A little wisdom

Meanwhile, there are men with "issues":

From the 15 Aug New Yorker.

PS: My mother would have been 70 today :)

Know your H2O -- The review

The Surfrider Foundation sent me this 20 minute video. I liked most of it but had some comments (below). Watch the video and see if you agree:



Comments:

• Love the production quality. Very cool.
• Wastewater discharges are not as bad as described. San Diego (Surfrider is based just north of San Diego) and Sacramento only partially treat their wastewater, but most places are better. EU countries may "over clean" their wastewater -- removing contaminants that are not at harmful levels. It's particularly important to avoid hysteria about wastewater if you want to convince people that recycled water (toilet to treatment to tap) is safe to drink.
• People do not lack "access" to water due to over use. The problem (human right to water) is about incompetent or corrupt politics.
• Peak water is an inaccurate idea. Scarcity is more accurate.
• CA uses 19% of electricity -- not energy -- on treating and moving water. Since electricity accounts for only 25 percent of energy use that means that water treatment and distribution only consume about 5 percent of the California's energy. I've seen this mistake ("19 percent of energy") more often recently, and we've got to prevent its spread.
• Great point on quarreling water managers. They can be coordinated in 2 ways -- bureaucratic convergence (good luck) and market prices (much easier).
• Half the water from desal is NOT wasted -- it's brine discharge.

I address most of these issues in my book, using the same examples, e.g., San Diego's wastewater discharge/desalination plans and the value of wetlands for coastal protection and water filtering.

As a final thought, I recommend that we consider one more "R" with respect to water policy (reduce, reuse, recycle) and that's... Raise prices to reflect water scarcity. Higher prices send a useful signal to water consumers that helps them conserve and generates additional revenue that can be used to improve the reliability and quality of our water supplies.

Bottom Line: I give this video FOUR stars for helping people see the connections between water flows and uses in an entertaining way.

Anything but water

• Greenwashing is real: "companies engage in corporate social responsibility (CSR) in order to offset corporate social irresponsibility (CSI)" Read the paper [PDF].
  
  
• How to remove yourself from websites selling your personal information to anyone with a credit card.
  
  
• Best medicine research money can buy: An NIH plan to disclose financial links between doctors/researchers and pharmaceutical companies is in trouble.
  
  
• How the "make money stuffing envelopes at home" scam works and the use/abuse of hand sanitizer (soap and water still better).
  
  
• A good description of how climate change will even harm the rich.

H/T to BE

Bleg: A career in western water policy?

MS Student emailed me, asking for advice:

I'm writing because I'm about to graduate from my masters program (MS in water policy from XX University -- think of it more as a geography program) and I want to pursue a career focused on improving western water policy. A broad goal, I know, but I was hoping you could help direct me: where is progressive change happening and where could I fit in as a recent MS with little work experience? I'm sure you're busy and I appreciate any thoughts you might have.

A little more about me so you know who you're talking to:

• My advisor XX has worked on international water policy.
• My thesis is about the geography of dams in China and their impact on agriculture.
• I have a strong background in econometrics (thesis: instrumental variable approach).

I answered with the following:

The blog has similar questions -- and answers -- from the past:

http://www.aguanomics.com/2008/11/grad-school-bleg.html
http://www.aguanomics.com/2010/08/bleg-help-make-my-career-relevant.html
http://www.aguanomics.com/2011/07/bleg-what-to-study.html

My general opinion is that an MS is particularly well-suited for working on real issues.

This may conflict with your econometric background -- which tends to get used for consultancies and law cases where people fight over the division of spoils....

I suggest that you choose an AREA you'd like to live in and then look for work within GOV/NGO/UTILITY industries related to policy. Best thing you could do is spend your time in rooms with enviros and farmers fighting over water flows...

You may not make more than $35k/year, but you gotta ask if money or enjoyment is better.

After 5 years, you will be a qualified veteran. After 10 years you will be an expert. After 20 years, you will OWN your space...

To which MS Student sent the following clarification:

Something I am realizing is that having a background in metrics is a blessing and a curse: I know enough to be dangerous, but I certainly don't have a PhD, which limits my ability to pursue a career that relies on expertise in metrics (as it should). The opportunity cost of studying metrics and resource econ is that I haven't studied, e.g. the detailed politics of California water and finding out where those rooms with angry farmers and enviros are. I like that I know metrics in a proficient but not expert way, but I have yet to see if the job market does too.

