A short while ago a story related to the four year long drought in California was the lead of story on news shows across the country. This story's time at the top of the charts was short lived. In most markets it was a one day wonder. But for that one day it was literally red hot. The key to this story's dominance of the news cycle was, what else, spectacular video. There was no blood but there was something that was almost better, pictures of burning cars and trucks including at least one 18 wheeler. A wildfire had swept across the I-15 interstate highway and set a bunch of vehicles on fire. There were flames shooting out of some vehicles while others had already been reduced to burned out hulks. A movie special effects crew with a big budget couldn't have done a better job.
And this happened in the L.A. TV market. All the local stations there have helicopters equipped with high tech video cameras. This meant that there was plenty of superb video for everyone. And everyone used all the video they could shoehorn into their shows. But by the next day the novelty had worn off and it was time to move on to the next shiny object. If this was the only "water shortage" story out there it would have been one thing. But there have been enough "water shortage" stories out there for long enough that most people are at least vaguely aware that something is going on. So what's up?
As Coleridge opined in "The Rime of the Ancient Mariner": "water, water, everywhere nor any drop to drink". In one sense there is no water shortage. The oceans are full of it. As are several other large bodies of water like the Mediterranean Sea. The problem is that the Med, the oceans, and these other large bodies of water contain salt water. It is not potable (drinkable) water so for many purposes it is useless. The "water shortage" is in reality a shortage of potable water. But a shortage of potable water is not a new problem.
Civilization used to be traced back to the valleys of the Tigris and Euphrates rivers in what is now Iraq. A key to development of this "first" (modern archeology now traces our roots much further back in time and to completely different places) civilization was the development of irrigation. Irrigation makes more potable water available and makes it available in more places and for longer periods of time. Controlling the spring flood of the Nile river performed a similar role in the development of the early Egyptian civilization. Various water management capabilities also played a similar role in allowing societies in ancient China and in its neighbor India to support dense populations for thousands of years. I could continue but let me instead skip to the near present.
One of the key drivers of the spectacular technological advance of the twentieth century has been giant water projects. I live in "the West". Dams, irrigation canals, and other large "water works" are literally everywhere. The Southern California we now know would be impossible without the many projects that bring water from hundreds of miles away to slake the thirst of the people, industry, and agriculture of the region. The region is still growing but it has now been decades since the last large water project was completed in the area. This has caused a lot of people to ask "are we at the end of our ability to find more water"? And by "water" they mean potable water.
If it was just Southern California it would be one thing. They have been getting their hands on water from somewhere else for more than a century now. People are often slow but they do eventually wise up. And the areas that Southern California historically has gone to for water have now also been growing quickly for decades. So they are much less interested in shipping water to Southern California. More importantly, they now have enough power and wealth to be able to resist advances by the "outsiders" from Southern California.
But it's not just Southern California. You now hear "we are running out of water" from pretty much everywhere. So is there a real crisis? Yes. If we keep going as we have then we are in big trouble. But the key phrase is "if we keep going as we have". It turns out that we have options. The problems are primarily not technological. We don't need some new gee whiz gadget or technological breakthrough. Instead the fixes we need are primarily political and psychological. If we can fix the politics and the psychology we have plenty of potable water. So what's the deal?
This is one of those "victims of our own success" things. The technology we deployed in the twentieth century enabled massive growth in our consumption of potable water. That technology primarily made more water available. It also did so very inexpensively. Most of the "new" water cost users very little. But there is no more new super-cheap water out there. We have to look elsewhere for solutions. The fact that the twentieth century produced so much cheap water caused us to get lazy. And by lazy I mean it caused us to get into the habit of using water very inefficiently.
The current poster child for inefficient water use is the Almond. We, or at least I, have recently learned that it takes a gallon of water to produce a single Almond. That seems like a lot and it is. That's why Almond producers have recently gotten a lot of flack. Yet on a per-Almond basis, Almonds in the supermarket are cheap. Amazon sells Blue Diamond Almonds, a premium name brand, for roughly a buck an ounce. I don't know how many Almonds are in an ounce but it is several. So at retail Almonds cost a few cents each.
