Couple backlogged thoughts on water financing.

I liked the Pacific Institute’s report on future water financing from back in November, but I’ll use this quote from the Conclusions as a springboard to one of my standard rants (just because it is something I hear around, and here is a version I can use).

New financing mechanisms and alternative revenue sources need to be explored for water conservation and efficiency, research and development, monitoring and data management, ongoing operation and maintenance, and upgrading failing water systems.

Look, y’all. This is not that complicated. The revenue sources are the wallets of the people of the state. If we aren’t using bonds to transfer the costs to future people, there are two financing mechanisms. There are taxes, where someone with authority takes an amount in a way that isn’t directly linked to a water bill, or there are fees, where someone with authority takes an amount in a way that is directly linked to a water bill. That’s it. That is the whole range of options. We talk about creative financing mechanisms and looking for alternatives, but in the end, if we decide to pay to keep our level of service up to first world standards, someone with authority will dip into the wallets of the people of the state.

I have some patience for discussions of whether taxes or fees will better accomplish policy goals, but I roll my eyes at discussions of “creative financing mechanisms”. Far as I can tell, the phrase is a placeholder for magic outside wealth appearing.

I loved every word of this Valley Econ post on making tree crop growers self-insure. Nut crop growers put a whole lot of capital into their orchards, then point to their orchards as hostages in drought time. “But we must get water, or our trees will die!” I’ve never understood why the public at large should be the backstop for the bad choice to plant crops with a constant water demand in a variable climate. If there is a state interest in growing nuts and grapes in particular, it hasn’t been explained to me. I understand the grower’s interest in growing a valuable crop, but since the profits from that aren’t returned to the state, I don’t see why the risk should be.


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4 responses to “Couple backlogged thoughts on water financing.

  1. Nice post. Regarding the first section…I guess it depends on how you define “financing”. I consider the taxes/fees you describe as funding sources/revenue streams. Financing those streams can create added value and there are innovations California hasn’t considered or implemented. For instance, here’s an interesting post on how California could structure pooled SRF financing, similar to other states, to increase capacity in the program.
    I consider this a financing innovation that doesn’t require the tax/fee increase you note.
    PS – glad to see you blogging again!

  2. Minivet

    Does federal crop insurance make this strategy less risky for the nut farmers?

  3. At the risk of a quibble, the magic outside wealth that we frequently try to conjure up here in New Mexico involves the federal government, which to parallel your syntax, involves dipping into the wallets of people in other states.

  4. ScottB

    Googled to see if there are any public-private partnerships in water projects and found this:
    Does that count as a “creative financing mechanism”? It is almost like magic, only with strings attached…