05.03.07

Water Scarcity

Posted in Politics, Resources at 10:41 pm by justakim

After my last post on the relining of a canal that would cut Mexico and Mexican wetlands off from leaking water, the scarcity of water has been on my mind.

On Monday, seven states that rely on the Colorado River for water submitted a plan for dealing with water in years of drought. The upper basin states would release less water and the lower basin states will draw water form other sources, under a plan of ‘intentionally created surpluses’.

But what does this mean:

Water for agriculture in Southern California could be “banked” in Lake Mead for future use if farm lands are allowed to go fallow.

What’s that, subsidies for not farming until you’ve built up a reserve?

No mention of Mexico was made in this article. I find it unlikely that the involved states will be more considerate in making sure Mexico gets its fair share of the Colorado.

Meanwhile we hear about investors speculating on water claims as water becomes a greater point of contention.

“Governments globally are reaching a point where they’re not able to finance the delivery of cheap water, which is why the private sector is getting more and more interested,” says a venture capitalist.

While some are banking upon water liabilities, others seem unconcerned with the risks. Water reporting seems to be skimpy and lacking standardization, even in water-heavy industries. This seems to be a strong case of moral hazard, trusting in the government to subsidize their water needs under the assumption that water is a necessity rather than the scarce resource it truly is. Even if water is available at a much cheaper rate than it should be, one would think that keeping tabs on how much water you’re using would be useful information. Can water be so cheap, or so secure, that it doesn’t matter how much is used?

The divergence in approaches to water as a resource may outreach our supply.

I am not advocating that water be simply subject to the market. The demand for water is pretty inelastic after some point; we need it to live. But we can’t ignore the fact that there is a limited supply, and some uses for fresh water are more valuable than others. And if we wanted to make our own, it’s going to require investment, and it’s going to cost.

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