And this price includes all kinds of non-water costs like the land, labor, Almond trees, packaging, shipping, marketing and distribution costs, etc. So there is at most a penny's worth of water in an Almond. And Almond production is up because it is a profitable product and the farmers seem to be able to find water somewhere. So they grow more Almonds. And they do so in Southern California where they are in the fourth year of a historic drought. Whatever Almond farmers are paying for water, it is not high enough to cause them to switch to a less water intensive crop. And maybe Almond farmers use water very efficiently. But a lot of farmers don't.
The Israelis have been critically short of water for many decades now. There is very little water in Israel. This makes what water there is very valuable. This has caused them to be world leaders in the field of efficient water use in agriculture. Even if it is used efficiently, water in Israel is still expensive. Any additional increase in efficiency can save farmers there a lot of money. So Israeli farmers do what they can to drive their already high level of efficiency even higher because that's what makes sense for them to do.
If water was cheap a farmer would be a fool to invest in expensive technology to increase efficiency. And for many farmers in the U.S. water is cheap so they use cheap inefficient water use practices. And they will keep doing so as long as they have access to cheap plentiful water. The same is true of industry. The "home" market for water in the U.S. constitutes a very small portion of the overall market. Most of it is used in agriculture and industry.
In California, for instance, 80% of all water usage in the state is by agriculture. What that means is that if you cut non-agricultural use by 10% you will only save one fourth as much as if you cut agricultural water use by 10%. When you factor in industrial use residential water use in a state like California is probably less than 10% of total consumption. So it is good PR to go after residential use. It convinces the average voter that the problem is real. But it does little to address the real problem.
I have now been going on about all this cheap water for some time now. What am I talking about? How much does water cost? To an extent that is astonishing the answer is "it depends". Water is a commodity isn't it? Shouldn't the price of water work like other commodities like Oil? It should but it doesn't. Let's start with a look at the pricing of Crude Oil as price information for it is easily found on the Internet. A quick search will turn up a number of different prices, a price for say "WTI" (West Texas Intermediate). or for "Brent" (basically oil from the North Sea). Each price quote will differ from the others. What's going on? Each quote is actually for a different grade of Crude Oil.
Oil varies from "light" (contains a high percentage of "volatiles", components that evaporate easily) to "heavy" (low percentage of volatiles). It can also be "sour" (contains a high amount of Sulfur contaminants) or "sweet" (contains a low amount of Sulfur). Light oil is easier to refine. Sour oil is more expensive to refine because the Sulfur must be removed. This is hard and, therefore, expensive. So the market likes and will pay more for light sweet crude (WTI and Saudi oil). It pays less for oil that is heavier and/or more sour like Brent oil.
In a similar manner there are grades of cotton, wheat, and many other commodities. If you stick to the same grade, however, everybody pays pretty much the same price. This is how commodity pricing works. If I can get the same thing somewhere else cheaper, I will. So prices for the same thing in different markets quickly even out. Now let's take a look at water, specifically potable water. There are gradations of potable water but the differences are small. So price variation is small, right? Let's see.
If I buy house brand bottled water online from Amazon it costs about $8/gallon. There are about 8 gallons in a cubic foot so that figures out to about sixty-odd dollars per cubic foot. But this is a retail price for water. How about wholesale? Usually there is a big markup between retail and wholesale. So the price difference might be something like two to one or four to one. The retail price is twice or four times the wholesale price. That would translate to a $30 (two to one) or $15 (four to one) wholesale price of water.
Because it is convenient I am going use the price of the water I get for my house from the municipal utility run by the city of Seattle as a proxy for the wholesale price of water. Now there is no packaging, advertising, etc. costs. There is the pipe to my house and the meter but all of that has a useful life of decades. So maybe this price is more similar to a farm price. Farm prices are lower than wholesale prices so let's apply another four to one factor to be on the safe side. This admittedly crude analysis would predict a "farm" price for water for my house of around $4 per cubit foot. What do we actually see? Depending on whether it is the summer or not and depending on my usage (they price to discourage high usage) I pay between 5 cents and 12 cents per cubit foot. So the actual retail to "farm" price ratio is roughly 600 to 1 instead of my calculated ratio of 16 to 1. That's quite a difference.