And then I said this:

I reckon that you know enough metrics. It's VERY rare that I see any USEFUL econometrics in the real world.

Perhaps the best skill you will have is an ability (or intuition) to detect bullshit. There's a lot of it.

But most of the battles in water/environment are getting ANY data or sensible prices. Metrics are a long way down the list...

Do readers have additional thoughts (or job offers) to add to this discussion?

TEoA and water markets on the radio

I had a good interview with Luke and Matthew at Benzinga Radio:

Water shortages are already major problems in several areas of the US, and they are only going to become more common. David Zetland, senior water economist at Wegeningen University in the Netherlands, author of the blog Aguanomics and the new book The End of Abundance: economic solutions to water scarcity, discusses flaws in American water policy and how market-based price principles might be used to encourage sustainable levels of consumption.

The issue with current water policy is that pricing schemes, for both commercial and residential applications, do not reflect the scarcity of the resource. Farmers' irrigation needs are highly subsidized regardless of sustainability. And “all you can eat” residential water systems, in which residents pay a flat monthly rate for water, encourage wasteful consumption. As water becomes an issue of more importance, Zetland argues, these pricing schemes will have to change.

Listen to it here.

Land, water and money

SS asks:

I am interested in water investing, particularly investing in raw productive agricultural land with water on site. My interest was generated from closely following [famous guy]. He is arguably the world's most prescient investor. Even Warren Buffet and Alan Greenspan have referred to this in interviews.

He is cryptic about his current investments but in some interviews the transcripts do include mention a significant portion of his portfolio is invested in raw land, specifically "productive agricultural land with water on site". In an interview with the author of a book about him, the author says that [FG] told him it was a complicated way of investing in water. The author also said he was focusing on almond farms. Since he lives in Northern California and California produces 80% of the world's almonds, it seems likely he is buying almond farm land in California.

Assuming he is buying almond farm land that is productive agricultural land with water on site, what is your best guess as to the way in which this works as a water investment?

FG's plan to buy almond land and sell the valuable water is not new. The Bass brothers tried to sell ag land in Imperial Valley and sell its water to San Diego, but they were blocked and ultimately sold the land to the Imperial Irrigation District.*

Here are a few more comments:

1. Water sales in California and most of the US are not easy. They require approval by regulators, water-using neighbors, local politicians (area of origin laws) and environmental panels.
2. Almond farms may be a good investment now, since almond prices are not so high but costs are rising. Farmers can, of course, rip out trees and plant a different crop.
3. Water trades (as in Australia) are difficult without standardized procedures, access to conveyance, adjudicated groundwater, etc.

My overall thought is that this is a high risk strategy. If I had my way (allowing more water marketing), it would pay off, but many people are either too conservative (don't change anything) or too greedy (give ME free water) to allow markets.

Bottom Line: Maybe FG is talking up this idea so he can offload some almond land on newbie investors.

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* That sale and farmers' decision to allow IID [article] -- but not individual farmers -- to sell water ultimately backfired. Now farmers who want to sell water ANYWHERE are blocked from doing so by "city" IID board members who want to keep cheap water in the area "for jobs."

Monday funnies

This cartoon is an improvement on a joke I heard a few years ago:

Two economists meet in the road.

Economist 1: Wow. Doesn't this food crisis stuff scare you?

Economist 2: Yes. I've stocked up on rice and beans.

Economist 1: It's scarier than that. I've stocked up on guns and ammo.

Panic in the markets

MD writes:

As an economist, you’ve got to be watching yesterday’s markets with fascination. From where I sit, it’s looking more and more like the collapse of the Washington Consensus, this just 20 years after the USSR kicked the bucket. Now no one seems to know what the dominant philosophy will be in this new global/technological world. I’m no economist; that’s my read as a layperson.

The market panic is the exact OPPOSITE of the collapse of the WC, which (1) hasn't really collapsed (look at Chile, Brazil, Estonia and other countries with low debt, small deficits, openness to trade, etc.) and (2) describes the kind of prudent macroeconomic policies that the US/EU are NOT pursuing.

Let's just list WC policies here:

1. Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;
2. Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
3. Tax reform – broadening the tax base and adopting moderate marginal tax rates;
4. Interest rates that are market determined and positive (but moderate) in real terms;
5. Competitive exchange rates;
6. Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
7. Liberalization of inward foreign direct investment;
8. Privatization of state enterprises;
9. Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions;
10. Legal security for property rights.

