Why Water Prices Are Rising

America’s water crisis is a governance problem, not a scarcity problem

By Julia R. Cartwright of AIER. 

"America is good at solving problems, but less good at recognizing when the “solutions” become the problem. Nowhere is this more evident than on your water bill, which has risen more than 27 percent over the past five years and is increasing at roughly twice the rate of inflation. Politicians and journalists point to aging infrastructure, climate change, and per- and polyfluoroalkyl substances (PFAS) contamination. They are not entirely wrong. What they often omit is how decades of well-intentioned government intervention have systematically weakened the market mechanisms that might otherwise help keep costs in check.

Consider gasoline. Drivers may not like what they pay at the pump, but the price is determined in global markets where no single regulator sets it. The market aggregates information from millions of producers and consumers and generates a price that, whatever its imperfections, reflects underlying conditions of scarcity and demand. Water operates very differently. Its price is shaped by a maze of legal doctrines, regulatory mandates, utility commissions, and interstate compacts accumulated over more than a century. Each layer places additional distance between the resource and the consumer, making prices less transparent and less reflective of underlying realities. 

This is what makes the situation so puzzling. Markets are remarkably effective at directing resources to where they are most needed. Hong Kong, Singapore, and Japan are three of the world’s most prosperous economies, yet they share one notable characteristic: a scarcity of natural resources. They possess little oil, coal, or rare earth minerals, and yet they thrive because markets reveal prices, coordinate investment, and allocate resources to their highest-valued uses. Scarcity, it turns out, is not an obstacle markets cannot overcome. It is often the very incentive that drives innovation and efficiency.

Water, by comparison, is an unusually ordinary resource. It is more abundant than oil, easier to treat than rare earth minerals, and across much of the United States, it literally falls from the sky. So why is America facing a slow-motion water crisis while Singapore can recycle wastewater to semiconductor-grade purity? The answer is not geology or climate. It is governance.

Some will argue that water is fundamentally different—a natural monopoly with relatively inelastic demand and pervasive externalities, where actions upstream affect everyone downstream. Those characteristics are real. Yet similar challenges exist in markets for oil, coal, and rare earth minerals, and markets have still found ways to move those resources across oceans to countries that possess little or none of them. To understand America’s water challenges, we must go back to a series of legal and political decisions that began before the Civil War and have compounded ever since. Let’s dive in (pun intended).

The first distortion predates federal regulation entirely. American water law split into two doctrines before the country was even fully defined. In Eastern and Midwestern states, riparian rights gave water access to whoever owned adjacent land; geography, not prices, determined access. In most Western states, prior appropriation, “first in time, first in right,” meant whoever diverted water first held the senior claim, regardless of the proximity of future landowners. Neither doctrine consistently allowed water to flow to its most productive use, as both locked allocation in place by accident of history. This was not a free market distorted by regulation, but one that was never permitted to form. 

On top of that foundation, Congress layered environmental mandates over many years. The Clean Water Act (1972) and the Safe Drinking Water Act (1974) set uniform standards every utility must meet, regardless of local conditions or costs. Each new regulated contaminant means a new compliance cost passed directly to ratepayers with no competitive check. PFAS regulations (2024) alone now add an estimated $1.5 billion annually in system-wide costs.

Meanwhile, most Americans cannot choose their water provider. One pipe, one utility, no exit.

Investor-owned utilities have learned to leverage that captivity through mechanisms that pass capital costs to ratepayers, combining the pricing power of a monopoly with limited cost discipline.

This dynamic, where customers have nowhere else to turn, creates a system ripe for upward price pressure with little accountability. And the Colorado River Compact (1922) illustrates just how deep this dysfunction runs: negotiated by political compromise, it divided water among states by seniority of claim, locking in agriculture’s consumption of 80 percent of the river’s flow simply because those rights are oldest. Meanwhile, cities that would generate far greater economic value per gallon are legally prevented from buying that water at any price. The result is a river stretched to its limits, serving yesterday’s economy by law, while growing urban centers go thirsty by design.

Decades of regulations that distorted water prices also resulted in them being too low in some 

municipalities. These layered laws subsidized the construction of entire cities in places that markets never would have chosen: dry desert cities like Las Vegas, Phoenix, and Tucson. The logic was circular: keep prices low enough that growth looks cheap, and the growth generates political constituencies that demand prices stay low. It is precisely the logic of subsidizing flood insurance for beachfront homes, except the moral hazard here is measured in millions of people and entire metropolitan economies that now require ongoing federal intervention just to stay hydrated. 

The solution is to move water more fully into the market, allowing prices to reflect scarcity and capital to flow toward conservation and innovation. In practice, that means a managed transition in which rates gradually move toward market levels, whether higher or lower. Most importantly, it means eliminating the policies that created the problem: below-cost agricultural water contracts, federal development subsidies that ignore water costs, and interstate compacts that lock 1922 decisions in place indefinitely. It also means stopping policies that make it artificially cheap to build the next Phoenix in the desert.

Your water bill isn’t rising because water has become more expensive. It’s rising because we’ve built a system specifically designed to ensure that price has little to do with it."

DATA CENTER MYTH V. REALITY

From Taxpayers Protection Alliance. They used 0.06 percent of water in 2025 in Maryland and 2.5 percent of electricity.

 

Water, Water Everywhere—Except in California’s Reservoirs

A winter respite from drought was all too brief. Dredging would solve the problem in the long term

By Edward Ring. He is director of water and energy policy for the California Policy Center. Excerpts:

"In the final week of 2025, more than 1.3 million acre-feet poured into the bay (San Francisco)—enough water to supply all the state’s water consumption other than farms for nearly two months. But California water officials captured less than 7% of the incoming flow because of onerous environmental restrictions. The rest flowed out to sea."

"There’s a solution that would safely permit Californians to harvest far more water from the Sacramento-San Joaquin Delta"

"This could make millions of additional acre-feet of water available for all Californians."

"Beginning in the late 19th century, California farmers regularly used their own equipment to dredge the delta channels."

"those farmers deepened the delta channels and spread over their surrounding farmland the rich silt they excavated or used it to reinforce the levees."

"environmentalists essentially ended the practice in the 1970s." 

"One of the central claims is that dredging kills protected native salmon. Precisely the opposite is true: The bigger threat to the state’s salmon population is the presence of striped and largemouth bass"

"In the old days, thanks to dredging, salmon still had access to deep channels with the cooler waters that they prefer and bass avoid."

"Without dredging, the delta’s waters are shallower and warmer. When environmentalists countered with expensive government salmon hatcheries, the bass adapted, hiding in the shallows surrounding the hatcheries, where they are treated to an endless buffet of salmon fingerlings."

"Without dredging, water officials who see storms coming quickly drain their reservoirs to make room for water. Dredging allows more water to flow through the delta without flooding, so water officials can keep reservoirs full"

"Channels deepened through regular dredging would greatly increase the overall volume of fresh water in the delta." 