And so far I have only crudely estimated what a farmer pays for water. What do farmers actually pay? It should be about the same as I pay, right? Nope! They actually pay a lot less. But how much less varies wildly from farmer to farmer. Again, why? It's complicated but let me hit the high spots. Most farmers get their water one of three ways. They can draw "surface water" from a river, stream, lake, etc., that is on or adjacent to their land. I am going to call this drawn water. Farmers in the U.S. have been doing this since before the country was founded. In a lot of cases this right to draw water is considered an inherent right that goes with the land. Other than the cost of the pump, etc. this water is often free.
A more modern variation of this idea, dating back at least to the nineteenth century, involves pumping water from under the land they own, what I am going to call "pumped" water. Think of the squeaky windmill that features in lots of western movies. The windmill is connected to a water pump. Again in many cases pumped water is considered a right that comes with the land and is free except for the cost of the pump, etc.
In both of these cases the law is slowly evolving. You may now need a permit draw or pump water. It is still rare but it is becoming more common to "meter" (measure) how much water is drawn and to charge farmers some volume based fee. Before moving on let me add one more wrinkle. In the "western movie" scenario only shallow water, water ten or twenty feet down was accessible. Modern technology allows farmers to go much deeper and access large lakes of underground water called aquifers.
The most famous one is the Ogallala Aquifer. It stretches from Texas to Nebraska in the central U.S. Water in this Aquifer is from two to six million years old. (The water in other aquifers may be of much more recent origin.) The Ogallala was filled from rain and other sources literally millions of years ago. When farmers figured out it was there they started tapping it. Initially they were able to inexpensively tap it because the top of the aquifer was not very far down. But it should come as no surprise that the top of the Ogallala has been dropping as farmers pump it out while nothing is refilling it. There is a lot of water there but the amount is finite and farmers use a lot of water when it is essentially free.
The top has been dropping for decades now. Farmers have had to drill deeper (and more expensive) wells and to install increasingly sophisticated (and expensive) pumping systems. In many areas the top of the Ogallala and other aquifers is now more than 200 feet down. It is easy to lift water 33 feet because that is how high normal atmospheric pressure can lift water. But every additional 33 feet means you need to push with an additional 15 pounds per square inch of pressure to get the water out of the ground. Systems for lifting water hundreds of feet are not only very expensive to install. They are very expensive to operate when compared with their short lift brethren. So pumping the Ogallala and other aquifers is getting more expensive as they are drained down. But it is still very cheap compared to the alternatives.
The third and most recent method was is to get water through some kind of agricultural water district. In this case the water district sells farmers metered water and the farmer is charged a volume based fee. But each district does things their own way for their own purposes. And while the purposes, in general are similar, the specifics are unique to each district. These districts were created to build and operate a dam or other large water project.
Dams have been built all over the western U.S. Many people think the federal government just coughed up all the money and built them. Actually many of them were built and operated by some state or local entity or even by completely private entities. But all of the big projects, regardless of who built and operated them, were financed with bonds. In the federal case the bonds were backed by the federal government (an indirect subsidy) but in all cases revenue to support the bonds came from fees charged farmers and based on the volume of water used. These dams and other big water projects were built starting in the late nineteenth century and continuing through the latter part of the twentieth century.
To make the bond scheme work Wall Street had to be convinced that there was sufficient revenue to cover the interest and principal. Say you wanted to build a ten million dollar dam. Then there needed to be a revenue source that would pay off those bonds (with interest) in say thirty years. The water rates were set to just cover the water district expenses. And the expenses consisted of money to pay off the bonds and to operate and maintain everything. There was literally no reason to set rates any higher and every reason to keep them as low as possible. Farmers would sign up to use water from the reservoir behind the dam to irrigate their crops. As soon as enough farmers signed up and promised to pay enough money for the water, everybody was happy.
Agricultural water is typically measured in acre-feet. An acre-foot is enough water to fill up an acre of land to a depth of one foot. It is a little less than 50,000 cubic feet. It turned out that the cost per acre-foot necessary to generate enough revenue to cover water district costs was not very much. And district costs dropped precipitously the day the bonds were paid off. At that point the per acre-foot rate for water could be and was cut drastically. Where I can find rate information it looks like farmers in water districts pay roughly the same amount of money for an acre-foot of water as I pay for a hundred cubic feet of water. (Rates for drawn or pumped water are even lower.) So the cost ration between a farmer and me is often in the neighborhood of 500 to 1. But it may be much higher as actual rates may be lower, in some cases much lower, than the rate I used in this calculation.
