Predictability trumps efficiency

John Fleck has written a fascinating summary of his panel at the Colorado River Water Users Association conference in scenic Las Vegas. He mentions that California, Arizona and Nevada are working on a series of deals to reduce their use of Colorado River water at various elevations of Lake Mead, expanding on the provisions of the Interim Guidelines that currently govern these sorts of reductions.

The idea, as one of the senior federal officials explained, is a series of voluntary agreements (“At reservoir level X, we agree to take this much less water”) developed within the framework of the basin’s 2007 shortage sharing rules, but with larger reductions to slow the reservoir’s fall.

With trends like these, who needs enemies? (I'll show myself out.)

With trends like these, who needs enemies? (I’ll show myself out.) Image via Doug Kenney of CU-Boulder.

Fleck notes that there’s probably a 10-to-30-percent chance of these reservoir levels being reached in the next five years. It speaks volumes that the reaction to the threat of imminent disaster is voluntary agreements negotiated far in advance and not one of two other possibilities. The first is that the states might have chosen is to sit on their paper entitlements and hope for the best result in the courts. The second is a radical departure to Australia-land, as the in-vogue academic literature suggests, and to simply cap overall water use and allow trades between individual users and/or states to sort it all out.

That the states have not seriously suggested such a radical departure could have two explanations: the first is to apply the lessons of Dustin Garrick‘s work on the Australian reform, that the costs of institutional reform are still too high, or at least higher than the risks of staying in the current system. By this view, the CRWUA members won’t consider radical changes because the act of doing the reform causes more disruption/ burden than the new system provides in benefits- for now, at least, until the crisis gets much more severe.

I’d like, however, to suggest an alternative explanation: that the states have considered the benefits and costs of such a system, and found them wanting. They would prefer instead, and quite rationally I might add, to know exactly how much water everyone gets at each stage of the crisis. Markets are inherently unpredictable: prices of water would rise and fall, the willingness to pay of various entities would rise and fall, and neither necessarily will correspond to the amount of water physically available.

In my view, given the choice between…

  1. allocating water according to a thousand individual decisions changing year-on-year all over the basin to maximize the productivity of limited water supplies, and
  2. knowing that their allocations rise and fall (or, realistically, fall and fall) predictably with the amount of water physically reaching them in the system,

…water users would, almost always, choose the latter. I think it’s another example of our policy discourse being profoundly disconnected from the preferences of actual water users (and, for that matter, how it’s physically delivered) not for the first time and certainly not for the last.

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One thought on “Predictability trumps efficiency

  1. Governments are notoriously unable to budget; why should we expect water budgets to be any different? I think I have asked before why the budgets are in absolute numbers (either flow or volume) instead of a percentage of the available total. Percentages could be based on public prioritization of the various potential projects. Any project that can’t continue with their allocation would need to shut down…or find a way to deal with other projects for access to any excess there (as if that would ever happen). Seems like a workable scenario for limited water…and any other governmental budgeting (yes, I’m thinking of finances): prioritize projects-provide percentages-cull out the losers.

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