Clark County Commissioner and noted free market champion Tick Segerblom has an interesting idea: Instead of giving the Raiders $30 million in exchange for advertising that teaches drunk tourists how to save water, why doesn’t the Southern Nevada Water Authority just charge more for water so people have an incentive to use less of it?
That’s a really good question.
To answer it, we have to acknowledge that water, especially in the driest state in the country, is scarce; in other words, there’s not enough of it to meet every Nevadan’s needs and wants simultaneously. Given that, the two ways we’ve found to peacefully manage scarcity are politically and economically. (Scarcity can be managed militarily as well, but it’s generally frowned upon.)
Trouble is, it’s impossible to manage scarcity purely through political or economic means.
Economics is impossible without some definition of property — who owns what and what does it mean to own something, in other words. Those, however, are also political questions, derived through mutual agreement and consensus. And it’s impossible to manage scarcity through purely political means because political means are simply too slow and inflexible; we’re not going to hold a vote before every shower, for example. Additionally, no matter how scarcity is managed, the fact that something is scarce means somebody is not going to get what they want. In fact, there’s a chance, though hopefully small, that somebody might not even get what they need.
There are a few things to keep in mind, however.
First, political solutions aren’t necessarily democratic ones, nor do they necessarily involve the government at all. Political solutions merely require that they apply to groups of people and that the groups of people govern themselves by those solutions. In fact, many political solutions openly contradict government statutes. For example, we have unofficially but politically decided that Burning Man and Electric Daisy Carnival are functionally exempt from all applicable drug laws and several Nevada counties have declared themselves exempt from state gun control laws.
Incidentally, political solutions that openly contradict government edict frequently end up overwriting and becoming government edict themselves. Just ask Clark County Commissioner and noted recreational marijuana champion Tick Segerblom.
The second thing to keep in mind is that markets are only as good as the information people feed into them, only as good as what people can do in response to the information the market provides, and only as good as the institutions the markets exist in. California successfully got all three wrong leading into its electricity crisis at the turn of the century by capping price increases, blocking supply construction, prohibiting long-term contracts, and creating a set of institutions that left ownership and responsibilities ambiguous, which allowed companies like Enron to manipulate those ambiguities for a sizable profit. (On the other hand, while it’s still probably best if we don’t think too hard about how sausage is made, it’s hard to argue that we don’t get enough of it, with incredible variety, at astonishingly low prices.)
The third thing to keep in mind is that both political and market solutions are nothing more than methods of communication. They’re not magic — they’re just ways for people to communicate what their needs and desires are, as well as how intense those needs and desires might be. Like all forms of communication, they privilege those who can speak the loudest and the longest. Politics privileges those who have the time and social capital (popularity, in other words) to build and enforce consensus; markets, meanwhile, privilege those who have more financial capital than others. (However, markets at least let everyone have a voice, even if it’s not an equal one; the same cannot be said about most political processes in our country, especially once governments, courts, and prisons get involved.)
With all of that in mind, let’s think about what we’re trying to communicate to each other about Nevada’s water supply in general and Las Vegas’ in particular. What are the existing political and economic solutions communicating? And what should they be communicating instead?
Our political and economic solutions surrounding Nevada’s water supply are, I’m sorry to say, a hack built on top of a kludge glued to a midden heap placed haphazardly between a rock and a hard place. Even if Nevada’s forefathers had an ounce of foresight, which I assure you they most certainly did not, they were the products of a culture that had more than a thousand years of experience managing land scarcity, absolutely no experience whatsoever thinking about water scarcity, and absolutely no desire to consider the practices of other cultures before attempting to solve a problem.
Consequently, water rights in the western United States are muddy, metaphorically speaking. I don’t mean that just in terms of them being unclear, though they are certainly that. I mean that in a lot of not particularly useful ways, we pretend that water behaves like land and apportion it accordingly, even when it doesn’t make sense to do so.
For example, water rights are apportioned by acre-foot (the amount of water it takes to cover an acre of land in a foot of water, or a little over 325,851 gallons; a suburban household uses between half an acre-foot to a full acre-foot of water each year). If that water owner uses their water rights to irrigate their property, some of the water will inevitably go back underground and become groundwater, where it can either be reused by another water owner or left to rest for future use. On the other hand, if that water owner bottles up their water right and ships it away, the water permanently leaves the system.
That’s a problem when you’re trying to identify how many acre-feet of water are actually in a system so you can apportion them without accidentally allocating more water than is actually present. If you only count “water used” but fail to count “water reclaimed as groundwater,” you’re going to overestimate the amount of water that’s actually allocatable. Luckily for all of us, Nevada’s forefathers got around this by estimating total water capacity at a time when water was used almost exclusively for local agriculture during an unusually wet period with an attitude that allowing any water to evaporate in a playa somewhere was “waste.”
Wait… that’s not lucky at all. That’s… the opposite of that. That’s a recipe for catastrophe.
