Monthly Archives: March 2009

This was s’posed to be a blog about climate change.

I’ve been trying not to analogize between the banking crises and the California drought, not because the comparisons aren’t there, but because analogies are the devil. So this is totally not an analogy. Instead, I am pointing out some truths that both crises reveal. We already talked about how losing trust makes it extremely difficult to solve policy problems.

Here, Ezra quotes a guy who wrote of regulating banks:

And if a highly interconnected, highly complex but small financial institution fails, the system as a whole would be fine.

This isn’t limited to banks. This is a generic recipe for resilience and it is the direction our water system should go in as well.

Resilience is a Big Deal in adapting to climate change. The notion is that with increased and more severe weather events, there are going to be more disasters. So we should arrange our built environment to be resilient, to suffer less during a storm and to bounce back faster afterwards. The way to do that is with “highly interconnected, highly complex but small … institution[s]”.

I wrote this for something for work. It totally got bounced*, but it goes to show you that I’m not just making this up now.

One way to avoid having extreme events become catastrophes is by building widely distributed and mildly redundant systems. A flood that destroys a large regional wastewater treatment plant is harder to recover from than one that takes out one of several smaller plants; other facilities can assume some of the load or people will be less dislocated by a search for working facilities. The cost of replacing a single major piece of infrastructure will be a higher burden on the region than that of patching a distributed system. Because the ferocity of weather perturbations cannot be predicted now, armoring a single crucial facility can’t be assured of success and will be very expensive. Smaller distributed systems mean that after an extreme event, pieces of the region will still work.

As of yesterday, I’m starting to turn my attention to managing the recovery from perturbation. If any of you know of any good work on how modern built environments respond when crises end, I’d be super interested. It can’t be as simple as “they all instantly go back to acting normal”. How do they reactivate themselves?

 Later:  I’m doing the obvious, googling “Drought Recovery”.  I loved both of these presentations.  Also, with my public library card, I can request books from college libraries throughout the west.  They come to me!  Civilization is remarkable.

 

 

 

 

 

*I estimate I get about 15% of my thoughts through one layer of management review. I have no idea if any make it past that. That’s OK, though. I have a lot of thoughts.

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Trust and the Peripheral Canal

OK. This is a problem:

Dante Nomellini Jr., representing Delta farmers, asked state Department of Water Resources Deputy Director Jerry Johns what assurance he would give that only surplus water would be diverted into the canal, even during a drought. “We are a system of laws,” Johns said, at which the crowd laughed.

It is, actually, most of the problem. This lack of trust is the reason that people that live or farm in the Delta are fighting the Peripheral Canal so furiously1. I’ve heard talk of two kinds of mistrust, one kind that I think is deluded, the other probably well justified.

Deluded:

One type of mistrust that Delta residents display is refusal to accept any governmental agency’s assessment of the situation. I ask my coworkers who go to meetings in the Delta2 what residents say when they present seismic or flood or sea level rise data. My coworkers say that Delta residents do not believe it. They imagine that state agencies are making up data in service of a complicated land and water grab conspiracy. They don’t believe the abstract data. The evidence of their eyes and lives is stronger. They see levees every day, and those always look just like working levees. They’ve never been in island collapse floods (as evidenced by the fact that they are alive) and they will not believe something that 1. is counter to their experience and 2. means leaving the lives they know. So they choose magical thinking and believe that the islands can last.

Well justified:

Some Delta residents do not want a Peripheral Canal for two more reasons. One is that so long as there is no canal, the state is forced to keep islands intact so we can keep the freshwater sloughs between them delivering water to the pumps. They do not trust the state to maintain their lifestyles if we are not forced to by how we pump water to LA and the San Joaquin Valley. I think this is absolutely accurate. The islands and all their farm production are worth less money than repairing and maintaining the island levees would cost. Any reasonable financial analysis would say to let them fail. Further, there are tens of thousands of people who depend on the Delta in its current state, which is a pretty small interest group in a state of 35 million people. This fear for their way of life is well founded3. (The water district for LA and San Diego once said out loud that they don’t want to get involved now and will simply wait until after the Delta collapse to build an emergency canal that will work for them. I gotta say, I can see the reasoning.)