I'd say that the US and the EU have failed (zero for ten) in terms of policy DIRECTION -- even assuming good policies in the past, e.g., Kelo weakened property rights in the US; the Italians and Greeks are opposing deregulation and privatization to protect special interests.

The "markets" panicked because people started to understand that political "solutions" like raising the debt ceiling, promising to print more money (QE3), or bail out Greece from wasteful loans do NOTHING to make the economy strong. At best, they transfer money to incompetent losers; at worst, they waste time and resources (shuffling deck chairs while the Titanic sinks).

Note that the Tea Partiers are not exactly paragons of macroeconomic wisdom. Their obsession with lowering taxes -- to zero percent, it appears -- is just as stupid as an obsession with the President's birth certificate.

Bottom Line: Political shenanigans [e.g, The Economist] will not strengthen the economy, and a weak economy will not support social programs that protect the weak.

Flashback: 1-7 Aug Jul 2010

A year later and still worth a read...

Government Failure refers to the Deepwater Horizon spill, but we can apply the same logic to political mismanagement of OUR public goods and finances.

Bleg: Academic mistakes? Still no link to that interesting project in which academics describe the (rare) instance in which they changed their minds.

When police are useless -- A lesson for those of us who take honest hardworking police for granted.

The Value of Nothing -- The Review -- One star for this anti-capitalist, kumbaya rant... that sold many copies, of course.

Monday funnies -- buy the Eat Pray Love yoga mat! Maybe the merchandizing was more successful than the film (5.2 -- ouch!).

Friday party!

Men are so competitive in their quest for the Darwin Award (via RM)

Anything but water

• As expected, "Round-up Ready™" resistant weeds are here. What next Monsanto? Organic seeds, flamethrowers or both?
  
  
• Intellectual pirate:

  This archive contains 18,592 scientific publications totaling 33GiB, all from Philosophical Transactions of the Royal Society and which should be available to everyone at no cost, but most have previously only been made available at high prices through paywall gatekeepers like JSTOR.

• In related news, a software developer struggles to stop piracy and how the GOP Hacked, Stole 2004 Election. This last one reinforces my impression that American politics are broken and corrupt.
  
  
• Speaking of hacking, Bob Park asks (again): Who hacked East Anglia (UK) to release the Climategate emails? Maybe Murdoch?
  
  
• Hotdogs and buns, an institutional analysis. Really.

Management fail? Screw customers!

BP sent this:

My friend X lives in the [xxx] area. He is served by the small [xxx] Mutual Water Company rather than the city of [xxx].

Apparently the mutual water company has been so mismanaged that they are now adding extra fixed charges for customers.

You can see that there is a quantity charge, a meter charge, then something called a "land charge" and a "surcharge". According to X, the land charge applied to all customers depends on the size of your lot, irrespective of how much water you use.

In other words, X, who has 5 acres, is charged more in total fixed charges than a neighbor with a smaller lot, even if the neighbor uses a lot more water. The land charge is almost $30.00 per acre.

Then, there is a surcharge. Apparently they just started adding the land charge twice and calling the second one a "surcharge." This was done because the water company has been so poorly managed they were running out of money. They apparently just added a surcharge to recoup losses?!!

On top of all this, their tiers are crazy. The first tier gives a user up to 50 units of water! What is the point of having 4 tiers if you can stay within the first one so easily.

My responses:

1. Water companies can charge whatever they want to "cover costs," even when they are wasteful or losing money because it's very hard to replace them with new companies (lots of political and regulatory transaction costs).*
   
   
2. Almost any mix of fixed and variable charges is possible and justifiable, given the variety of targets that managers can aim for -- everything from water conservation to fiscal stability (maintaining your debt rating).
   
   
3. Some charges (per acre? for a water company?) are stupid.
   
   
4. There are two ways to rectify the situation: hope for outside subsidies (via takeover by the local city/private operator or a cash transfer) or overthrow management on a platform of "fairer" pricing. Given the subsidy from landowners to water users, I am not sure how that fight might go.*

Bottom Line: Water managers with monopoly power -- not customers -- choose how to do their jobs.

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* I discuss water management, politics and collective action in Chapter 7 of my book :)