Claims of data center water use are laughably wrong

By Mark Lisheron. He is the Managing Editor of the Badger Institute. Excerpts:

"Early on in the proposals made by Vantage and Microsoft, developers explained that both campuses would be using something called a closed loop cooling system. Rather than perpetually passing cold, fresh water past hot computer units, a closed loop system uses a kind of antifreeze that circulates in the system and is cooled by a chiller.

The evaporative cooling systems used by most older data centers, including Microsoft’s five centers in West Des Moines, Iowa, spend millions of gallons of fresh water that is either lost in evaporation or is reclaimed by the local water utility.

In a closed loop system, no liquid is lost or needs to be replaced. Such systems are heavier on power use but much lighter on water use than open-air evaporative systems."

"The data center will get its water from Lake Michigan, just as Port Washington residents have since 1901. But Vantage’s plan calls for the use of only up to 10,000 gallons of water for the daily operation — not unlike the uses in a factory or an office building, and about the same amount of water used by the people living in 65 homes."

"“It sounds like a big number; 2.8 million gallons [per year],” Smith said, from a transcript obtained by the Badger Institute, “is the amount of water that it would take to build four Olympic-sized swimming pools.

“Just to compare that, when Foxconn was planning to build here, they were permitted to use more than 7 million gallons every day. So, 2.8 million a year is tiny compared to 7.8 million a day.

“Lake Michigan has enough water to fill 2 billion swimming pools. Good news. Lake Michigan has nothing to fear from our data center.”"

"Microsoft has five data centers and a sixth in the works in West Des Moines, for example. The data centers are regularly the largest single water users in West Des Moines, Christina Murphy, general manager of the West Des Moines Water Works, said. 

At their peak usage, the data centers represent between 2 percent and 7 percent of the city’s peak usage, Murphy told the Badger Institute.

“Microsoft has been a good corporate partner,” she added.

Northern Virginia, with the greatest concentration of data centers in the country (more than 250), has had no problem supplying water to them and no violations of water use limits, according to a report by Virginia’s Joint Legislative Audit and Review Commission.

More than 80 percent of the data centers in the state use about 6.7 million gallons of water a year, not per day, the report said. Eleven used more than 50 million gallons a year, but at least as many used less water annually than a typical household, the report said."

Your showerhead is lying to you

Higher pressure is a blessing in more ways than one

By Mark Lasswell of The Wahsington Post. Excerpts:

"Intrepid researchers at the University of Surrey had placed sensors in 290 showers around campus, recording data for 39 weeks from 86,421 individual shower sessions. “Water consumption,” the study found, sensationally, “was reduced by up to 56% with high water pressure.”

The researchers, seeming puzzled by the results, recommended more study. But they also offered a theory along these lines: When a showerhead delivers a good, fizzing spray, people pop in and briskly get their business done, unlike when faced with a drizzle that prompts them to wonder if the Head & Shoulders will ever be adequately washed off their head and shoulders.

One researcher, perhaps trying to reassure eco-warriors distressed by the news, noted: “The best of all worlds is high pressure, low flow.” This is true, just as in the cake realm the best of all worlds is having it and eating it too. The showering ideal might be achievable in controlled laboratory conditions, but we all know what happens in the tiled wild."

A Big Panic Over Tiny Plastics

Science can detect increasingly small particles of plastic in our air and water. That doesn't mean it's bad for you.

By Mike Pesca of Reason. 

"A study published in the Proceedings of the National Academy of Sciences (PNAS) in January has been used for a media wave of scaremongering about plastic residue in bottled water. Its results are based on a system developed by researchers at Columbia University and Rutgers University that uses a "hyperspectral stimulated Raman scattering (SRS) imaging platform with an automated plastic identification algorithm that allows micro-nano plastic analysis." That sounds impressive, and it really is, relying on an immersive tank, lasers, and advanced computational techniques.

The study's major contribution to science was actually not in coming up with an estimate of the amount of plastic in bottled water, but in inventing a technique that could detect nanoplastics at all. Nanoplastics, as the name implies, are much smaller than already tiny microplastics. Microplastics can be as small as one micron in size, 1/83rd the width of a strand of hair.

The smallest-sized particles the researchers picked up measured 100 nanometers. This means we can now detect bits of plastic so small that 10 million of them would amount to a piece of microplastic a fraction of the width of a hair.

Just as a stronger telescope will discover more planets, or a better microscope might tell us there are more bacteria in a petri dish than we previously knew, so too did this impressive newfound ability to see infinitesimally small bits of plastic mean that they discovered a seemingly infinite amount of plastic.

Nearly every news outlet hit concerned thirsty Americans with headlines such as "Scientists Find About a Quarter Million Invisible Nanoplastic Particles in a Liter of Bottled Water" (Associated Press) and "Bottled water contains hundreds of thousands of potentially dangerous plastic fragments: Study" (The Hill), as if the 240,000 figure is directly meaningful to their readers.

The number of pieces of plastic, as opposed to the amount of plastic, is irrelevant to the danger (if there even is a danger), but the aim was to communicate dread at all of the tiny shards of toxicity loosed upon our water-gulping bodies. It's like pretending it is actually informative about our colorectal risk from eating beef to reveal we are consuming more than 30,000 grams of beef a year vs. the equivalent 66 pounds. The number of discrete units on any arbitrary scale is not what's important for our health risk; it's the total weight.

To be clear, the PNAS paper didn't just convert microplastic units to nanoplastic units. The techniques did allow for the detection of a greater amount of plastic in the water, but the implications of that were played up in the media in the most dire way possible. The Washington Post headline referenced "100 to 1000 times more plastics." The subhead of that article proclaims: "A new study finds that 'nanoplastics' are even more common than microplastics in bottled water." In that article we are told, "People are swallowing hundreds of thousands of microscopic pieces of plastic each time they drink a liter of bottled water, scientists have shown—a revelation that could have profound implications for human health."

Emphasis on "could." There are no good studies on what the effects of these particles are. Most of the media outlets that covered the nanoplastic discovery disclose that there's never been a documented effect on health from the particles, but they still can't resist framing the discovery with maximum alarm.

Every person breathes, and has breathed in since the dawn of time, nanoparticles. They are in decomposing skin, leaves, and ash. Plastic is different, to be sure, which is what the current studies are properly concerned with. We do know that bottled water contains small bits of plastic, the oceans contain small bits of plastic, and our tap water contains small bits of plastic.

What we don't know is how any of this plastic may, or may not, affect us. The panic thrust upon us by almost all the media framing is premature and in many cases antithetical to the actual processes of scientific inquiry. A headline such as Earth.com's "Over 240,000 cancer-causing nanoplastics found in bottled water" is not just quantitatively illegible, it's an assertion not based on any proof of carcinogenic effect. Likewise, a recent article in The New Yorker titled "How Plastics Are Poisoning Us" is interesting, taught me things I didn't know about small plastics and "nurdles," and excited my interest in further research, but what it didn't do was present any proof that plastics are poisoning us.