The other mistrust that seems well justified to me is that Delta residents do not believe the Department of Water Resources will obey the laws that govern any new Peripheral Canal. I mean, the people at that meeting laughed at the notion. The environmental group Friends of the River says “plumbing is destiny”. They believe if you build a big canal (which you should, because you should have enough capacity to gulp up floodwaters and send those south at the rare times when it won’t hurt smelt), it will inevitably be used in dry years to divert the whole Sacramento River. They do not believe any agreements can hold against the need for urban water. It doesn’t help that current talk of raising dams will violate old assurances that reservoirs won’t encroach on the rivers above them. Even as DWR assures Delta residents that they’ll only take what they agree to, USBR is looking at ways to violate agreements that Shasta Dam wouldn’t backwater the wild and scenic McCloud River. No wonder people don’t trust water agencies’ assurances.

DWR hasn’t demonstrated a lot of respect for laws in the past few years. They got spanked by Judge Roesch when he told them they had to have a take permit to run their pumps. The agencies said “but look, we have documents (in binders!) that are JUST LIKE a take permit.” And Judge Roesch said, how ‘bout you obey the fucking law and come back to me with a real take permit?” And DWR said “but that would take a long time and be hard” and Judge Roesch said “Then you better get started and you can start your pumps again when you bring me a take permit that says Take Permit, not a pretend bunch of documents.” And everyone looking on said, “hmm. DWR thinks laws don’t apply to them.” No wonder they can’t convince Delta residents that they would abide by a governance agreement for a Peripheral Canal.

Which is a shame. I think it is staggeringly irresponsible to have the drinking water supply for two huge cities to be as vulnerable as ours is. The known risks are shockingly high and the Delta will fail whether we build a Peripheral Canal or not. Nothing will save most Delta islands, so we might as well protect against the consequences of Delta failure. The other two options are to depopulate Los Angeles and San Diego or to find other water for them. Of the three options, the Peripheral Canal strikes me as the only possible one. So I’m for it. Battling all these forms of mistrust will make building it that much harder.

 

 

 

 

 

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In other years, black or Asian kids have gotten thirsty.

I took my first hard look at the cover for the draft Water Plan and I laughed and laughed and laughed. The images are standard, kid drinking, sprinklers on ag*, governance, nature, clouds. Whatever. Then! The ONE picture of the Delta is of a levee break (Franks Tract?). Yep. That’s the one thing you need to know about the Delta. Levees break. Guess we need a Peripheral Canal, then.

 

 

 

 

 

 

*Solid set, not hand more. You see how the throw area overlaps? That means all those sprinklers stay there and water the field for the whole season. Solid set. Hand move sprinklers are at much wider intervals. After they irrigate an area, the line gets broken down and moved to the outside of its throw pattern. (The ones in that picture are wheellines, but the thing I’m trying to show is the far apart spacing.) That’s how you tell solid set and hand move sprinklers apart from a distance. The spacing.

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Sorry for the long absence.

I’m mulling posts, but not finishing them. No doubt I’ll write them all in an un-paced blast. This is why I’m not one of those bloggers pulling down the big dollars. In the queue:

1. I don’t think a water market is the end-all, because I am not convinced I support an economically efficient distribution of water. Surprisingly, some of Yglesias’s commenters got that right.
2. Three years of drought has revealed our brittle our water system is, physically, socially and legally.
3. More on limited response capacity at the water district level, mostly self-inflicted by the decision to keep rates low. I blame motherfucking Howard Jarvis. For just about everything.
4. I owe you government documents! Obscure ones! But I don’t have any in my sights. I am betraying the theme of the blog and the banner. I must do better.

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Why districts are slow to charge market rates for water.

Why don’t districts pass the marginal costs of water on to their constituents?

HAH! Do you see what I did there? Constituents? Not customers, constituents. That’s the first reason districts don’t want to raise rates and pass the marginal costs of supplying water to users.

