Monthly Archives: September 2009

Putting things in proportion.

South Carolina Senator DeMint must have watched Hannity; he suggests waiving the ESA for a year to restore farming on the west side of the San Joaquin Valley.  He’s from one of those teeny states that are far away, so maybe these numbers sound big to him:

A revised University of California-Davis study recently found that up to 40,000 San Joaquin Valley jobs will be lost by the end of 2009 and 500,000 acres of productive farm land will be fallowed because of water rationing — a direct result of these Biological Opinions. The same study also concluded that Central Valley could lose $1.6 billion to $2.2 billion as a result of this unnecessary drought.

OK, folks.  Here are some other interesting numbers.

The salmon industry that needs those Biological Opinions to recover is worth about $1.4B.

500,000 acres sounds like a lot, but the state’s total irrigated acreage is about 9 million acres.  You’re talking 5% of the irrigated acreage of the state, which is relatively not so much.  The state’s almond acreage is 710,000 acres, and so long as we’re growing luxuries like almonds, I’m not listening to worries about national food shortages.  Further, the state’s alfalfa acreage was 900,000 acres in 2009, and while I don’t hate alfalfa the way most people do, so long as we’re growing fodder for animals, I will not think we’re on the verge of a food shortage for people.

The majority of the idled acres are in Westlands Water District and on the west side of the San Joaquin Valley.  As a reminder, if those acres are returned to production, gathering and treating their selenium-poisoned farm run-off is predicted to cost $2.6B.

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I do feel bad for idled farmworkers on the west side (there is considerable active controversy about their number), but while this drought hits junior water rights holders like Westlands hard, it isn’t hammering all of CA agriculture evenly and CA agriculture is BIG.  Our best option is to use this drought as the start of a conscientious phazing out of west side agriculture, with support for transitioning growers and farmworkers.  That smacks of socialism, so of course we won’t do it.  I guess we’ll let it happen the hard way.

UPDATE 10/8: Saw the  USDA Disaster Declaration Requests for 51 counties for 2009.   I can’t find a link for them yet, but I’ll tell you that the total USDA drought reported losses are at $875M.  The better part of a billion dollars sounds like a lot of money, but the total value of California ag is about $36.6B.  Declared drought losses come out to 2% of the annual value of California ag.

UPDATE 10/16: Truly, this is too fun to stop. From here:

Lawmakers from the San Joaquin Valley have likened the economic devastation to their Hurricane Katrina.

Shall we?  Wikipedia says that Katrina cost $89.6B dollars.  Right now, the disaster relief funds to California agriculture from the drought are at $875M.   When the drought is a hundred times as bad, it’ll be roughly like Katrina.  Of course, for what Katrina cost, you could buy all of California ag for two years straight.

The only thing under the fold is the most trivial insider gossip about ag econ modeling.  Truly, virtually all of you aren’t interested.

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I could have told them, but I wouldn’t have.

I shouldn’t do “outraged at Fox News” blogging, because I’ve never watched Fox News.  I am given to understand that it is biased in ways I wouldn’t like if I did watch it.  I knew someone named Hannity would be doing a show on water and the San Joaquin Valley, and despite my interest in those topics, I knew I’d never bother to watch it.  Nevertheless, I did see a write-up of the show here, and my craziest hope rose with every word I read.  They couldn’t have… they didn’t… there’s no way… but it sounds like.  OH HOLY CRAP.  They put Zeke Grader on the show!  I don’t know Zeke Grader, but he’s legendary.  He’s a super strong fishing and ecosystem advocate and he’s funny as hell.  I’ve loved him ever since this quote:

Commercial fishermen heaped blame Friday on the Bush administration for managing the [Klamath] river in a way they contend favors farmers, dam operators and timber companies at the expense of fish.

“The federal government has done absolutely nothing to help, and fishermen are angry,” said Zeke Grader, executive director of the Pacific Coast Federation of Fishermen’s Assns. “It’s almost like they created this Klamath situation to make them look competent on Katrina.”

I still won’t watch the program, but apparently Grader pointed out that fisherman are also hurting, leaving Fox News watchers to resolve the dissonance of two competing groups of picturesque resource extractors, both real manly and conservative. I’ll leave them to their dilemma.

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Youngins, don’t you do what I have done.

The news in water these days is mostly about big bills in the legislature, trying to come up with a big fix for California water.  I can’t get too worked up over it.  I’ll be super pleased if they get the mandatory urban conservation measures passed, and they can start here in Sacramento, which is an utterly shameful water waster.  I’ll be a trifle sad if they pass Sites Reservoir, because I’ve been to that valley and it is beautiful.  I’ll be intrigued if they get the Delta governance structure put in place, because I think that’s a step towards a Peripheral Canal, but doesn’t guarantee anything.  I’ll be guaranteed employment for the next decade if they pass the $10B bond to do all these things.   So that’s what the papers are talking about.  For my money, though, the most important water story I’ve seen in years is this one.

PALMDALE – Residents of one of the city’s newer housing tracts on the east side feel financially drained by the Palmdale Water District’s recent rate hike, which ranged from 65% to more than 140% for some customers.

