The PJ Tatler

We Could Solve California's Drought Problem Tomorrow

After four years of drought combined with population growth and increasing demand for water, the state of California has imposed mandatory water conservation on its residents. From MSN:

Rivers are so low that young salmon have to be trucked to the sea, and many farmers can use only a fraction of the water normally available for irrigation. Dry forests burn like tinder.

On Wednesday, the State Water Resources Board approved a new process for regulating desalination plants to make ocean water drinkable. On Tuesday the board issued the new conservation rules, aimed at enforcing an order by [Governor Jerry] Brown for the state’s urban areas to cut their water use by 25 percent.

None of this would be necessary if water were provided by the market instead of a government-regulated utility. Critics of privatizing utilities bulk at imagined high prices and the audacity of profit-making from a substance essential to life. But as California’s fresh rationing demonstrates, drinkable water proves scarce no matter how it’s delivered.

The difference in a market scenario would be the communication and incentive inherent in price signals. Drought would result in higher prices, which would signal to consumers that they ought to conserve, and to producers that they ought to produce more even if at higher cost. For those who say water’s too important to be left to the market, the same could be said of any commodity. The Soviet’s said it of bread, and we know how those lines worked out.