Districts are public institutions.
Districts are not companies. They have no profit function. They do not, for themselves, want to capture the full willingness to pay for water. That is not what they are for. In fact, their mission is some variant on “cheaply and reliably deliver water”. Because that is why local citizens organized and incorporated a district. Charging any more for water than it costs to get, treat and deliver is failing their mission. It is often also violating their bylaws, charter or the state laws that give them authority.

From the district side of things, they don’t want to make water expensive. Once O&M is covered, they have no incentive. What would they do with the money? Gold plate their pumps? They don’t have shareholders to distribute it to.

This neglects the ‘price signal’ aspect to charging lots for water (show the public it is valuable! no wasting!). There’s a lot to be said for that, so why don’t districts raise rates for that purpose and, um, give any revenues above operations and maintenance to an orphanage?

Board members are publicly elected
The people who set rates for a district are the board members, who are publicly elected by people in the district. They are not strongly motivated to increase rates for abstract considerations like “send a price signal”. First, they’d be increasing rates on their very own water. Second, they are answerable to the people in the district at the very next election. If you go back to those stories on raising rates, did you notice the part about how people are pissed? And organizing? Those are the friends and neighbors of board members, and also the people who will yank them out of office at the next election if rates go up (long digression on the opposition to rate increases in a post below).

But maybe a district really does need to raise rates, to pass along higher costs of getting new water or in this drought year, to encourage conservation. A standard technique is to charge very little for some small amount of health and safety water, and then high prices for frivolous extra water like elaborate water fountains in your tropical rainforest garden, Richy Rich. Economists are all, this is SO OBVIOUS. Do this already. Yeah, well, until last October, it was illegal. This is why economists need to pay closer attention to the law side of things.

Motherfucking Howard Jarvis.
There is an elaborate legal backstory, but basically, one side effect of Proposition 218, put forth by the Howard Jarvis Taxpayers Association, was that it became illegal to charge any household more than the costs of conveyance to that parcel. It was illegal to charge punitive rates to send a price signal to wasteful users. The last year of drought made this such a problem that the legislature corrected it.

So you have all these economists telling districts they could solve their shortages by charging more for excessive use, and districts saying, we’ll get sued. It was illegal until six months ago. I went to a number of different agency meetings, where everyone talked about how conservation pricing was such a great tool, and I kept saying, it is illegal. I think we should stop recommending illegal measures to the public. (Or, if we don’t care about legality, I think we should get far more imaginative.) People didn’t believe me because it evolved over three court cases, but then I’d explain Prop 218 and the court cases, and they’d realize that was a huge problem. Fortunately, Assemblymember Wolk solved it.

So when people say, ‘why haven’t districts instituted conservation pricing already when it is the obvious solution’, one answer is, ‘because there have only been three board meetings since it became legal to do that?’ Then my question is, did you know that? Did you realize that there are legal and institutional barriers that slow districts down? Do you know what they are? It isn’t necessarily ignorance or backwardness on the part of the district. The world that districts operate in is far more complex than the world of economic theory.

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Long digression on the opposition to rate increases.

It is fairly common, if you follow a story for a few years to see a cycle of necessary rate increases followed by recall or ousting at the next election. Diehards get elected, swearing on their newborns that they’ll never raise rates like the last assholes. Then, the realities of the district beat them down. Two or three years later, they’re reluctantly admitting the need for rate increases. You would think that people would remember that they used to oppose rate increases and that would give their calls for higher rates some credibility. But I’ve seen vicious cycles where their previous supporters turn on them and yank them out next. The aversion to higher rates starts anew. I always wonder if anyone in the process gains self-awareness or enlightenment.

The story for opposing rate increases is always the same. People storm district meetings, afraid and angry and dogged, saying they can’t afford the increases. I never know what to make of that. In the first place, there are efficiency gains and cutting back. After that, though, what should I make of stories about forcing little old ladies on fixed incomes to eat cat food? Do I believe that increasing water rates are the last straw? Maybe that’s plausible, and I certainly believe that we’re in the beginning of a period when most environmental fees will go up. Gas prices, food prices, firefighting costs, development fees, water, sewage, waste collection. I fully believe those are all about to go up. I suppose any one of them could be perceived as the last straw.