…”My bill went from $12.80 to $185,” Summerford, a Neighborhood Watch captain, told the water board.

“My water bill went from $139 to $468,” Sanchez said at that meeting. Since then Sanchez received another monthly bill, one for $324. Together that meant she owed the water district $792, plus a prior balance that brought her total to $924.

Water bills of hundreds of dollars a month?!  Man alive!  I am generally heartless and unsympathetic to people who complain about water bills.  I know they’ve been artificially cheap for years, as the environment absorbed part of the costs of moving water, and I know people got used to that.   As their bills go up, I am generally glad.  Yes.  You live in Palmdale and I don’t see any rivers near you.  You should expect that it will cost a lot for clean water to come out of your taps.  Still, even for heartless me, an unexpected jump of hundreds of dollars is a blow.

The middle part of the article goes on about a very familiar story, in which the intrepid neighbors decide to take on the unresponsive water district.  I’ve seen this one, so I’ll tell you the ending.  One of the neighbors will get FIRED UP! and empowered and activist.  She’ll run for the board of directors, vowing reform and low water prices forever.  When she gets elected, she’ll be faced with the realities of buying, moving and cleaning water, as well as maintaining the physical insfrastructure.  She will realize the rates are still too low and the district is still eating their reserves; that the previous board made inevitable decisions and did their best to keep the constituents happy.  She’ll end up supporting the next rate hike and be vilified as a traitor by her former activist buddies who got her elected.   Good luck with that, Ms. Sanchez or Ms. Summerford.

But the ending of the article.  This is it.  This is the turning of the California dream.  The rumor I heard was that railroad companies started Sunset magazine, to get people to move west and take their trains back and forth.  The railroads had nurseries full of palm trees, for cities to line their boulevards.  And Sunset magazine sold the dream.  Live here, in the sunshine, in a small bungalow with a yard and two fruit trees.  I don’t know if that is accurate and I don’t know how the dream got supersized into a huge tract home.  But Ms. Sanchez was clearly in the grip of this dream:

Sanchez had been elated to move into her first home but now has second thoughts, especially because she has cut back her outdoor water use significantly to try to lower her monthly bills.

“It’s sad for first-time buyers,” she said. “I feel really disappointed. I came up here working on a home that needed a lawn. You put all our money into it to make it look nice. Now my lawn is going back to where it was. I feel discouraged. I feel like we should have stayed in Santa Clarita and lived in our apartment.”

There it is.  There’s the end.  This is the turning point I’ve been waiting for.  With water costs this high, she’d rather be in a city apartment.  I’ve been wondering for years what would herd people in from the exurbs.  It struck me as a race between costs of water and costs of firefighting.  For a while, the cost of gas and the commute was coming on strong, but that horse fizzled.  Now we need people to know this before they lock themselves into houses.  Ms. Sanchez, don’t become a water district activist!  Spend your energy telling your friends not to do what you did!   Tell them the house and lawn isn’t worth it.  You can still save them.  That’s what we need.

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This is why I’m not sympathetic.

I’ve seen a number of op-eds emphasizing that the people who live in the Delta have to be included in making big decisions about the Delta, and a couple more op-eds about whether people who live in the Delta are included enough. In principle, I agree with that, because their ways of life are at stake and because I believe in participatory democracy. In this case, however, I don’t want to include them if including them will give them veto power over a Peripheral Canal*.

Folks who live in the Delta are fighting like wolverines for the preservation of what they have. That makes sense. Anyone would. But what they would like to keep is behind inadequate levees that would cost a fortune to repair and maintain against the high risk of earthquake and the certainty of sea level rise. They don’t want to pay that fortune. They can’t afford to pay that fortune. They would like us to pay that fortune. You know, maybe that isn’t preposterous. Maybe we’re an affluent society that pools risk and pays to maintain niche lifestyles, so that we can exoticize visit them for our entertainment.

So here’s this thing I do, a trick I learned when I learned the Coase Theorem. I do not love the Coase Theorem the way libertarians love the Coase Theorem, but it did teach me a very useful thought reversal. The Coase Theorem proves that if a set of initial conditions hold, two parties will bargain their way to the same end point no matter which one holds the rights. In the first example I learned, you could award one neighbor the right to have very noisy parties, and make the next door neighbor buy one-hour blocks of silence. Or you could award a neighbor the right to peace and quiet and make the partier buy the right to make lots of loud noise. According to the Coase Theorem, they would bargain to the same end point of quiet time and raging parties. Whatever. I don’t especially care about that part. But since I learned the Coase Theorem, every time I hear a dispute, I flip the rights in my mind to see if anything interesting shakes out.