The scientists behind the study themselves said they've personally reduced the amount of water they drank out of bottles. Columbia's Wei Min claimed he cut his bottled water consumption in half.

In half? I doubt lung cancer researchers cut their smoking in half. Did Herbert Needleman, the researcher who proved the effects of lead on child development, react by painting his son's nursery walls with only one coat of lead paint instead of two? The nanoplastic chemists are showing proper caution, but their continued use of some level of bottled water rebuts the more fearmongering claims attached to their work.

One example of proper perspective appeared in an Associated Press article quoting Denise Hardesty, an Australian government oceanographer who studies plastic waste. She pointed out that the total weight of nanoplastics found in a bottle of water was the "equivalent to the weight of a single penny in the volume of two Olympic-sized swimming pools."

I once swallowed a penny. I lived. We all have swallowed lots of water—bottled, tap, and maybe even from swimming pools. All of this water will have infinitesimally small pieces of plastic in it which science is now able to detect and count. The numbers associated with these tiny bits of plastic will be quite large. The conclusions we should draw from the huge counts are not quite nil, but are many orders of magnitudes less significant than the media panic over nanoplastics we're swimming in."

Supreme Court Clarifies Murky “Waters of the United States” Definition: It No Longer Includes Mud Puddles

By Jay Schweikert and Isaiah McKinney of Cato.

"This week, in Sackett v. EPA, the Supreme Court closed the book on Mike and Chantell Sackett’s 19 year saga of trying to build on their land. In 2004, the Sacketts purchased property 500 feet from the shores of Priest Lake, Idaho. In 2007, after they started to fill in wet spots in their property so they could build a home, EPA officials informed the Sacketts that their property was a wetland adjacent to a tributary that fed into the lake, and therefore counted as “navigable waters” under the EPA’s jurisdiction pursuant to the Clean Water Act (“CWA”). The Sacketts would need to get a permit if they wanted to build, and a permit, if the Sacketts could get one, would cost them hundreds of thousands of dollars. The Sacketts challenged the EPA’s decision, but the lower court decided the EPA’s order was not “final,” so the Sacketts could not challenge it. The Sacketts appealed, eventually going to the Supreme Court in 2012, which held that the EPA’s decision was a final order and the Sacketts were able to challenge it.

11 years later, the Sacketts were back at the Supreme Court, this time asking whether their property could be regulated as “waters of the United States” under the CWA. This is the fourth time the Supreme Court has addressed the scope of this provision—and this time the Court got it right.

The story of CWA regulation and litigation is too long and confusing to tell here in full. But the last time the Supreme Court addressed the scope of “navigable waters”—which the statute further defines as “waters of the United States”—in 2006, the Court split 4–1‑4, so there was no controlling majority. The two main opinions from that case, Rapanos v. United States—written by Justices Scalia and Kennedy respectively—disagreed on the test that should be applied to determine if a wetland was “waters of the United States.” Justice Scalia’s test would apply to “permanent, standing or continuously flowing bodies of water,” and wetlands that shared a “continuous surface connection” to such permanent bodies of water. Justice Kennedy considered this term more broadly to include all bodies of water that had a “significant nexus” with navigable‐​in‐​fact waters.

Lower courts split on which test to apply, but most courts applied Justice Kennedy’s broader test. One of the issues with his test, however, was that “significant nexus” had no real limiting principle. Land that was in no way connected to navigable waters, but which was damp for a couple months of the year, could be regulated as “waters of the United States” because sufficient water molecules from that land interacted with nearby bodies of water. Justice Kennedy’s test was indeed expansive.

This week, the Court unanimously rejected the significant nexus test and held that the EPA lacked jurisdiction to prohibit the Sacketts from building on their land. Justice Alito, writing for the majority, essentially adopted Justice Scalia’s test from Rapanos. Quoting from Justice Scalia’s opinion, Justice Alito explained that the term “waters of the United States” is limited to “only those relatively permanent, standing or continuously flowing bodies of water forming geographical features that are described in ordinary parlance as streams, oceans, rivers, and lakes.” But amendments to the CWA, in a provision discussing permits, state that the EPA can regulate not only “waters of the United States,” but also “adjacent wetlands.” These “adjacent wetlands” must not be distinct and separate from “waters of the United States,” Alito explained, because otherwise the amendments would be drastically changing the scope of the statute via an ancillary provision. Congress was not changing the scope of the CWA by allowing permits for wetlands. Rather an “adjacent wetland” is an “indistinguishably part of a body of water that itself constitutes ‘waters’ under the CWA.” Therefore, as Scalia wrote in 2006, “adjacent wetlands” must be connected to navigable waters via “a continuous surface connection.”

This decision brings clarity to an area of the law that has been infamously obtuse. The scope of the CWA has bounced back and forth for decades, leaving farmers, homebuilders, and property owners across this country in confusion on what they can and cannot do on their property. Not only did the Supreme Court pen a happy ending for the Sacketts—they will now get to build their dream home—but property owners everywhere have received much needed clarity on whether their property qualifies as “waters of the United States.” Not only did property rights win the day, but so also did clarity and simplicity."

Nicholas Kristof says we should let the market allocate water

See When One Almond Gulps 3.2 Gallons of Water. Excerpts:

"One study found that 88 percent of water in 17 Western states was used by agriculture. Only 7 percent was consumed by homes."

"California produces a bounty of almonds, which gulp about 3.2 gallons of water for each almond, according to a 2019 study."

"A central problem is that water isn’t allocated by market price but inefficiently through a muddle of irrigation rights that were mostly awarded on a first-come-first-serve basis. This water is so cheap that there is little attempt to conserve or develop technical innovations to use less water.

Many of the shortages would disappear if water were rationed the way goods normally are in a market economy, by price: Farmers would not irrigate almond orchards if they had to buy 3.2 gallons of water at market rates to produce each almond.

Mostly we’re a market economy, but water allocation resembles a 1970s Soviet system, with the same lack of price signals and consequently the same inefficiency. Any rationalization of the system and raising of irrigation costs would be wrenching — consider a farm family that has gone into debt to plant a large almond orchard — but there is no other sensible path forward."

Why California Insists on Wasting Its Scarce Water Supply

Harvesting its abundant storm runoff would allow the state to leave the Colorado River alone

By Edward Ring. Mr. Ring cofounded the California Policy Center in 2013, served as its first president, and is a senior fellow. He is the author of “The Abundance Choice: Our Fight for More Water in California.” Excerpts:

"If California’s political leaders had the political will, they could solve the problem for every member of the Colorado River Compact by developing infrastructure to use untapped sources of water. But to do that, the state Legislature would have to stand up to a powerful environmentalist lobby that views humans as parasites and demands rationing as the only acceptable policy."