But then, I think two things. I suspect that for lots of people, the reason they can’t pay those fees are that they transformed their income into illiquid extra square feet on their house. That is a huge bind, but I never respected their choice of a big house, so it leaves me a little unsympathetic that their mortgage puts them so close to the edge. Second, the truth is, most of those new fees are different forms of internalizing environmental costs. Someone who can’t afford to pay those cannot afford their standard of living. They’ve grown used to that standard of living under artificially low prices subsidized by the environment, but that is a false expectation.

So, on the one hand, I really do feel bad for any particular nice old lady eating cat food. When those stories get personalized, they really hurt. On the other hand, their fight is to impose the costs of their lifestyle, of which water is just one example, on anything else. The environment, most likely, or the collective as a second choice. Then I am not so sure that that lifestyle is such a valuable one that I care if they get to continue it. I am even less sure that I care enough to spend money supporting their lifestyles.

(Please note that I would make the decision to support some forms of farming, because it can have positive externalities that I want. So it isn’t like I’m absolutist on this stuff.)

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Why it isn’t simple to charge market rates for water. Background.

I see this stuff all the time (sometimes, I see double!): an oversimplistic assessment that raising rates for water would end shortages. I am, actually, in favor of charging by unit of water (so you pay more when you buy more, a concept so straightforward that it is embarrassing to have to say it explicitly, but not always the norm for water pricing). I am also in favor of charging a rough marginal rate for water. These days the cheap chunks of water are thoroughly exploited and the next source costs more to collect, treat and deliver. I’m fine with water users seeing that cost for what it is. So it isn’t that I’m opposed to the concept of raising rates on water. But I do get frustrated when people act as if that is straightforward and obvious and the full solution. Districts aren’t dumb. There are reasons they have the pricing structures they do.

Some things to get out of the way:
1. No utility sells water. Water is free. What they sell is capacity and distribution. You are renting a length of pipe as water moves through it. The way to tell how much you bought is by measuring the amount of water, and that’s how they charge you. For your billing and behavior, this is just like charging you for water, so this is a minor technicality that makes no difference. It just bugs me to hear people saying to charge more for water, because I am hopelessly pedantic and literal minded.

2. It isn’t coincidence that the people you hear saying that pricing water is the bulk of the solution are all economists. A lot of the reasons pricing structures change slowly are over on the legal and institutional side; economists dismiss those as trivial, malleable impediments, but lawyers understand that they give districts a different set of incentives.

3. Rates ARE going up. Fast and hard this year.

4. The word “shortage” is doing some work that gets skipped over a lot. When everyone says “drought” and “shortage”, what we basically mean is “less then we’re used to”. We don’t mean, and won’t in the foreseeable future, “not enough to drink and bathe”. So far we’re not even close to that range. What we do mean is “not enough to use it like we’ve always been able to”, on lawns and embedded in our meat supply and on wasteful appliances and by deferring maintenance on leaky pipes.

Now here’s the thing. When laypeople hear No More Shortages, they think, ‘there’s plenty, I can continue hosing down my driveway just like I always have.’ When economists say No More Shortages, they mean charging so much for water that people cut out the uses they don’t want to pay for. Then supply curve intersects demand curve, and the economic definition of No Shortage is met! Yay! In real life, high price signals that cut out less-intensely-wanted uses means no lawns, fewer burgers, switching out appliances and replacing leaky pipes. That is what laypeople thought was a shortage! It is not the careless plenty they grew up with.

I am personally fine with this. I don’t have any emotional attachment to careless water management or lawns. I do want to point out, however, that when economists say No More Shortage, they are talking about what the broad public considers a shortage (less than I’m used to and I have to pay attention).

5. One of the standard critiques of markets is that since wealth is distributed unevenly, the marginal value of a dollar is different between rich and poor people. The rich will be able to afford their swampy lawns while the poor scrimp to drink. You can create pricing structures to alleviate this (a very low rate for the initial chunk of water, or refunds to low-income users), if environmental and social justice are important to you. Those are worth explicit consideration and decision.

All that out of the way, lets get to the good part. Why don’t districts pass the marginal costs of water on to their constituents?

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