How to Avert a Water Crisis in Phoenix, Arizona
Jack was visiting Phoenix recently. He had many interesting things to tell his friends about Phoenix and Scottsdale, but one that stood out in my mind was this:
Raise the price of water!
Water is rationed in nearly every community of which I am aware. For many communities, though, the price system does most of the rationing by inducing water users to cut back on the less highly valued uses of water. Those communities that refuse to raise the price of water up to the market clearing price are begging for a "crisis" like that which Jack predicts for Phoenix (and, let me add, many other communities in the semi-arid Southwest).
When the price of water is kept too low, people use too much of it, and shortages develop. That's when politicians and bureaucrats institute rationing plans like these and try even harder to control our lives. One sure way to cause a shortage is to keep the price too low; and one sure way to get rid of a shortage is to raise the price.
After all, people respond to incentives. Mike Hanrahan: Are you listening?
Update: Raising the price of water might also cover the costs of constructing desalination plants in Southern California, too [h/t to Newmark's Door].
Water has to be a major issue here. Terrible quality, rationed, and, with the population explosion, certain to be a crisis at any moment.I have a solution for Phoenix, which I am offering, free of charge:
Water is rationed in nearly every community of which I am aware. For many communities, though, the price system does most of the rationing by inducing water users to cut back on the less highly valued uses of water. Those communities that refuse to raise the price of water up to the market clearing price are begging for a "crisis" like that which Jack predicts for Phoenix (and, let me add, many other communities in the semi-arid Southwest).
When the price of water is kept too low, people use too much of it, and shortages develop. That's when politicians and bureaucrats institute rationing plans like these and try even harder to control our lives. One sure way to cause a shortage is to keep the price too low; and one sure way to get rid of a shortage is to raise the price.
After all, people respond to incentives. Mike Hanrahan: Are you listening?
Update: Raising the price of water might also cover the costs of constructing desalination plants in Southern California, too [h/t to Newmark's Door].
Category: Economics, Price Controls Posted on
Wednesday, March 8, 2006 at 12:25am
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Riparian and hydrologic issues were found wherever I went. The Rio Grande has most of its water diverted into farms in New Mexico.
Virtually all drinkable water in the Southwest is taken from underground aquifers. Problems with subsidence ensue.
I have long thought it a smart bet to short real estate on everything between Louisiana and San Diego and south of Utah.
But the real estate market keeps proving me wrong.
Perhaps when there is a water shortage my prediction will come to pass.
And here's another thought. The whole issue of drinking water could be solved if nuclear power were available. Just think how easy and cheap it would be if desalinization plants could be run on nuclear power. Then it would just be a matter of transporting water from the Pacific or Gulf of Mexico to parched desert regions.