In 2012, the drought-stricken Western United States will ship more than 50 billion gallons of water to China. This water will leave the country embedded in alfalfa–most of it grown in California–and is destined to feed Chinese cows. The strange situation illustrates what is wrong about how we think, or rather don’t think, about water policy in the U.S. (Source WSJ, quoted here.)
Why does the federal government subsidize sending 50
billion gallons of water to China? The reason is politics and special interests. The alfalfa farmers who benefit from these subsidies are concentrated and each gains significant benefits from artificially cheap water.
The millions of taxpayers who each “contribute” small slices of their tax payment to support alfalfa growers have no idea the program exists much less how to end it. Those who would benefit from ending the subsidies are scattered and lose far less per person than the handful of gainers gain.
This water diverted to alfalfa and shipped to China is water that would enrich marine ecosystems downstream and could help revive salmon habitat, oyster beds, and other marine natural resources if set free by markets to flow toward higher-valued uses.
Welcome to the world of government. This isn’t the way government is taught in schools, but in the real world, this is most of what politicians and government agencies do day-to-day. Governments transfer taxes to subsidies and regulate commerce. These policies distort behavior and add friction to economic life. Water flows to concentrated special-interest farmers, and cash flows from corporate farmers, trade associations, and lobbyists toward congressmen who protect these interests.
Environmentalists have entered the fray to battle agricultural interests and push for their own special interests (delta smelt, other marine animals, “wild and scenic rivers,” marine protected areas).Why not allow people who want fresh water to make payments for it, allowing farmers, fishermen, environmentalists, and delta smelt fans to bid for limited fresh water flows? These water users would compete with and coordinate water use with people wanting water for showers, flowers, and lawns downstream in California cities and suburbs. (Plus those oystermen and hungry consumers wanting to revive coastal oyster beds, discussed below.)
Market critics might claim there isn’t enough water for water exchanges to work. But compared to what? Compared to politicians and special interests subsidizing sending fifty billion gallons of fresh water usage to feed cows in distant lands across the deep blue sea?
Chris Edwards and P.J. Hill in Cutting the Bureau of Reclamation and Reforming Water Markets, give the history, politics and wasteful economics of current programs. Irrigation is generally a good thing, but not always and not everywhere and not forever. Transporting water from one place to another is a lot like transporting cars. People build transportation infrastructure and expect it to be paid for by those who benefit from it. When governments decide for political reasons to spend tax dollars to build “bridges to nowhere,” the costs are higher than possible benefits. So it is with many federal water reclamation projects. The costs for building them can be higher than benefits of transporting water from one place to another. And then, over time, higher-value water uses emerge, but government water reclamation project waters are often frozen to past uses.
Water reclamation, agriculture, and delta smelt might sound like upstream issues and not directly marine natural resources. But the water diverted to alfalfa bound for cows in China, or diverted for desert rice or other thirsty low-value California crops, has direct impact on higher-value downstream uses, including oyster and other harvests that could be restored.
The California alfalfa harvest need not be decimated by ending water subsidies. It turns out that spring harvests are the most productive and require the least irrigation water. It is the heavily-irrigated summer harvests that are the least productive. This peer-reviewed Forage and Grazinglands article explains:
This mid-summer deficit irrigation strategy consists of full irrigation to meet crop demand during the early part of the crop season and no irrigation (deficit irrigation) during mid-summer. This approach maintains the relatively high yields in spring that contribute to most of the seasonal yield, and reduces yields during the summer when production generally is low and quality is poor. … The sale of the water not used during the mid-summer period could compensate the grower for the reduced revenue from lower alfalfa yields caused by mid-summer deficit irrigation. (Source.)
Reduced subsidies and water markets would deliver fresh water to higher-valued oysters and other coastal marine creatures and ecosystems
California’s largest fishery? For many years it was oysters. The oyster industry boomed in San Francisco bay in the late 1800s and early 1900s. On the way to a
presentation to debaters in Hayward, California, I noticed a turnoff to Oyster Bay. Below is a image of plaque for the San Leandro Oyster Beds. (s
ource)
So where have all the oysters gone? Oysters require plentiful fresh water flowing into coastal bays. As fresh water flows were diverted to upstream agriculture, and pollution from local industry increased, local oysters couldn’t survive. (Oysters are
discussed in a number of earlier posts due to their importance as a marine natural resource. Oysters filter water, keeping it clear and provide fine dining experiences for sea turtles, sea mammals, birds, and the author of this pro-oyster policy post.)
Maybe it is okay that oyster beds and harvests have declined along most of America’s coastal areas. Lots of people don’t like oysters. They are sort of yucky in texture and taste for those not used to them. And “everyone knows” that California suffers from ongoing water shortages. So maybe fresh water should continue flowing to other uses. And for that, the EPA has a plan…
Unfortunately, EPA five-years plans are just as likely to fail as Soviet five-years economic plans did in the old USSR. Central planners lack the information needed to weigh alternatives, and underestimate the role of incentives in shifting behavior. Planners also underestimate the ability of entrepreneurs to discover ingenious solutions to scarcity problems.
The 2012
EPA’s Action Plan cover shows birds in a dead tree looking down on a lagoon. Perhaps they are waiting for the next truck bringing endangered Delta smelt to pump into the lagoon (the story is that predator fish recognize and swim toward the sound of arriving diesel trucks pumping endangered delta smelt into their new–though very temporary–homes).Solutions aren’t simple, but they start by allowing water users to exchange water up and down rivers and along irrigation systems. The authors of
Cutting the Bureau of Land Reclamation and Reforming Water Markets argue for federal land reclamation and irrigation projects to be turned over to states and regional authorities. I’ve recommended
PERC’s study on Environmental Water Markets.
How is this topical for students advocating reforming federal marine natural resource policies? Fresh water is most highly valued along coastal areas where population is the most dense (not that coastal people themselves are necessarily dense).
Increased freshwater flows to coastal areas will release more fresh water into coastal marine ecosystems. Oyster lovers want these increased freshwater flows to return rich oyster harvests in Oyster Bay, San Leandro, and to other California coastal bays and estuaries.
How is this topical for students advocating reforming federal marine natural resource policies? Fresh water is most highly valued along coastal areas where population is the most dense (not that coastal people themselves are necessarily dense).