But wait, it gets worse. Western water law is based on the doctrine of prior appropriation, which is based on the idea that the first person to take a quantity of water for beneficial use (more on that in a bit) has a perpetual right to that quantity of water as long as they use it beneficially. Subsequent water users, meanwhile, can take whatever quantities of water they can, provided doing so doesn’t interfere with prior water users’ rights. (This, admittedly, is an improvement over riparian water rights, the governing regime used back east, which basically governs water like air: take whatever you want but don’t make too much of a mess, basically.)
There are two major problems with this approach.
First, in order to maintain the right, the water right has to be exercised in its entirety. This means there’s a strong incentive against conservation. If a water rights holder uses less water than they have a right to, they might lose the right in subsequent, wetter years. Worse than that, the definition of “beneficial use” is so restrictive that letting water pass in order to preserve or improve the local environment doesn’t count, as federal officials reminded the Walker Basin Conservancy recently, and also restrictive enough to prevent reselling to other water customers, especially across state lines. Consequently, senior water rights holders have every incentive to not only deny water to conservation efforts, they also have every incentive to exercise their water rights to the fullest, even if doing so denies junior water rights holders access to water.
Second, just because you can appropriate a quantity of water today, that doesn’t mean you’ll be able to appropriate that quantity of water tomorrow, no matter what rights are on paper. This is especially true of Nevada’s groundwater, which is largely composed of “fossil water” — in other words, underground lakes filled with water from thousands of years ago. Though there is some natural recharge of Nevada’s groundwater basins, a lot of Nevada’s precipitation evaporates away before it gets into the water table, especially in clay-lined valley playas.
A particularly horrifying counterexample of playa evaporation, by the way, is the Nevada National Security Site, which contains several cracked playas in which lush plant growth are taking place because of the fracturing of the clay and the exposing of loose soil. Why is that horrifying? Let’s just say you probably don’t want to think about how those playas were cracked, and you definitely don’t want to think about what’s washing underground from those activities.
But wait, it gets worse. Yes, worse than water filtering through irradiated nuclear test sites into Nevada’s groundwater. Yes, really.
Not only do we have poorly defined water rights that regulate water like acre-feet of immobile dirt, not only do we have government-imposed restrictions on water rights that require every senior water right holder waste as much water as they wasted in the 19th century, and not only do existing water rights in Nevada ignore groundwater recharge rates, but we also heavily subsidize water use, which brings us back to the beginning.
How heavily, you ask? Consider this — the water rates in Lakeland, Florida and Seattle are both above $7 for each 1,000 gallons used. In Reno? Less than $3 for each 1,000 gallons. In Las Vegas? If a household uses half of an acre foot of water a year, or a little more than 13,500 gallons a month, they will pay, on average, just over $2.20 per 1,000 gallons at current rates — less than a third what water customers in Seattle pay.
In other words, our markets, as currently designed, are telling us that water isn’t scarce at all; in fact, they’re telling us that water is more plentiful in Las Vegas than it is in nearly any other city in the United States. That’s obviously incorrect, so, to correct against that, we have put into place a variety of complicated and seldom understood political solutions to better match consumption to reality. These include sprawling, slow moving bureaucracies (like the Colorado River Compact), regressive sales taxes that subsidize profligate water users on the backs of less water-profligate residents, and enough lawsuits to choke the Nevada Supreme Court.
There is another way.
Australia, like Nevada, is also very dry, and so water is very scarce there as well. Unlike Nevada, however, Australia ultimately opted to manage water scarcity through market-driven methods instead of political and litigious methods.
This didn’t happen quickly. Water Markets in Australia: A Short History is 155 pages long (that’s longer than this op-ed, believe it or not), which should give some insight into how long it took and how laborious it was to settle the political questions over who owned what and who was allowed to sell what to whom. Choosing a market-driven solution did not make the political questions go away. It only moved them up a level while simultaneously empowering individual water owners and users to make their own decisions regarding water consumption and sales.
Even so, it worked. Switching to a water market encouraged Australian farmers to not only use less water by being more efficient with their water consumption, but also to resell water to more productive uses (cities, more often than not). It helped that Australia allowed water rights to be preserved even if the water rights holder didn’t consume their full allotment; on the contrary, their market system actively encourages this behavior.
To be clear, water markets aren’t a panacea. If poorly designed, like Nevada’s water market currently is, they may encourage overuse or even Enron-style manipulation. Additionally, though Nevada’s precipitation totals may be similar to Australia’s, our hydrology is a bit different. We have more isolated groundwater basins filled with fossil water than Australia probably does because of our unique Basin & Range geology, so any water rights regimen we conceive will need to account for the sustainability of these resources.
Even so, political processes, grinding bureaucracy and endless litigation are a poor substitute for effective water management. At some point, we have to encourage Nevadans to do the right thing — not by hectoring them during football games but by changing incentives so we will all want to use less water. Australia proves that well-conceived water markets can work.
David Colborne has been active in the Libertarian Party for two decades. During that time, he has blogged intermittently on his personal blog, as well as the Libertarian Party of Nevada blog, and ran for office twice as a Libertarian candidate. He serves on the Executive Committee for both his state and county Libertarian Party chapters. He is the father of two sons and an IT professional. You can follow him on Twitter @DavidColborne or email him at firstname.lastname@example.org.