California's record drought and mandatory water cuts

http://www.democracynow.org/2015/4/2/after_warmest_winter_drought_stricken_california
http://www.kqed.org/a/forum/R201504020900
http://marginalrevolution.com/marginalrevolution/2015/03/the-misallocation-of-water.html

This week, Gov. Brown mandated non-ag CA homes and businesses need to cut water consumption by 25%, effective immediately. I am not sure what the enforcement mechanisms are. Like the sequester, an x% across-the-board cut is lazy governance and pretty stupid too.

There are smaller households or efficient households that barely use any water - they should be rewarded and not asked to cut even more (which may be very painful on them to achieve). There are also larger, more wasteful households that probably should cut more than 25% (part of that may be tied to landscaping - and I think Brown plans to prohibit lawns as well - which some other Southwest communities have tried). Sacramento and LA consume much more water per capita than SF or Oakland. Likewise, some businesses consume more or less water per employee (or per $revenue) due to the nature of the business.

Why not implement quotas instead? Depending on the severity of the drought in your county, you are allotted x gallons/day per capita. If you remain below the quota, you get a rebate. If you exceed it, you pay a penalty with growing magnitude. Maybe some waivers and exceptions can be put in place for unusual circumstances. Frankly such a system should be in place with or without the presence of drought.

But of course the water cuts ignore the elephant in the room - CA agriculture, which accounts for 80% of state water usage (BTW the energy sector is also exempt, and they use a ton of water for power plants, drilling, etc.). CA farms don't even use drip irrigation like Israel - they just spray water indiscriminately because it's subsidized (which also causes a lot of runoff with harmful fertilizer/pesticide chemicals sickening the locals). CA economy is both high and low tech, but the mix has to evolve to favor high tech. Tech and service industries produce way more GDP per capita and per unit of resources (and often much less environmental impact) vs. farming. The only profitable farming these days (apart from cannabis) is large corporate ag. Profits are concentrated to the owners and execs, and workers are often temporary and poorly-paid with few benefits. I understand that not everyone can be a software engineer or account manager, but if we're in a crisis and we have to pick what parts of our economy/society to protect, and what parts are less critical, I don't think there are many strong arguments in favor of farming. 

Apart from wine grapes, I don't think there are many crops that have to be grown in CA these days. With global trade, we can get produce and other foodstuffs from anywhere. Already many of our fruits and veggies come from south-of-our-border, nuts from the Maghreb/Middle East (CA almonds are a noteworthy culprit), and rice comes from Asia. We might as well go all the way. Maybe there is some risk associated with a dependence on foreign imports, but there's also a lot of risk associated with giving CA farmers the lion's share of our dwindling potable water. And currently, desalinization is very expensive (maybe not quite cost-prohibitive, but close) and harmful to local sea life. Maybe farmers could pay a water tax to help fund desal?

Environmental conditions have caused human migrations and adaptations since the beginning of our history. Just because we settled and farmed the CA Central Valley in the past doesn't mean that we have to always. And it's not like we'd be losing so much - Central Valley communities lead the state in terms of unemployment, some forms of pollution, and crime, significantly contributed to the housing bust, and all their structures are in a flood plain with 100 year old levees. Maybe it's best if we stop the "making the desert bloom" experiment, and stick to the coasts? Just maintain an urban, non-resource-intensive society and economy. Like Dubai, but without the crazy construction projects. Let the Central Valley return to its natural state. Just putting it out there.

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After discussing this issue with some economists at work, there is of course the libertarian-market approach (for better or worse). Forget quotas and reduction targets - just open up water to market forces and let people decide how much it's worth to them. Of course there are a lot of practical considerations and details that need to be resolved, but "properly priced" water will eliminate the wasteful farmers (using a lot of water on low-profit crops like alfalfa), and people will only buy what they can afford to use. There should also be a water credit for low-income or at-risk persons/groups to ensure that they have fair access to a minimum living supply, no matter the market price. But like most traded products, I can see such a system vulnerable to exploitation/manipulation by certain privileged groups at the expense of the less sophisticated.

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I think the privileged groups is pretty clearly the farmers. As you note, they use 80% of California's water to produce 2% of California's economy. They pay 1/10th of the consumer rate for water. I think the attached graphic pretty well illustrates it.

Why should consumers go through radical water savings techniques when the real solution is to increase the rate farmers pay? You're pretty much squeezing water from a stone from residential users as it is to get further efficiencies. 

San Diego is spending billions to build a desalinization plant when almond farmers are spraying water like there's no tomorrow. It's a horrendous misallocation of resources. Even if we didn't fully marketize the price of water, even bringing it a little more in line with market forces would go a long way to hitting water reduction targets.

 

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For a seasoned, liberal politician, Brown has proposed and implemented some pretty questionable stuff during his recent tenure. As you said, the 25% residential-business cutback is a complex, unfair way to barely affect the problem - while ignoring the no-brainer, big-impact approach.

I was also surprised how small a % of CA GDP ag was. Anything that consumes 80% of a scarce resource and returns 2% of value should get cut. But they have political clout, so it's much easier to lean on residents/SMBs who can't as easily take collective action. Time to relocate to Oregon? :P

 

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It is interesting to note that in the us there are some things that would be unobtainable if ca stopped producing:

Artichokes 99% of us consumption, broccoli 94%, cauliflower 89%, celery 95%, garlic 95%, almonds 99%, apricots 97%, figs, grapes, kiwi, nectarines, olives, pistachios, plums, and walnuts all over 90%. 

https://motherjones.com/files/2agovstat10_web-1.pdf

So off shoring of our food may be possible but it will be painful for many foods.  But all those pointing at irresponsible California and its water wasting aren't putting their money where there mouth is (literally) and mostly non Californians benefit from the water subsidies.

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But you have to wonder - why aren't other states growing those crops? It's not like they can't if they really needed to, and other states have more favorable tax/labor/regulatory environments. I know CA soil and climate are pretty good, but I don't think it's such a differentiator. Maybe the economics just don't make sense for the rest of the US? And for scale - CA's ag sector was $34B in revenue in 2009 (with profits of $8.8B), vs. $21B for the runner-up Iowa - a much smaller state. So to normalize for geography, actually CA is not that grand. We just have a diversity of crops, which may not be unique to CA. Ironically if you look at the financials on pg. 24 of the doc, they don't even list water as a cost, so I have no idea what they're paying.

Say we did significantly cut back on CA ag production - we would have shortages of some of those products in stores. Prices would go up for the produce that people really wanted, but suppliers would respond by planting more of those in other states (or we would import more). Maybe they don't taste quite as good or the fruits are a bit smaller, but it would get to market in a season or two. Heck, it's not like CA grows those crops all year either - when CA farms are fallow or those crops are out of season, we get supply from greenhouses (which don't have to be in CA) or foreign farms anyway.  

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Apparently CA is not the only place where business interests are exacerbating a water crisis:

http://rt.com/news/167012-coca-cola-factory-closed-india/