By contrast, potblogging brought in huge hits.

I have to say, friends, that slowly reading through a blueprint for transitioning from western water rights to Australian water rights has not created a bonanza of blogging attention. It is worth it, however, to read stupid bullshit like this and really understand what it would take to do that here.

ADDED 10/13: I listened to RAND’s Drought and Water Policy presentation. If the drought continues, ACWA is going to start pushing harder for water markets. I transcribed the discussion of water markets; it is beneath the jump.  When I finish going through the Unbundling paper, I want to start asking for a lot more specifics.  I cannot imagine a transformation like the one described in the Unbundling happening within a decade.  What could come sooner, by Year Six?  Dropping the requirement of a CEQA analysis for water transfers?  State law saying that we don’t care about third party impacts?

My other thought on hearing this discussion is the possibility that the transaction costs for water trades are just that high.  There’s a lot of talk about streamlining and lowering the barriers to moving water.  But water is heavy, hard to track and hard to move.  When you are talking about out-of-basin transfers, the physicality of water may override economic theory.

7:28, Quinn
If the drought continues in year six, seven, eight, you do have to start choosing which economic processes get water and which don’t. We haven’t really, the agricultural world has been tougher but in the urban economy, this is the fourth year of a millennial drought and our urban economy is still going pretty strong, largely because we were more ready for this than we get credit for. …
If it goes and it does start to threaten urban economic actions, my board of directors took a very strong policy position that we should raise the bar on California’s water market. We should make water marketing much easier to do in the state of California. It has been a constant in my career. I was hired thirty years ago and water marketing was one of my primary responsibilities.
{Interesting aside on farmers resenting the mention of Australian policy.}

Moderator:
You’re talking about this water rights… system in California. … A water right is a license to look for water, it doesn’t guarantee that you’re going to get it in California. … We’re also seeing changing relationships, to how we manage those rights, what we want to use that water for, how we prioritize it. … We’re talking about using water as efficiently as possible.
I recently did a story about water rights and I met some Australians who are interested in creating a NASDAQ-style, real time water trading in California. And what they want to do is sort of improve and expand on the idea of water marketing and water trading in California. … What are your initial thoughts about how well water trading works now, certainly farmers take advantage of it some times.
19:52, Wenger
Yep, many farmers do and the water trading, the water markets are great, especially if you have growers who have a water right, an established water right, a surface water right and they can’t utilize, or that crop that they’re growing is at such a price point that it isn’t very profitable. And so if Metropolitan or somebody else wants to transfer that water, but we also have the linchpin of getting that through the pumps. But water markets and water trading are great, but that doesn’t always mean that water from the north is going to find it to the available market in the south, because you still have to get it through the system.
Moderator: and get approvals from the government for your trade along the way.
Wenger: and get approvals. But if we don’t grow the pie, that is just to fix a problem in a time of need. If we’re going to rely on water markets to say ‘those who have the money have the water’ then I don’t think it is really good for the 39 million people who make their home in California, soon to be continue to grow. Water is very foundational …
Moderator: But we do have farmers and cities who are engaging in water transfers right now who are both benefitting from it. Both within California system and in the Colorado system.
Wenger: It is a great short-term fix.
Moderator: Well, short term for water guys is thirty-five years.
21:25, Groves
…Well, maybe push it a little bit further. The nice thing about markets is that it helps establish a value for a good and it helps facilitate win-win trades. People who want to buy something and people want to sell something, if you don’t have a market, they can’t make that deal. Now water is immensely complicated. It is not as simple as … me selling my water to you, because there’s how do you get it there, and there might be a lot of uses for it along the way and the fish might care if I take it away and sell it to you, and such, so it is very complicated. In principle it really can not only just help solve a short term allocation problem, like ‘there’s too much water here, let’ s try to move it there but actually help shape how water is fundamentally used in California.
…That gets to some of the longer term questions. You know, longer term play out, ten, twenty years, this drought will come and go, but we’ll be facing another drought. But fundamentally, at some point we’re going to need to be doing things other than the ornamental water fixes of browning lawns. We’re going to have be fundamentally making hard choices about how do we use our water. How much food do we grow? What do we do for our ecosystems? Water markets can help identify how to allocate that water because it helps establish what it is really valued.

