Daniel Sutter: Water worries

Decades of political management of our nation’s water resources are exacerbating the impacts of California’s ongoing drought. Government control of water has imposed an enormous economic and environmental burden.  The Colorado River, the Salton Sea, the Pacific salmon, and low flush toilets illustrate this folly.

Our water policy emerges from municipal systems and irrigation districts, which deliver water to households and agriculture, and state governments and the U.S. Department of the Interior, which set the legal and policy framework. Our water policy, I think, has tried to prevent the availability or price of water from slowing economic development. This has been true even in arid and desert areas of the western U.S.

To see the consequences, let’s start with the Colorado River, which carved out the Grand Canyon. The Colorado is a major source of water for the West. The river literally gives everything it has: since the early 1990s, the Colorado no longer reaches the Gulf of California.

Southern California’s Imperial Valley was a desert until a canal brought water from the Colorado River. Faulty flood gates at the head of the canal failed during a 1905 flood, diverting the Colorado into the Imperial Valley for nearly two years. The resulting inundation formed the Salton Sea.

The Federal government then built the All American Canal in the 1930s.  As has been typical of Federal projects, farmers paid a fraction of the government’s cost for the water. Agriculture has flourished in the Imperial Valley, because farmers use subsidized water to grow crops.

One might think that water would be used carefully when irrigating the desert. But the low price eliminates farmers’ incentive to conserve water, resulting in the use of wasteful methods like flood irrigation and unlined ditches. One third of the water diverted from the Colorado River has merely run off, sustaining the Salton Sea for a century.

The Federal government has built dams to generate electricity, ensure reliable water supplies, control floods, and enhance outdoor recreation. Yet political forces, not environmental or economic concerns, have driven the process. States or communities captured the benefits but passed the cost on to taxpayers nationwide, and formed a powerful constituency for building dams. Meanwhile, dams on the rivers of the Northwest significantly harmed fish like the Pacific salmon, resulting in numerous endangered species listings.

Our government-controlled system gives people rights to use but not save or sell water. The lack of a right to sell water drives wasteful irrigation. Farmers would conserve irrigation water even if received for free if they could sell the water to cities. The problem of use-only rights extends to aquifers, or underground pools of water. Our nation’s largest aquifer, the Ogallala, stretches from Texas to the Dakotas. The aquifer is no 30% depleted, and in some areas the water table has fallen 200 feet. At least 20% of the farmland irrigated by the Ogallala may run out of water within thirty years.

Because low prices do not give households the proper incentive to conserve water, politicians restrict our water use. The most visible restrictions are imposed during droughts, as currently in California. Less visibly, water conservation is built into many consumer products, like the Department of Energy’s limitation of residential toilets to 1.6 gallons per flush.  Market prices let people make decisions tailored to their likes and dislikes. People can use lots of water if they want, but they will have to pay for it.

The enormous costs of our politicized system should surprise no professional in the public policy world.  Economists like Ludwig von Mises and Friedrich Hayek explained why government officials cannot match markets in satisfying the likes and dislikes of consumers. State and federal bureaucrats must decide what constitutes beneficial use of water, but this is impossible unless people can make purchases at prices reflecting supply and demand.

Political control over water has produced a sea in the California desert, endangered fish populations, and rapid depletion of our nation’s aquifers. Our water policy has been a train wreck, and restricted our personal freedom to boot. Fortunately property rights and voluntary exchange can improve our situation if given the opportunity.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision