Years of hot, dry conditions and population growth across the Southwest have resulted in painful reductions in Colorado River water flow allocations in Arizona, California, Nevada, and Mexico. Based on a 1920s multistate pact, the Department of the Interior raises an alarm when the river’s watersheds drop to extremely low levels, leaving states with no choice but to drastically reduce their water consumption, limiting their consumption by part of agriculture, industry and citizens.
At the moment, whatever water one state gets, another can expect to lose. And each state has its own body of water law that generally prioritizes historical retreat patterns. That body of law is important, but unfortunately times have changed. Perhaps we should look at some past experiences with extreme water scarcity and consider institutional changes that could make things better for people in the arid Southwestern states.
What if, for example, there were clearly established routes for an Arizona community to profit from replacing plans for its new well-maintained golf course in favor of a “browner” course and selling the lost water to farmers. of California? Or, instead of a water district paying homeowners taxes to plow their lush lawns – America’s largest “irrigated crop” – homeowners could sell grandparents’ lawn rights to other users they appreciate. more water?
As things currently stand, there is no institutional arrangement that allows any state or large entity that uses water to trade with another. No regional market where water rights are valued or otherwise valued in a way that takes full advantage of economic incentives to balance demand with diminishing supply and pay for creative ways of conservation.
Water scarcity in the West is nothing new and the current situation and its inevitable mandates have taken a long time. Fortunately, there are past lessons to consider. People facing other water scarcity situations have managed to transform perpetual crises in which no one was winning into situations not unlike those we use to manage other scarce resources such as land, labor and capital.
Consider the Ruhr River Basin at the end of the 19th century. At that time, the river passed through the most industrialized region in the world, an area centered on Essen in East Prussia. The production of coal, steel and chemicals predominated. Population growth had exploded. Heavy industrial discharges and periods of drought and low river flows have created water shortages and typhus epidemics.
Industry and community leaders have decided to do something about it. In 1899 they formed a basin association and in 1913 they incorporated the river and formed the Ruhrverbanda river basin association authorized to manage all aspects of river use.
In fact, the new association became the owner. It first added dams and reservoirs to alleviate the low-flow situation. He then set the prices for any withdrawal from the river, both for drinking and for industrial use. Fixes the prices of discharges into the river based on chemical and biological characteristics. Revenue paid for the improvement of the catchment area. Discharges known to be harmful to fish and other aquatic life were not allowed at any price. Over time, the flows became more reliable and the river and surrounding land became more valuable assets.
The King of Prussia therefore encouraged the incorporation of other rivers. Competing river basin associations charged prices for their own water withdrawal and use. Competition between river operators has led to water quality innovations that have lowered the cost of improvements and increased the supply of water for all users. The typhus problems are over.
Now fast forward to the 20th century and the Ohio River. Like the Ruhr, the area contained growing industrial cities and little concern for industrial wastewater and sewage. Downstream the Cincinnati protests went unheard until the outbreaks of gastroenteritis traveled upstream. In 1948, with the approval of Congress, the Ohio River Sanitation Commission was formed, bringing cooperation and coordination between the eight member states. The river flourished.
How about a desert river like Colorado? Its water is too precious to be treated as a common access resource where whoever arrives first gets their first swim, or where strict command-and-control rules for sharing can’t keep up with reduced flow and population growing. If funding cuts need to be made, why not create a more powerful incentive for water users to reduce their consumption or pay another user to do so?
The multistate basin of the Colorado River forms a biological unit. The time has come to form a corresponding political-administrative unit. Lessons from the past can help improve the situation and make scarcity a prelude to abundance.
Bruce Yandle is an adjunct member of the Mercatus Center, senior researcher emeritus at the Property and Environment Research Center, former executive director of the Federal Trade Commission and former senior economist of the President’s Council on Wage and Price Stability.