22:37, Quinn:
…You have to be careful about it, but the market is one of the few things that we can materially improve our situation, given the inadequate infrastructure we’re operating with today.
… Where my board of directors went, I was a water marketing advocate, I got bit by this bug. RAND Corporation did a series of very influential studies, the date on them is 1978 they weren’t actually published until 1980 or a little after that. One of their recommendations, forty years ago, was this state needs to do more to use the market to manage water.
I left RAND, went to work for the Metropolitan Water District and became one of the advocates for water marketing in California, which did not make me a popular person. I mean, it was an idea, nobody liked the idea thirty years ago. There was no trading going on. We now have trading going on. It is notable that my very diverse board of directors which includes a lot of farmers and ag representatives, they went to this policy, a very strong pro-market policy …with no real dissension at all.
That showed progress in California but we still have a market with enormously high transactions cost. It is completely non-transparent. You have to be as big as my former employer … to incur the transactions costs and one of the places where my organizations would like to go is, again you get in trouble for saying you want to be like Australia in my world, but in the respect of finding mechanisms that have much lower transactions costs, much higher transparency. So you don’t have to be the Metropolitan Water District to go to a computerized trading place and find a source of supply or offer a source of supply.
That’s one of the things I would like to see coming out of this drought, the way recycling and desalination came out of the last drought. We need the market to take a big jump in this drought. …

 25:03, Wenger
… Don’t forget about third party impacts. So we had a lot of rice growers that sold their water and transferred it this year. They didn’t need employees. They didn’t buy fuel, so the local fuel distributor had to lay off employees. They didn’t buy equipment and they didn’t buy other things. When you talk about rural California … we are agrarian, we are dependent upon an agricultural base. What about all those other folks that are dependent upon agriculture? Now when agriculture isn’t producing, you’re not producing almonds, the wine from the wine grapes and everything else. Everybody else creates jobs downstream from that and those that helped you upstream to be able to get that crop, they’re impacted. They didn’t benefit from that water market. Only the farmer did.

7 Comments

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7 responses to “By contrast, potblogging brought in huge hits.

  1. Uti

    Guilty. It sounds like it is discouraging that few readers engaged in the discussion. Pot and water I can understand because I see the dynamics at work first hand. Unbundling water rights and transitioning to a whole new system is a steep learning curve for me personally. I read the link to the opinion piece and will keep on reading the blog and comments to try to learn more about it.

    • onthepublicrecord

      This is difficult stuff. That’s why it is taking me so long to go through it.

  2. Blake Hihara

    Blugh, the OC Reg.

  3. Anonymous

    We’re all busy putting together our comments on WaterFix. But we still lurk.

  4. onthepublicrecord

    I do think it’ll be worth it to have done this. I bet we hear a whole lot about markets in the next couple years, and this shows us that anyone who talks about converting to an Australian-type market quickly is completely full of shit.

    It will also help us understand which reforms are what. We’ll know what the pieces are, after this.

  5. Steve Bloom

    Well, I think just following the news about the Australian market is enough to draw that conclusion. AFAICT from the ongoing conflicts, all they really succeeded in doing was reducing supply stress by buying out a bunch of farmers. It remains to be seen how much water the infrastructure improvements actually save, how much damage the reductions n environmental protection end up doing, and whether the whole thing has to be re-done when the next big drought happens (with a big chunk of extra supply reductions as the original plan recognized would be necessary).

  6. Steve Bloom

    OK, more on the Murray-Darling plan, including a bunch of context I was lacking. For one thing, I hadn’t been aware that the plan assumed no change in climate. Well, wow. Anyway, this article makes things in Oz look like even more of a train wreck.