at a fraction of a penny per gallon. At ordinary levels of consumption, nobody is getting priced out of drinking water. What starts to get expensive is washing your car, doing many loads of laundry, watering that thirsty lawn every day, taking long showers, and various other activities that use large volumes of water.

This is a sound point. There's nothing wrong with some price flexibility.

The amount of water used for drinking is minuscule. Even for residential use, it's basically irrelevant. How high would prices hive to rise before the cost of water would cause people to literally go thirsty? Long before that point, people would cut down on showers, laundry, car washes, pools, and all the other uses of water, and prices would stabilize.

You say "If a farm can't afford water for crops, the crops weren't profitable enough to grow anyway." From context, I gather you intended this to be ironic. But I don't see why! That's a totally true and justifiable statement. There's plenty of farmland in wetter areas of the country to take up the slack. We won't starve if we decide to stop subsidizing crops in inappropriate climates by providing artificially cheap water.

In all seriousness, if California's water problems really did get to Arrakis levels of expensive where some set of people could not even afford to drink, then "they move to somewhere where water is cheaper" would actually be a good outcome. It would relieve an incredibly overloaded infrastructure. (If there was going to be nowhere to move those people, that would be a different problem, but that's not the current problem. There are many places with enough water to drink.)

I mean, this is just the "planetary carrying capacity" issue applied to a smaller area. The argument still holds, so if you accept the idea that the planet has a certain carrying capacity for a certain level of lifestyle, the idea that maybe California can not support necessarily arbitrarily large numbers of people in a given lifestyle is just the same idea. Which idea is going to win out if they conflict?

But by forcing out people who cannot afford the water you are driving out essentially only lower-class people which is unrealistic. More problematically, these are specifically people for whom moving is more difficult since they lack the financial resources which makes moving possible.

"But by forcing out people who cannot afford the water you are driving out essentially only lower-class people which is unrealistic."

Remember, we're already talking about an "unrealistic" situation. In real life, the price of water is orders of magnitude away from pricing people out of being able to drink. You should expect a world where that is not true to be substantially different from this one, and uncritically examined shortcuts used to think about morality, such as simplified "class warfare" narratives with dubious applicability even to the world as it stands today, may need to be reconsidered. (In either direction, after all; what is today a minor problem could in this world be a "start the revolution!" crisis. Hard to tell; we're a long ways away from this and there's many paths from here to there.)

What's the alternative? Force these people to stay in this place where the water is too expensive to drink? How is that any better than moving to somewhere where it isn't? (How did we get to that point in the first place? After all the meta-point here is that the whole conversation is completely disconnected from reality and was showboating to start with.)

I know you're being facetious to make a point (and it's a good point), but "the crops aren't profitable enough to grow" is a major debate in this country. Especially around crops that take a lot of resources to grow for a relatively small amount of return (like corn).

There's a huge campaign against things like growing crops in California to export to other, far away states. The main gist of the argument is that it is unsustainable in the long run. Articles like this just goes to show how accurate that is.

Again, I know you're being facetious, but again, other farms could be more productive. The US government sometimes pays farmers to not plant crops, and quite often pays farmers to plant corn instead of other, easier to grow, more productive crops. The US doesn't have to depend on California, there is a lot of fertile land not being used to its full potential right now.

> "You're right, if people can't afford water to drink, they're clearly not valuable enough to live."

Let's do the math.

Adults need about 3 liters of water per day [1], but let's round up to 1 gallon. Where I live, in SF, a single family residence is currently charged about $5 for the first "unit" of water per month, which is 748 gallons, so about $0.007 per gallon.

Residential water prices could go up at least an order of magnitude and no one would die of dehydration. People may have to cut back on showers/laundry/car washes, but isn't that exactly what we want?

[1] http://www.mayoclinic.org/healthy-living/nutrition-and-healt...

[2] http://www.sfwater.org/index.aspx?page=168

The first people to be hit by the price increase will be the farmers of water-intensive crops. The people will be paying much, much less.

The current situation is due to aggressive subsidy of agriculture. Get rid of the subsidies, and the problem will take care of itself. Of course, it will badly hurt California's agricultural sector, but it still needs to happen. You can't fool nature.

If water costs more, that's a signal to entrepreneurs to invest money into methods of providing water, and also a signal to everyone to conserve water, both of which are exactly what you should want if you're worried about the supply of water.

The issue of very poor people being unable to afford water is obviously important, but completely separate.

Give me a break. Metered residential water servive in LA is less than a penny a gallon! There's nobody who couldn't afford water to drink even if we doubled or tripled the price. Nobody in the entire state!

Ok, so you've addressed one point out of three. And do you think all the farmers are just going to pack up and move?

> The average American uses about 90 gallons of water each day in the home, and each American household uses approximately 107,000 gallons of water each year. For the most part, we use water treated to meet drinking water standards to flush toilets, water lawns, and wash dishes, clothes, and cars. In fact, 50-70 percent of home water is used for watering lawns and gardens.Nearly 14 percent of the water a typical homeowner pays for is never even used—it leaks down the drain. ... The national average cost of water is $2.00 per 1,000 gallons. The average American family spends about $474 each year on water and sewage charges. American households spend an additional $230 per year on water heating costs.[0]

I don't think people will be dying of thirst. It might just make more sense to let the price people pay bare some resemblance to what it actually costs to deliver the good and avert this whole catastrophe.

[0] http://www.epa.gov/ogwdw/wot/pdfs/book_waterontap_full.pdf

Domestic (municipal) water in California is already quite expensive. While adopting steeply graduated pricing would indeed be a market-friendly way to end most irrigation of lawns and ornamentals, that's literally a drop in the bucket and would do nothing to alleviate the state's water shortage (drought or not). First, many Californians don't have lawns. Second, many who do have already reduced or stopped irrigation. There's less savings than you think to be had there. As for the rest of your points, the amount of water we're talking about is simply not significant. Yes, it would likely be worthwhile to fix leaks; that's often inexpensive, though it also provides a very modest reduction in waste. The fact that nonpotable water can be used for most household purposes is moot; few people have access to a source of nonpotable water, and installing a graywater system is usually cost-prohibitive. Worse, graywater is not nearly as useful as clean but nonpotable water, unless intermediate treatment is added as well. That all represents a large investment for a small return, and in any case the problem in California isn't the cost of treating water but the lack of any water at all. Spending hundreds or thousand of dollars (at least!) on a graywater system so you can save a few gallons a day flushing toilets with recycled water is a poor investment even if the price of water were several times higher, not to mention that there would be no incentive for landlords to make such an investment even if it were profitable for homeowners.

But really, your opening sentence puts itself in focus: the units you use are gallons. The problem in Califonia is not one of gallons but of cubic feet per second and millions of acre-feet per year (the units that are actually used in the water industry and usually in water rights law). Household water use, wasteful though it may be, is too small a share of the state's consumption to constitute a crucial part of any solution. Public service messages about conservation, higher or graduated pricing, and mandatory rationing are used primarily to remind people that water is a limited resource; these approaches help to rein in rampant waste but do little else. They will not play a major role in reducing total consumption and will play no role at all in increasing supply, if in fact that is even possible. In short, these approaches are at best a secondary part of any solution.

Instead, as others have pointed out, the focus needs to be on agriculture and, to a lesser extent, industry. Agricultural users pay far less for water than domestic municipal customers, and they use the lion's share of it statewide. However painful the adjustments that will be required, no solution that does not radically reduce agricultural consumption will be an effective or meaningful one. Even if no one were allowed to live in California except farmers, the crisis would still be severe and those farmers would still have to bear the burden of addressing it. There is no escaping this, and if the public messaging centers on domestic use even if agriculture is a major behind-the-scenes focus, the planners will be doing the people of the state a great disservice by encouraging them to believe that largely irrelevant changes in their own behavior will address the problem. It would be much better to encourage domestic users to make sensible investments in saving water that will provide them with a return, but to openly acknowledge that the big-picture problems will require agricultural users to make most of the adjustments.

How realistic is it to move certain crops, such as fruit and nut trees that may take decades to grow to maturity?

A few weeks ago I did a 200km bike ride of Mount Hamilton and one of the things I saw along the way was a "nursery" that specializes in very large fairly mature trees in massive planters ready to be moved by truck (Calaveras Rd (Rt 84) just south of 680). The biggest trees had large wooden planters ~5 ft high and as with as an 18 wheeler.

Given how valuable certain trees are and the time cost of waiting for them to grow to fruit and nut bearing age, it must make sense at some point to give loans to dig up orchards and move them to better locations.

Assuming such a plan is botanically viable, my main concern is that the price shock for water takes too longer for it to make financial sense until it is too late to make the decision to move any trees worth being moved.

Wouldn't changing the price agriculturists pays for water be exactly the kind of regulation you're deriding?

Though perhaps you are referring to the price of something else?

I would prefer if we just remove the government distortion in price of water that drives down the price farmers have paid and force them to pay a market-driven rate. (Deregulate, then?) Perhaps if they would pay the market-dictated rate, smart farmers will get to keep their farms by choosing to not do idiotic things like plant rice patties and walnut groves in a desert.

Water is one of those scarce resources that have alternative uses. If we would just charge farmers what the water in California is truly worth, rational decision making will return to agriculture there. Or, agriculture could move to a more suitable place.

Are you serious? You want WATER to have its price raised to reflect the realities in California? All that would do is screw all the poor and middle class people and it would do nothing to solve the shortage.