"in a single month, December 2021, well over 100 million acre-feet of rain fell during the one big storm that hit the state that year. If California had the capacity to capture more of that water, it would have been enough to supply full allocations to Golden State farmers and avoid rationing in cities."

There are two major projects that could unlock millions of acre-feet of new water for Californians. The first is to eliminate nutrient pollution in the San Francisco Bay, which feeds toxic algae blooms that kill aquatic life. The solution so far has been to dilute the nutrient loads in the bay by requiring massive diversions from the Sacramento-San Joaquin Delta—a little like flushing a toilet. But upgrading the urban wastewater-treatment facilities surrounding the bay would eliminate nutrient pollution, permitting more delta water to be directed to California’s farms and cities—a lot more water.

This rainy season started in October 2022. By the first day of spring, March 21, the net outflow (after pumping) from the delta into the bay was 11.6 million acre-feet but the state had only pumped 1 million acre-feet into the California Aqueduct, and the Federal Bureau of Reclamation had only pumped 826,000 acre-feet into the Delta-Mendota Canal. Despite record precipitation, the state had diverted only 13% of flood-level delta outflows into southbound aqueducts.

In late March and early April, as rain continued to pour in California and the biggest snowpack in decades began to melt, California’s water officials actually reduced pumping. Their reason? To protect endangered fish and maintain sufficient flow to flush out the nutrient pollution in the San Francisco Bay.

Even in a year with extraordinary rain and snow, California’s environmental extremists have done their utmost to prevent water managers from filling reservoirs, allow pumps to operate at capacity to fill the southbound aqueducts, and allow farmers to get their full water allocations so they can use runoff to irrigate instead of pumping already depleted groundwater. But even if California’s state government weren’t dominated by extremists, California’s water infrastructure would be stretched to the limit.

The second major project, then, would be for Californians to build new ways to extract and store water from the delta during atmospheric river events. A new technique, already demonstrated on the Tuolumne River, creates channels in some of the delta islands so that huge perforated pipes can be installed under a gravel bed. Fish aren’t endangered by such installations. This water could be rapidly transferred to aquifers south of the delta via surface percolation and deep injection. Unused aquifer capacity in the San Joaquin Valley is conservatively estimated at more than 50 million acre feet.

If Californians were willing to harvest additional millions of acre-feet from storm runoff in the Sacramento-San Joaquin watershed, and had the means to do so, they might not need any water from the Colorado River. This is how California can give back not only its share of Colorado River water, but cover its annual deficit of 2 million to 4 million acre-feet. Other states in the Colorado Basin might help fund these projects. Thinking big solves big problems. It’s time for California’s state Legislature permanently to solve the challenge of water scarcity in the American Southwest."

The southwestern US has plenty of water

By Scott Sumner.

"Many people are under the impression that the southwestern US suffers from a severe shortage of water.  In one sense that’s true.  The market price of water is set far below equilibrium. And that sort of price control almost always tends to lead to shortages.  If you set prices low enough, even Canada would have water shortages.  (Iraq has fuel shortages.)

But the southwestern US has plenty of water, far more than needed to provide a comfortable lifestyle for its residents.   Most people assume the region’s water problem is due to its climate and rapid population growth.  This is false—there’s plenty of water.

This region is dominated by California, which has a population of nearly 40 million.  It’s also one of American’s most urbanized states.  And yet the vast majority of California’s water is consumed by farmers.

California’s cities and towns have reduced their water use by 30% in the past 15 years, according to research from the Pacific Institute. Farm use dropped 15 percent between 1980 and 2015, according to a report from the Public Policy Institute of California.

But agriculture still consumes about 80% of California’s water.

If you doubled the amount of water going to California’s cities, you would still leave farmers with 60% of the total supply.  So why doesn’t this happen?  It turns out that water is sold to farmers at much lower prices than to city dwellers.  And even within the farm community, there are vast disparities, with Imperial Valley being a prime beneficiary:

Imperial’s water is also dirt cheap. Whereas farmers elsewhere in the state buy water for hundreds of dollars or more per acre-foot, the base rate for Imperial’s farmers is $20 per acre-foot. (An acre-foot is enough to support two to three California households for a year.)

Think about that final parenthetical sentence for a moment.

So why don’t farmers who benefit from cheap water sell it to the highest bidder?  After all, subsidies don’t create shortages where resale is allowed.  Unfortunately, there are legal barriers to reselling surplus water, which removes the incentive for farmers to use the water more efficiently.

Unfortunately, Western water laws can discourage conservation and limit the flexibility to move water to higher-valued uses. In many cases, legal rules can discourage or prevent water-right holders from leasing or selling their conserved water. To encourage greater adaptation, water policies should allow someone who needs water to pay another user to forgo water use or to invest in water conservation. But, in reality, a variety of procedural and regulatory requirements can thwart even the most sensible win–win water trades.

Part of the challenge is that, under the prior-appropriation doctrine, the status of conserved water is often unclear. “If a water user adopts more efficient practices that result in unused water, certain interpretations of the ‘beneficial-use’ requirement could cause that user to lose that portion of their water right,” Bryan Leonard, a natural-resource economist at Arizona State University, said in an interview. In some states, farmers who take steps to save water — perhaps by updating an irrigation system or lining leaky ditches — risk forfeiting the unused amount. “Use it or lose it” rules can also make it difficult to lease or acquire water for nonuse purposes, such as boosting in-stream flows for fish and wildlife habitat. . . .

Suppose the share of California’s water going to farmers fell from 80% to 60%.  How would this affect agriculture?  Some farmers insist that it would lead to land lying fallow, as the climate in places like the Imperial Valley is too dry to support farming without irrigation.  In fact, things are much more complicated—not all crops are equally water intensive:

Farmer Kevin Herman grows figs and almonds in the San Joaquin Valley and until four years ago maintained a small planting of figs in the Imperial Valley. He questioned the wisdom of using so much of a dwindling river for desert agriculture.

“Those farmers down there are putting on 7 and 8 acre-feet of water per year for hay, and I just don’t know if that’s a sustainable model,” Herman said. “There are so many people now needing that water and I just don’t think it’s the highest and best use.”

Some experts say Imperial Valley growers should shift to less water-intensive crops. Alfalfa, its leading crop, is notorious for using lots of water, as much as 10 acre-feet per acre each year. Statewide, “large acreage coupled with a long growing season make alfalfa the largest agricultural user of water,” according to a University of California report.

These last two quotes are from a National Review article discussing the Biden administration’s attempt to wade into this thorny issue.

Each year I drive through the Imperial Valley and southern Arizona along I-8.  I am continually surprised by the vast green fields I see out in the middle of the desert between Yuma and Tucson.  This has become a campaign issue, albeit for the wrong reasons:

Since 2014, the Saudi company Fondomonte has been pumping unlimited amounts of groundwater in the desert west of Phoenix to harvest thousands of acres of alfalfa crops. The alfalfa is then shipped back to Saudi Arabia to feed their cattle.