Sticking with 500 to 1 for the moment, this ratio is roughly the same as that between bottled water and tap water. The ratio between the cost of bottled water and farm water is roughly 300,000 to 1. My estimate of maybe a cent for the cost of the water to make an Almond turns out to be way high. The cost of water is not a factor in a farmer's decision as to whether or not to increase Almond production. And that's a problem. But wait. There's more! It turns out that a lot of bottled water is produced in that very same drought stricken Southern California. Why? Because, like Almond farmers, the price of water does not figure into the business calculations of bottled water manufacturers. Finally, remember that a lot of farmers pay even less for water. It just does not make any sense for them to put any time or money into using water more efficiently so they don't.
And that's the fundamental factor driving water use and driving very inefficient water use. The same kind of logic drives industrial water usage. There is no incentive to use it efficiently and every incentive to use it inefficiently. And more than 80% of all potable water goes into agriculture or industry. The obvious fix to this problem is to change the incentive structure by making water more expensive. This would make market forces part of the solution instead of part of the problem. And in many cases large increases in efficiency are available very inexpensively.
So why hasn't this happened? There are literally thousands of water districts. They operate as they do because of contracts. Long ago contracts were created to make sure the bonds got retired on time. That was the objective. But the contracts were written so that the basic system would remain in place in perpetuity. Farmers would still need the water after the dam was paid off. There seemed no reason at the time not to lock a farmer's water rights into place forever. It didn't cost the dam builders or Wall Street anything to put "forever" language in the contract so they did. And now all of us are forced to deal with the forever language written into these old contracts, some created more than a hundred years ago. Times have changed but the contract language hasn't.
Powerful people with lots of money have been litigating contracts against equally powerful people with lots of money for a very long time. The result is that lawyers have long known how to write "iron clad" and "bullet proof" contracts of this type. This knowledge dates back to well before the time the first water district was set up. There will be no successful legal challenge to these contracts based on some flaw or loop hole in the contract. Congress could pass laws to negate these contracts. But it would run up against a lot of lobbying clout. Anyone associated with any of these water districts would weigh in. But legislative action of this type would also be fiercely opposed by anyone interested I the idea that "a contract is a contract". And unfortunately this latter group includes pretty much all of the rich and powerful. So a legislative fix is extremely unlikely.
Another path would be to buy the farmers in question out. But this would be extremely expensive. Farmers would be giving up not only whatever the water is currently worth but also whatever the water might be worth in the future. Any farmer who could not figure this out on their own would be quickly clued in by a friend, neighbor, passing stranger, somebody. And in a water short future world just how much might water come to be worth? That's a guess but speculation would start at "a lot" and go up from there. Asking taxpayers to pony up the cost of a mass water rights purchase program is a hard sell. And the more money farmers see in the kitty the more they are likely to hold out for.
So we are locked in one of those all too common political gridlocks. Market pressure could change behavior if market forces could be applied. And the cost of making the changes necessary to substantially improve efficiency are known and known to be inexpensive in many cases. But there is currently no incentive for the players to change their behavior so they don't. Moving ahead by changing the pricing structure or by buying farmers out over farmer objections is theoretically easy to do. But real world political considerations make it nearly impossible. Do we have any other things we can do?
We do but they will not be nearly as effective as efficiency improvements. And the benefit potential of the alternatives are much more modest. The key idea to keep in mind is that "all water is recycled". Geological and cosmological processes gave us the water we have. Most, perhaps all of the water on earth dates back billions of years. Since then it has cycled and recycled through various hydraulic systems. Heat from the sun evaporates water from the oceans. It eventually comes back to earth as rain. The rain may land high on a mountain. From there it moves through the soil to rivers. Rivers eventually deliver it back to the ocean. This description gives you the general idea but leaves out some key steps that have been involved for at least the last half billion years. And this is where the problem comes in.