Put down Atlas Shrugged for a minute and look at reality. The whole state of California has always been on water welfare, and if it weren't life there would be untenable for anyone who wasn't extremely wealthy.

If you really think "OK, so what? People can move." You are totally detached from reality. That's not what would happen. There would be riots.

> The whole state of California has always been on water welfare

You're right, it has always been stupid to farm in California. Now it's coming back to bit people in the ass.

No, that's not the correct conclusion. It used to be cheap enough to send water there that once you did that the sunny climate made it ideal for a lot of crops.

It just so happens that climate change and population explosion has made it uneconomical now.

Here's a pro tip, if you think complex issues like water distribution for an entire state have easy, trite answers you're missing something.

"once you did that the sunny climate made it ideal for a lot of crops."

By this the Sahara or Arabian peninsula are some of the best farmland on the planet. I mean, all you have to do is bring in the key ingredient of life.

This is not a new problem for California. It's been ignored for so long because it used to be cheap. It was always stupid to farm in a desert, it doesn't matter how cheap it used to be to bring water in.

It turns out, large parts of California are arid for a reason, and the reason isn't recent climate change. But we as a species can't think past right now. California was populated when we didn't think we were ruled by nature anymore and our new found genius would meld nature to bend to our will. It's biting us in the ass now.

> If you really think "OK, so what? People can move." You are totally detached from reality. That's not what would happen. There would be riots.

So, there isn't enough water, people don't want to move to where there is water, what's your solution?

Water costs, whether thats to pump it out of the ground, import it from places that do have water, or desalinate it. Someone has to pay for that. Would it not be those who use the water?

There isn't an easy solution that I can write up in a short paragraph in the HN comments. That's the point. It's a complex issue.

/u/timtadh summed it up perfectly: https://news.ycombinator.com/item?id=9198672

"From my perspective the problem with water in the US is that no one is charged for the actual water. You are only charged for the processing costs. This means that the market never acts to regulate how much water you use. People will use less water if it costs them more."

So write two long paragraphs. At some point there's simply not going to be any water. What then? Wouldn't it be better to do something before we reach that point?

>and it would do nothing to solve the shortage

Sure it would, it would decrease usage. You can easily subsidize poor people's water if that's a serious problem. It's a tiny amount anyway as the overwhelming majority of water usage is agricultural.

Guess who uses 80% of the water in CA? It's not the poor and middle class, it's agriculture, typically run by large corporations. Guess how much agriculture contributes to CA's GDP? 2%.

It's possible to alter the way water is used in the state in ways that benefit the residents and don't screw the poor and middle class.

The poor and the middle class, screwed by lower food prices.

Agriculture (food) actually does have benefits for nearly everyone, you know.

If you have to, you can subsidize food costs for the poor later on.

Right now, the subsidy is going to the wrong place.

If you're subsidizing food costs "later on", the money is still going to the large corporations.

From my perspective the problem with water in the US is that no one is charged for the actual water. You are only charged for the processing costs. This means that the market never acts to regulate how much water you use. People will use less water if it costs them more.

However, changing to a market system for water would never happen overnight. People are not used to paying for water and cannot move on a dime. However, long term I think it is our only solution. The midwest, who many on HN seem to have a bad impression of, has the world's largest fresh water reserve in the world (the great lakes). Meanwhile, the plain states and California will have continuing water difficulties moving forward. Long term, people are going to need to move to where there is abundant water. It is not sustainable for so many people to live in marginal areas.

One way to encourage people to move is by having market forces act. If the price of water is cheaper in the great lakes region there will be a slow but steady migration there over time. This will in turn ease the brewing crisis in the west. This isn't the only action which should be taken but we should consider (from a policy perspective) the idea of allowing market forces to act in the water market.

Sure, put down Atlas Shrugged, but pick up any economics textbook, or Google some statistics about water usage in California. I absolutely do want water's price to reflect the realities in California. It would not screw the poor and middle class, and it would solve the shortage.

Water is already priced based on the type and quantity of usage. The more you use, the more it costs. You can raise prices for farms without "screw[ing] all the poor and middle class."

If you raise farm water prices, you will find that water-intensive crops will be less profitable (even with raised prices) and farms will switch to crops which use less water.

Rationing may have the same effect, or it may instead have the effect of fewer crops being produced and prices going up.

Supply and demand curves are part of the problem, though. People have talked about almonds a lot in these comments. We're growing tons of almonds because the demand for almonds is very high. They're one of the most lucrative crops you can grow. The long-term effects, as we are seeing, are bad -- but we're not making decisions on long-term effects, we're making decisions based on immediate demand needs.

This is the product of two things. First, short-sightedness. But second, and more rationally, if you need money now to keep your farm going, you cannot afford to worry about ten years down the line. It's not just irrational behavior.

"Some way to change prices" is regulation.

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