But a recent investigation from Arizona Central has revealed that Fondomonte, a subsidiary of Riyadh-based Almarai, has the bargain of a lifetime: for only $25 per acre annually, it can pump as much water as it wants. Nearby farmers pay six times more than the Saudi company.

This modern day watergate has become a campaign issue ahead of the contentious midterms but candidates across the ballot appear to agree that this is bad. Democratic candidate Katie Hobbs tweeted that “Our water should be for Arizonans, not for sweetheart deals to foreign corporations to grow crops to then send back to their country.”

It is an outrage, but it is sad that the public doesn’t become upset unless the issue is framed in crude nationalistic terms.  There is nothing wrong with using the Southwest’s water to grow alfalfa for Saudi cattle, if the water is priced correctly.  The real problem is not that Arizona’s precious groundwater is being (implicitly) exported to Saudi Arabia in the form of alfalfa, it’s that our dysfunctional system of water prices causes a grotesque misallocation of resources.

I doubt that we’ll be able to get rid of all water subsidies—farmers have too much political clout.  But at a minimum, we need to raise the opportunity cost of agricultural water use up to urban prices.  That requires efficient markets where farmers can resell water no longer needed because of improved irrigation techniques, such as drip irrigation or shifting to less water intensive crops.  If the price in resale markets is much higher than the subsidized price, then farmers will base decisions on water use on the alternative price for which they could sell the water to urban dwellers–its opportunity cost."

The Water Woes of Jackson, Miss., Explained

The Mississippi city is another example of failed local government

WSJ editorial.

"It’s inevitable these days that any urban calamity immediately becomes a progressive parable of systemic racism and “anti-government ideology,” as one columnist put it. That’s been the media spin after last week’s failure of a water treatment plant in Jackson, Miss., but the truth isn’t that simple. This is another local government failure of the kind that is becoming all too common in America’s cities.

Mississippi Gov. Tate Reeves said Monday that “we have returned water pressure to the city,” but Jackson residents suffered a week without a reliable water supply after flooding of the Pearl River overwhelmed the 30-year-old O.B. Curtis water treatment plant. Much of the blame belongs to chronic mismanagement by elected officials in the city of about 150,000, which is also the state capital.

***

Ensuring safe and reliable drinking water is fundamentally a local responsibility under the U.S. federalist system, with the state and federal government providing some oversight. But many cities like Jackson are struggling to perform this core government responsibility.

Jackson’s water woes aren’t new. In 2014, 90% of city voters approved a one percentage-point increase in the sales tax in part to fund water and sewer repairs. In the past nine years, the city has allocated nearly $490 million from its capital budget to water and sewers—about $3,200 per resident. But much of the money hasn’t been well spent, and the city’s water problems have worsened.

In the month before the flood, Jackson residents were under a boil-water notice—a frequent occurrence in the city—due to failed pumps at the Curtis plant. In April 2021, an electrical fire caused the plant to temporarily shut down, and a winter storm that year also interrupted the water supply for many residents for weeks. The city’s progressive mayor, Democrat Chokwe Lumumba, blames white state Republicans for not providing sufficient funding.

Yet the state made available nearly $170 million in loans and grants from 2016 to 2021 for Jackson’s water and sewer infrastructure. Earlier this year, Mr. Lumumba grumbled when the state offered another $25 million from federal American Rescue Plan Act funds because lawmakers insisted on exercising oversight on how the money was spent. The state had good reason.

In March 2020, the federal Environmental Protection Agency issued an Emergency Administrative Order to Jackson citing conditions “that present an imminent and substantial endangerment to the persons served” by the water system. The city had “failed to perform filter maintenance” at both of its water treatment plants, EPA noted. Jackson residents say the city doesn’t respond to calls when pipes burst or sewage backs up in their homes.

The progressive media narrative is that Jackson’s problems are the inevitable result of whites fleeing the predominantly black city, resulting in a shrinking of the local tax base. But many blacks have been escaping too. Blame lousy schools and infrastructure and a homicide rate that is among the highest in the U.S. In any case, city revenue increased to $264 million from $242 million between 2018 and 2020. Yet the city’s water and sewage disposal system ran $27 million in operating deficits during that time.

Uncollected bills are one problem. Faulty meters installed under a $90 million contract with Siemens in 2013 have resulted in the city losing as much as $1.8 million a month, according to the Jackson Water Sewer Business Administration. In March 2020 as Covid hit, the state imposed a two-month moratorium on water shutoffs owing to unpaid bills. But the city maintained a moratorium until September 2021, which meant the city collected less money to fund repairs.

***

Jackson’s competence problems read like those in Detroit and Flint, Mich. State receiverships helped fix their chronic fiscal and management problems, and this is an idea worth considering for Jackson. Gov. Reeves has promised to cover half the costs of the repairs for the current crisis, but Jackson needs more help than money alone can provide."

Water problems in Jackson, Mississippi (the price is too low, and government failure is the reason why)

From Tyler Cowen.

"I am now reading quite a few analyses of the problem, and so few mention price!  Even when written by economists.  I find this article somewhat useful:

“We are a city with very high levels of poverty, and it’s difficult for us to raise the rates enough to do large scale replacement type projects and not make it unaffordable to live in the city of Jackson,” said former city councilman Melvin Priester Jr.

Yet the cost of Jackson’s poor quality water is still passed on to families who don’t trust the tap and purchase bottled water — which can cost a family of four $50-$100 a month — to drink instead.

The city raised water rates in 2013, but the Siemens deal penned the same year came with an onslaught of problems, including the installation of faulty water meters and meters that measured water in gallons instead of the correct cubic feet. This made any benefits of the rate increase virtually impossible to see.

The results have been nonsensical. Over the past several years, the city has mailed exorbitant bills to some customers and none to others. Sometimes, the charges weren’t based on how much water a household used and other times, city officials advised residents to “pay what they think they owe.” Past officials said the city lacked the manpower and expertise in the billing department to manually rectify the account issues with any speed.

In trying to protect people during the persistent billing blunders, the city has at times instituted no-shutoff policies, which demonstrate compassion but haven’t helped to compel payment.

Today, more than 8,000 customers, or nearly one-sixth of the city’s customer base, still aren’t receiving bills. Nearly 16,000 customers owe more than $100 or are more than 90 days past due, a city spokesperson told Mississippi Today. Jackson water customers owe a total of $90.3 million.

As a result, the city continues to miss out on tens of millions of water revenues. In 2016, when officials first uncovered the issue, the city’s actual water sewer collections during the previous year was a startling 32% less than projected — a roughly $26 million shortfall.

And most generally:

“The nature of local politics is that city governments will tend to neglect utilities until they break because they’re literally buried,” he said. “One of the things that is a perennial challenge for governments that operate water systems is that the quality of the water system is very hard for people to observe. But the price is very easy for them to observe.”