As it stands now, the unspoken conventional wisdom is that people in the Delta should get to live the way they do now, and everyone else in the state should pay for the maintenance to preserve their way of life, and if the state finds a way to build the Peripheral Canal (over their protests), the state or southern cities should pay for it. Essentially, the rest of the state is paying people in the Delta to be allowed to build reliable conveyance of water. But what if that were switched? What if the people in the Delta had to pay the rest of California to keep an unreliable conveyance of water? What if the remainder of the state said to people in the Delta:

You like what you have now? You insist that twenty-five million people depend on a source of water that could catastrophically fail at any moment so that you may risk your lives in your very attractive pear orchards? Fine. Keep it. But. When the Delta fails and the state can’t move water south because you insist that we all depend on your crappy levees, you pay us. You reimburse the City of Los Angeles for their losses. You indemnify the City of San Diego for the risks you insist that they bear. You pay the west side growers for their losses. You, people who live in the Delta, promise to make us whole when through-Delta conveyance collapses and we’ll forget all about this Peripheral Canal nonsense.

This sounds like crazy talk, but it is actually no more ridiculous than the example of the quiet neighbor and the loud neighbor. It is just switching and illuminating the unspoken assumptions about who deserves the initial allocation of rights. On the other hand, of course this is fucking crazy talk. There’s no way on earth that the people of the Delta, the ones who are trying to block a Peripheral Canal, could possibly indemnify the state for the catastrophic failure of the Delta. If they were asked to do so, they would rightfully cower in horror. Possibly be responsible for the paying for the damage to LA, SD and the San Joaquin Valley when the Delta fails? They should take any other option. No one could afford that. And that’s the thing. Neither can California.

 

 

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You can buy whatever car you want to pay for. But your gas still costs what the gas station says it does.

From the Daily News in Los Angeles:

 But after his stint on the Board of Water and Power Commissioners, [Nick Patsaouras] wants to be known as the Howard Jarvis of the DWP.

“I want to put a measure on the ballot that would put a ceiling on DWP rates,” Patsaouras said. “We need to put controls on the rates so that we aren’t pricing ourselves so high that people can’t afford it.


The idea for a rate ceiling came when the commission recently voted to lift the Energy Cost Adjustment Factor, a pass-through to ratepayers to cover the cost of fuel.

“That is the straw that will break the camel’s back,” Patsaouras said. “If that is adopted, the pass-through will exceed the base rates. We have to stop it now.”

This kills me. Dude wants to cap the amount of a pass-through for energy costs. I don’t understand. This fee, the one he wants to cap, is how customers pay for energy to convey and treat water. What does he think will happen if his initiative passes and LA DWP customers can no longer pay the market rate for fuel to move water? Does he think that fuel will magically cost what they want to pay? Does he think that LA DWP will buy as much fuel as they can under the new regulation, and then only convey that much water? There are fuel costs associated with moving and treating water and they impose a burden on the consumers of water. That is all true and sad, especially if those fuel costs are going up rapidly in a time when people don’t have much money. But these are supply costs on an open market, asked by fuel sellers who presumably have other customers. Voting to establish an absolute upper bound that DWP will pay for fuel is meaningless. DWP must have fuel to move and treat water and it must either buy that fuel for the market price or buy less fuel.

You know, I don’t even understand this guy on his own crazy terms. Why is he capping the fuel pass-through fee? That’s the part with no agency discretion. Why not go for the base-rate? The base-rate is some combination of stuff like costs of conveyance and treatment*, paying for their physical capital, staff salaries, and a maintenance reserve. It is perfectly legitimate for the board of a water district to decide to keep the base-rate low and have a shoddy, falling-apart water district. This is one possible choice that constituents might prefer, although City of Placerville is regretting it. But he isn’t proposing to cap the base-rate. He’s proposing to cap the part DWP has no way to change.

This is so staggeringly dumb it makes my head hurt, but I should have known that as soon as I saw that someone aspires to be the Howard Jarvis of something.  Please, please, please, voters in Los Angeles. Please see through this, please understand that this proposal is nonsensical. Please can we put an end to thinking that we don’t have to pay for what we use?
 

 

 

*I bet they separated the fuel pass-through from that because the cost of fuel changes a lot and they didn’t want to be tinkering with the water rates all the time.

UPDATE: Edited very slightly a day later.

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Framing

One of the memes that some in the agricultural community are pushing this year is that California is in a “regulatory drought”, that the problem is not that we got so very little precipitation, but that a judge gave what we got to scrawny fish in the Delta.  It is true that a judge stopped pumping in the Delta at some times of the year to protect fish, and that as a result, less water was moved south, and that junior rights holders like Westlands took the brunt of that.  But “regulatory drought’?  A regulation is written by bureaucrats in an agency, subject to the public process but usually filling in details that the legislature didn’t want to attend to.  The judge that reallocated water to scrawny fish in the Delta was enforcing the Endangered Species Act.  The ESA isn’t a regulation.  It is a huge law, one of the major legislative achievements of the 70’s.  It is not like the judge is down in the weeds, enforcing some obscure 432.5894.2(f)(3)(ii).  (Even if he were, it should be followed or changed through the public process.)  He is enforcing one of the major laws of the land, and he’s doing it because nothing less will preserve wild Californian salmon and the agencies sure weren’t doing it on their own.  “Legal drought”, maybe.  “Judicial drought”, if one must.  From now on, I’m correcting people who say “regulatory drought”.

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