Ratcheting Up for New Water Laws

Does California’s water shortage warrant immediate water rationing by state authorities? Jay Famiglietti, a senior water scientist at NASA’s Jet Propulsion Laboratory at Caltech, thinks so. If this sounds familiar, it’s because his March 12 Los Angeles Times op-ed advocating such drastic actions made national headlines, and his op-ed and the resulting news coverage have circulated widely over social media.

Familglietti underscores the seriousness of California’s drought and water shortage. Unfortunately, he jumps into the deep end when he urges the state to impose “immediate mandatory water rationing [that] should be authorized across all of the state’s water sectors, from domestic and municipal through agricultural and industrial.” The crisis is real, but mandatory rationing is the wrong approach.

There’s another reason this episode has the ring of familiarity. Here, we see an authority figure calling for the growth of the State during an emergency—a call for government action that reminds us of the “ratchet effect,” made famous by Robert Higgs in Crisis and Leviathan, in which a State expands during an emergency but often fails to return to its original size after the emergency has passed.

Famiglietti continues his recommendations by suggesting that the state create agencies to oversee water management as outlined in the Sustainable Groundwater Management Act of 2014, including a taskforce of state-appointed “thought leaders.” (This would come on top of the more than 1,000 agencies [see page 4] already managing some aspect of water in California, excluding county and municipal agencies that have created local statutes or exercise oversight for water in their jurisdiction.)

Famiglietti offers no definition of who these “thought leaders” should be, but if they’re anything like the people who helped build the surface-water storage facilities that lose up to 20 inches of water annually through summertime evaporation, then things do not look good.

So, if not more state controls to address the water shortage, then what? Fortunately, there’s no shortage of promising alternatives, including: letting the market determine the price of water, adjudicating water basins, breaking federal water subsidies to agriculture, or some combination of all of the above.

Removing the distortions from water pricing is probably the most urgently needed reform. As the Public Policy Institute of California notes in California Water Today, water is undervalued, poorly managed, and misallocated by federal projects that receive massive water subsidies. This excerpt from its report drives home their point:

In coastal Southern California, for instance, farmers pay up to $600 to $800 per acre-foot for State Water Project water that must travel over the Tehachapi Mountains, whereas in Imperial County, parts of the northern Sacramento Valley, and the east side of the San Joaquin Valley, farmers receive water deliveries from local and federal projects for as little as $8 to $40 per acre-foot.

Allowing the market to set the price of water will, admittedly, be a costly process for many people accustomed to cheap water, but in the face of a looming water crisis, moving toward market pricing is critical.

Also, to enable California’s water system to adapt quickly and effectively to changing market conditions, the state should shed many state agencies with a stake in water-rights planning, agencies whose contradictory or clashing plans often impede the flow of sensible reform.

Additionally, California should adjudicate its water basins, a process that creates enforceable legal mechanisms between water users, and serves to clearly define individual water users’ property rights, or claims, over the water.

Finally, removing government subsidies will free up water for higher-valued uses, as farmland that binge drinks with artificially cheap water shifts toward crops and land uses that better reflect true costs and economically sensible trade-offs.

Regardless of approach, California is facing another year of drought that it is ill equipped to handle. With no end in sight, California needs water markets, not additional poor water management.