From WSJ here is some important background information:

Unlike bridges, roads and subway lines, clean drinking water isn’t primarily funded by taxes. More than 90% of the average utility’s revenues come directly from constituents’ water bills.

In other words, the price is too low, and government failure is the reason why.  A higher price is no fun for a relatively poor set of Jackson buyers, but the city’s per capita income is 22k or so, and plenty of countries in that income range have satisfactory water systems where you can shower without closing your mouth.  You just have to get the institutions and incentives right.  It is remarkable to me how few people in the public sphere are making theses relatively straightforward points."

Warren Has a Plan for Your Drinking Water—but It’s Risky

Private utilities have a better record on health. Naturally, she wants to put them out of business

Seth M. Siegel. He is author of “Troubled Water: What’s Wrong With What We Drink.” Excerpts:

"academic studies consistently show that for-profit companies do a better job than government entities at removing contaminants from drinking water, as concluded last year in a report from the National Academy of Sciences.

One key reason for this is that there are too many drinking-water utilities. It would be logical to have a few hundred of them to handle water distribution throughout the country. Instead, the U.S. has about 50,000 water suppliers, many times the combined number of electricity and gas utilities. This amounts to more than 16 water utilities for every U.S. county."

"Such an unwieldy number of utilities leads to inefficiency and waste. Far worse, it has a direct effect on public health. The smaller the drinking-water utility, the greater the likelihood that it lacks the funds needed to hire highly skilled engineers, buy new treatment equipment, and replace aging infrastructure. Government companies are nearly 30% more likely than their private counterparts to incur violations of the Safe Drinking Water Act, according to a 2016 study in the American Journal of Political Science. Many of these violations go on for years, subjecting millions to water with unsafe levels of contaminants.

There are a few reasons for the disparity. Private water companies are subject to a layer of regulatory oversight from state public utility commissions from which municipal utilities are ordinarily exempt. When violations are found, regulators are often reluctant to hit small municipalities with fines, and are quicker to punish violations of private operators. That fear of a financial penalty encourages private companies to be vigilant."

"Fears of price gouging by private water companies are overblown, as state utility commissions have the authority to set rates."

Smartphones Are Unleashing the Promise of World Water Day

By Todd Myers. He is the Director of the Center for the Environment at Washington Policy Center, and the author of Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment. 

"“I would spend up to three hours per day just collecting water. Now I can walk a minute and get clean water,” says Roda Hagali, who lives in a small Tanzanian village.

In Tanzania and across the developing world, access to clean water is a serious problem, costing hours of human effort every day and keeping prosperity out of reach for many people. March 22 is World Water Day, and this year there is real hope that we can increase access to clean water and reduce waste. In many cases that hope comes from the screen of a smartphone.

Many of the most exciting improvements are occurring in Africa.

In Tanzania, even when water pipes are installed, they are often poorly maintained due to corruption and the challenging problem of collecting fees to maintain the system. According to Alex Burton of eWaterPay, about 40 percent of water pumps are broken just 18 months after they are installed.

eWaterPay is helping solve this problem. By installing payment systems at water pumps, collecting money becomes easier and more consistent. More than 90 percent of Africans have access to a mobile phone and the eWaterPay system allows people to pay from their phone, using an electronic tag that opens the faucet. The result is a win-win for users and for water system managers.

Alex Burton, CEO of eWaterPay, told me water managers see revenue increase by 340 percent. Additionally, water is now available 24 hours a day, and breakdowns are fixed quickly. “When there is a fault, there is an SMS message sent to the technician,” says Burton. “Faults have gone down from weeks to hours.” With eWaterPay money is made available for repairs, and managers have a strong incentive to keep their water customers happy.

The United States is not immune to similar problems. A study from researchers at Michigan State University warned that as demand for water increases, the number of people facing unaffordable water bills could triple. One problem is that households lose about 10 percent of water to costly leaks.

That fact spurred one person to act. “My first reaction was righteous indignation,” says Kerri Waters, who helped invent Buoy, a small attachment to a water pipe that tracks water use. She had lamented that she was “taking shorter showers, which is pleasure in my day,” rather than focusing on the more serious problem of waste caused by leaks.

With Buoy, consumers can track usage from their smartphones and quickly identify leaks and the most significant sources of water use. “When I realized how well I was doing on water use overall, my overall water use was so efficient that I stopped feeling guilty about that long shower in the morning,” she said.

Buoy can also shut off your water immediately with a click from your phone in the case of a catastrophic water leak. Insurance companies pay about $10 billion a year in claims due to water damage caused by leaks. Buoy identifies leaks and allows users to stop them in under a minute.

These tools are starting to catch on. The water district in my hometown of Sammamish, Washington, is creating an app that allows users to track water use and costs from their smartphones. Some utilities in California, where water is often scarce due to drought conditions, are doing the same thing.

Marriott hotels are also using market-based incentives—albeit without the smartphone—to save water. They offer Starwood points to guests who forego having their rooms cleaned and sheets replaced every day. The Make a Green Choice program notes that skipping a day of room cleaning saves 37.2 gallons of water.

The beauty of these solutions is that they are not mandated or subject to the whims of politics. People with smartphones can access tools that make water more available, cut costs, and reduce waste—and in the process, they help dramatically reducing the transaction costs of information and coordination, opening new opportunities to conserve resources.

World Water Day is a chance to marvel at that reality, and at the opportunities now available from California to Tanzania."

This product is also yet another example of how the environment is cleaned by capitalism (cheap water filter)

See Cleaned by Capitalism XXXIX by Don Boudreaux.

"Available from Amazon.com for $14.99 (and from other retailers at a similar price) is this handy device that filters and decontaminates water whenever someone uses it as a straw.  Lifestraw removes 99.9999% of waterborne bacteria and 99.9% of waterborne protozoa.  Each Lifestraw filters the amount of water that the typical person drinks in the course of a year.  Made (I think in Poland) by the Swiss company Vestergaard, Lifestraw – from its conception to the system that allows it to be produced and distributed and sold at a price that’s about 2/3rds of the amount of money that an ordinary American worker earns in a single hour – is a marvelous example of human ingenuity and of the largely unseen and under-appreciated productive power of a globe-spanning market.  This product is also yet another example of how the environment is cleaned by capitalism.  And since Lifestraw became available, the process of reducing water pollution is a bit less of a public good than it was before the availability of Lifestraw.

I thank Warren Smith for sending me this article about Lifestraw."

Billion-dollar dams are making water shortages, not solving them

By Fred Pearce of New Scientist.

"Dams are supposed to collect water from rivers and redistribute it to alleviate water shortages, right? Not so fast. It turns out that in most cases they actually create water scarcity, especially for people living downstream.