The problem can be succinctly described by quoting a common aphorism: don't drink the water - fish fuck in it. But it's not just the fish. Another aphorism asks: do bears shit in the woods? Indeed bears do. These, and many other processes, some "all natural" and others not so much, affect the water situation in the following way. A lot of people believe that yucky things happen to water and they don't want to drink water that has been yucked up. This is good as far as it goes. The problem is that many people believe that there is magical source of non-yucked up water. They believe that rain water or natural spring water or water from some other source is not yucked up. But the truth is that all water has been yucked up over and over and is yucked up now. There is no such thing as the water equivalent of immaculate conception.
All water is yucked up to a greater or lesser extent. It is never completely yuck-free. Rain water can pick up air pollution and lots of other nasty things that happen to be airborne while the rain is falling. Alpine spring water can contain bacteria that will put you in the hospital if you don't take the proper precautions. The wrong question is "where did it come from"? The right question is: "is it safe to use for the purpose I intend to put it to"?
People have a misplaced faith in the ability of certain "natural" processes to produce de-yucked water. This matched by a misplaced distrust in the ability of "artificial " processes to produce de-yucked water. So they want nothing to do with water that comes out of even the best sewerage treatment plant, for instance. But if this yucky water is put into the Mississippi River (there's a reason it's nickname is "the big muddy") and allowed to travel a few miles downstream, all of a sudden it's fine. And it's fine even if pesticide runoff and who knows what else has been added to the river as the water makes its magical journey from upstream sewerage outfall to downstream water system intake.
The yuck factor is a potent political force. If people come to the opinion that certain water is yucky they tend to throw roadblocks in the way of worthy projects. If they come to the opinion that water is not yucky they tend to believe that water should just be left alone. This can get in the way of necessary steps being taken. From here on I am going to focus on the worthy projects.
Potable water gets used for many purposes. If it is being used for drinking water it needs to meet high standards of safety, clarity, etc. But there are many uses for which a lower standard is just fine. Historically it has been hard to put multiple systems in place to handle multiple grades of water. Why spend the extra money if, as used to be the case, high quality water is available cheaply. But times have changed. Now there are real opportunities that make sense both technically and financially to go to multi-grade water systems. Continue to maintain the highest standard and grade for drinking water. But go to grades and standards that are appropriate for what the water will actually be used for.
This multi-grade system offers real opportunities to expand from an "all drinking quality all the time" system to a more flexible one delivering more usable water at a lower cost. The more flexible system (irrigation quality water for the golf course, cleaning quality water for the plant that needs to keep equipment clean, etc.) increases the amount of usable water. There are many situations where cost is not a problem because this is the cheapest alternative. But that still leaves the problem of the many people who look at such a system and go "yuck". That is a difficult but manageable problem. Assuming the "yuck" problem can be fixed going to a multi-grade system is a good idea. It won't be as effective at increasing the effective water supply as fixing our dysfunctional pricing system but it will help.
Finally there are some technological fixes. One of them is desalinization. Salt water from oceans and seas can be turned into potable water. Here too the Israelis have been pioneers. And the technology has improved substantially over the past half century. But it is still very expensive. The underlying scientific principles tell us that the process will always require a lot of energy. That means it will always be expensive. Gulf states have little water and lots of energy. They can also afford to subsidize the process. There are some other situations where it makes sense. But the process will never be cheap so it will always be a niche solution.
So there it is. We don't really have a shortage of water. We have a shortage of potable water. And we can free up a lot of potable water by increasing efficiencies, particularly in agriculture and industry. The way we price water is the primary impediment to progress on this front. Contracts are the principal impediment to using market forces (price increases) to drive improvements. But to stand a chance of making progress here the political environment must change to the point where these contracts can be modified or eliminated. Unfortunately, there seems little chance of this happening any time soon.
The next best approach is to move toward a multi-grade approach to water use. Here the big problem is the "yuck" factor. Some progress is being made in some areas and more progress is possible. There is probably a multiplier factor here. If the "yuck" factor can be overcome in some places then those successes can probably be leveraged to achieve progress in other places. As more and more people get comfortable with the idea opposition will fade. But this approach does not have anywhere near the potential of the efficiency approach.
Finally there are technological assists like desalinization. But these kinds of things have only limited applicability so their contribution will be modest and will be restricted to a few special situations.
We really don't have any long term choice but to increase efficiency. It has tremendous potential but frankly I do not know how to solve the political problems that make it presently infeasible.
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