Almost a quarter of the global population experiences significant decreases in water availability through human interventions on rivers, says Ted Veldkamp at Vrije University in Amsterdam, the Netherlands. Those interventions primarily involve dams that take water for irrigation or cities, or to generate hydroelectricity.

Winners and losers

To investigate the impact of dams on communities, Veldkamp and her colleagues created a detailed modelling study that divided the world into 50-kilometre squares. They used this to assess water scarcity between 1971 and 2010, so they could identify the hydrological winners and losers from dam interventions.

.

The team found a drastic reshuffling of water-scarcity hotspots over time, with mostly people upstream benefitting from the capture of river flows, but those downstream left high and dry.

The world has spent an estimated $2 trillion on dams in recent decades. But Veldkamp’s startling conclusion is that the activity has left 23 per cent of the global population with less water, compared with only 20 per cent who have gained.

“Water scarcity is rapidly increasing in many regions,” says Veldkamp.  A recent study put the number of people living in areas of such scarcity for at least one month a year at 4 billion. Many blame climate change, but that emerges as only a small element in the new study.

Shifting resources

Large rivers in which upstream dam activity has led to water shortages downstream include the Yellow River in arid northern China; the Ganges, where upstream activity in India has damaged livelihoods in downstream Bangladesh; the Euphrates, where Turkish dams cause drought in Iraq; and the Colorado River, where US abstractions leave little water for Mexico.

Richard Taylor, CEO of the UK-based International Hydropower Association, which represents many dam builders, dismissed the findings.

“The major driver of building a reservoir is to store fresh water so as to smooth the irregularity of natural flows, absorb floods and guarantee minimum flows during drought periods,” he says. “These fundamental services are exclusively downstream benefits.”

Yet the study finds that the worst impacts of dams happen in months with the highest pressure on water resources. Veldkamp says dams also increase the average duration of water-scarcity events.

Under pressure

Many nations see dams as an important way to fight climate change – both by diverting water to alleviate shortages and by generating low-carbon hydroelectricity to replace power stations that burn fossil fuel. “In most parts of the world, water storage will be fundamental to the viability of human livelihoods,” says Taylor.

But Veldkamp’s findings suggest that, whatever the intention, collecting more water behind dams often aggravates shortages. Building more dams “might mitigate tomorrow’s climate change impacts for a certain group of people whilst putting others under pressure today,” she says."

California’s Wasted Winter Rains: The drought is over but the greens keep sending the water out to sea

From the WSJ.

"Hydrologic records indicate that this year could be the wettest on record in California."

"Most of the major reservoirs in the north are full, and some are releasing hundreds of billions of gallons of water to prevent flooding and make room for the melting snowpack this spring.

While farmers and communities downstream can capture some of the discharges, millions of acre-feet will invariably flow into the ocean due to lack of storage capacity and rules to protect endangered fish species. One problem is that while the state population has increased 70% since 1979, storage hasn’t expanded."

"five proposed reservoirs could add four million acre-feet of storage capacity at a cost of $9 billion. Yet environmentalists have opposed every significant surface storage project for three decades. The state is even razing four hydroelectric dams on the Klamath River that green groups complain impede fish migration.

Ah, the fish. Regulations intended to protect smelt and salmon have limited pumping at the Sacramento-San Joaquin River Delta. As a result, some seven million acre-feet of water that was once available for Central Valley farmers and Southern California is flushed into San Francisco Bay each year.

Meanwhile, a 60-mile dry riverbed on the San Joaquin River that hasn’t borne fish since the 1940s is being restored at a cost of $1.7 billion to farmers and state and federal taxpayers. The river restoration is expected to divert an additional 170,000 acre-feet each year, but it could be more since the Chinook salmon that environmentalists want to revive require cool temperatures—meaning more water—to spawn and survive."

"While the state board’s plan would cause more farmland to be removed from production, the main casualties would be low-income and Hispanic communities like Merced that rely on groundwater recharged by the tributaries."

"Communities and farmers have drilled deeper wells and pumped more groundwater to compensate for reduced imports from the delta, leading to severe land subsidence."

"San Joaquin Valley is sinking at a rate of nearly two inches per month in some areas."

Study: Methane in Colorado water isn't always from oil wells

From the Associated Press.

"DENVER (AP) - Researchers say the oil and gas industry may not be to blame if northeastern Colorado tap water is so full of methane it can be set on fire.

A study released Monday by the Proceedings of the National Academy of Science says only about 5 percent of the region's water wells that were checked for methane had been tainted by oil and gas leaks.

About 18 percent had methane that came from coal seams that underlie the area.

The others had methane that couldn't be definitively traced or had no detectable methane at all.
Videos of flaming tap water occasionally surface in communities near oil and gas wells, and they're sometimes cited as evidence of the danger posed by energy development.

But the researchers say that's a natural occurrence in many cases."

From CBS Denver. 

"The oil and gas industry may not be to blame if northeastern Colorado tap water is so full of methane it can be set on fire, researchers say.

Fewer than 5 percent of the region’s water wells that were checked for methane pollution had been tainted by oil and gas leaks, according to a study released Monday in the Proceedings of the National Academy of Science.

About 18 percent had methane that came from coal seams that underlie the area, the researchers said.

The other wells either had methane that couldn’t be definitively traced or had no detectable methane at all.

Dramatic videos of residents igniting water running from a faucet occasionally surface in communities near oil and gas wells, including in Colorado, and the images are sometimes cited as evidence of the danger posed by energy development, including fracking.

“I think it’s important for people to realize that being able to light your tap water on fire in many cases is a natural occurrence,” said Owen Sherwood, lead author of the study and a research associate at the University of Colorado.

“However, accidents do happen, leaks do happen,” he said.

The study looked only at the Denver-Julesburg Basin, an energy-rich formation in northeastern Colorado. The findings don’t necessarily apply to other formations because of differences in geology, drilling history and regulation, Sherwood said.

The $12 million study was funded by the National Science Foundation and got no money from the energy industry, Sherwood said.

Sherwood and five other researchers reviewed public records from the Colorado Oil and Gas Conservation Commission, the state’s energy regulator, from 1988 to 2014.
The records showed that 924 individual water wells were tested for methane after residents complained about pollution. Of those wells, 593 had detectable levels of methane, including 169 with methane that could be traced to coal beds and 42 with methane that could be traced to oil and gas production.

Researchers can distinguish between the two because they have distinct chemical footprints, Sherwood said. Methane from oil and gas production is also mixed with ethane, propane and butane, he said.

If the study couldn’t determine the source of the methane, it was usually because regulators hadn’t finished their investigation at the time the researchers retrieved the data in 2014, or because the case was so old that the available technology couldn’t identify the source.

Regardless of the source, the methane gets into water wells by first infiltrating an aquifer, a natural underground water reservoir, Sherwood said. It’s then drawn up into the well.

Researchers were able to trace groundwater methane pollution to a leak in a specific oil or gas well in 11 instances. In each case, the culprit was the surface casing — the lining inside the upper part of the well bore — in an older petroleum well drilled under now-obsolete rules, Sherwood said.

In all 11 instances, the well casing was too shallow by current standards for new wells. Six of those wells also had leaks in the casings.

The current rules, adopted in the mid-1990s, require the surface casing to extend 50 feet below the deepest aquifer in some areas. In the Denver-Julesburg Basin, that can be as deep as 1,200 feet, Sherwood said.

In none of those 11 instances could the leak be attributed to hydraulic fracturing, Sherwood said. Hydraulic fracturing, or fracking, injects water, sand and chemicals into a well bore to break open underground formations and release oil and gas.

In 2010, drilling companies began high-volume fracking, injecting the fluids perhaps 20 times at different locations in the same well, compared with three or four times under previous practice, Sherwood said.

But the number of documented incidents of water wells polluted by methane from oil and gas production each year didn’t change, he said.

“It’s relatively rare, a rate of about two cases a year” since 2000, Sherwood said.

Rob Jackson, an earth sciences professor at Stanford University who wasn’t involved in the research, said he thinks the study is sound, although he said a potential weakness is whether water sampling techniques were consistent over the years covered.

“I still like what they’ve done,” he said. The study highlights the importance of oil and gas well casing, he said.

By Dan Elliott, AP Writer"

Too Bad Flint Wasn’t Run Like a Business

By Logan Billman of The Manhattan Institute. Excerpt:

"If the city were run like a business, the Flint crisis would likely have never happened. Even if the crisis had happened, the people of Flint would have been better off if a business, not government, was the perpetrator, because they would have received compensation.

Flint was placed under emergency management in 2011 because the city was running a deficit of over $19.6 million. Over the prior two decades, unemployment, crime, and an increasingly elderly work force dried up Flint's revenues, while Flint accumulated over $945 million in unfunded pensions and other post-employment benefits. By 2014, retiree benefits accounted for 32 percent of the city's budget.

On average Flint's households were paying $864 a year for their water, double the U.S. average and 2.7 times the average Michigan rate. Residents were paying these exorbitant rates because in 2014 Flint's emergency manager forced through a 25 percent water and sewer rate increase. The hike's stated purpose was to raise the city's revenue stream.  Similarly, the expected savings from switching water systems, expected to exceed $660 million over 30 years, was an attempt to free up even more funding to finance the city's legacy costs.

Were Flint run as a corporation, its fiduciary requirements would have forced the city to find a solution to its revenue problem years ago. Mandatory shareholders' reports would have revealed Flint's revenue problems well before the tipping point. In turn, shareholders could have forced management shakeups, policy changes, and renegotiated contracts in order to return Flint to solvency, options not as readily available to the public sector.

Even assuming that austerity caused the crisis, Flint's residents would still be better off if a corporation had provided their water. In his Huffington Post article, Gerard cites Takata airbags and the Peanut Corporation of America (PCA) as examples of corporations that hurt the public by cutting corners. These businesses hurt people through their reckless and criminal actions, but as a result went bankrupt.

PCA went out of business and the CEO was sentenced to 28 years in prison. Analysts now speculate that spiraling recall costs and plummeting stock values will soon force Takata to join PCA in bankruptcy. Even Chipotle's stock and sales are plummeting after its E. coli outbreak. When a business cuts corners and people suffer, the market forces the company to repair itself, or go out of business.

But there is no such accountability when government cuts corners to save costs. Ignoring industry standards, Flint failed to treat its water with anti-corrosion agents such as orthophosphates. Had Flint's water had been treated with these salts, over 90 percent of the crisis would have been prevented. Yet, at an annual cost of $36,500 a year, city officials judged that the price was too high.

Any CEOs, trustees, or directors responsible for such a reckless decision would have exposed themselves to civil lawsuits and criminal persecution. Yet, under the doctrines of sovereign and officer immunity, government officials are largely immune from civil and criminal lawsuits. Thus the emergency managers and city council members, whose recklessness caused the crisis, will not be held accountable.

At least those officials can still be held accountable at the ballot box, unlike the countless regulators who fabricated test results and misled federal authorities. Instead of being charged with fraud, conspiracy, or negligence--as their corporate peers would have been--these officials will most likely continue in their jobs without consequence. So far only one bureaucrat has been fired for her role in the crisis, though a few have resigned."

Dealing with the California Drought (better property rights and allowing water to be sold)

By Peter Van Doren of Cato.

"California has had several years of record low rainfall, resulting in a severe water shortage. Gov. Jerry Brown (D) has responded by ordering a 25 percent reduction in urban water system use.

Are there any solutions to the state’s water shortage other than government mandates? Gary Libecap, professor of environmental management at the University of California, Santa Barbara, argues in a recent issue of Regulation that the restoration of clear water ownership rights and the cultural and political acceptance of water markets is an easier solution.

Conventional accounts of water problems in the West often blame farmers and their excessive use of water in places like the vegetable-farming Central Valley. But according to Libecap, “farmers are not the source of the problem. … Most would be pleased to sell or lease water that could earn more than is generated in agricultural production.”

But farmers haven’t traded away some of their water rights because of the “public trust doctrine,” as first described in a 1970 Michigan Law Review article by Joseph Sax. Libecap explains:

According to Sax, the judiciary could direct public policy for protecting diffuse public uses from narrow private ones. The article energized legal scholars and advocacy groups to expand the doctrine and to weaken private property rights. 

The most celebrated incorporation of the public trust doctrine came in 1983 when the California Supreme Court in National Audubon Society v. Superior Court ruled that the “core of the public trust doctrine is the state’s authority as sovereign to exercise a continuous supervision and control over” the waters of the state to protect ecological and recreational values. The ruling expanded the role of the state in reallocation of water as public values changed; asserted that existing rights were non-vested and therefore could be reallocated without compensation; and affirmed broad, open standing to citizens to raise a claim of harm under the public trust against private water users.

As a result of that court decision, the practice of restricting water trades in California is widespread. Some 22 counties have enacted ordinances that block groundwater transfers. When communities are granted a veto over proposed water transfers, “water rights are so diffused and uncertain that no party (except farmers) bears the opportunity costs of failed exchanges,” according to Libecap. “The solution is to define water rights more precisely” and allow exchanges.

Some fear that environmental concerns such as stream flows adequate to support fish habitats would be given short shrift without the public trust doctrine. But, writes Libecap,

private water rights are traded for augmenting stream flows routinely by Oregon’s Freshwater Trust… Environmentalists pay for the water desired for streams. Hence, state environmental mandates are not necessary to protect aquatic and riparian habitats.

In an ideal world, there would be no federal water projects that benefit California farmers. But that policy reform is a long way from happening. In the meantime, facilitating water trades from those farmers to urban consumers would allow water to be priced correctly to reflect its scarcity and eliminate the need for arbitrary regulatory restrictions on water use."