Thursday, April 2, 2015

California and Water

In a recent post Mankiw has proposed using pricing as a control mechanism for water in California. Generally that is a sensible and correct way to manage the problem. However, from many trips to out of the way places in California I believe that there are many unintended consequences that drive the problem. Let me explain two:

1. Most of California is desert. San Diego has but a few inches or rain a year and people there want lawns etc. The climate supports at best a few cacti and scorpions. Not much more. Then add humans and you get a mess.

2. Almonds. Now a few years back I spent time with almond growers. Almonds are those nuts that airlines used to serve in Business Class before dinner. I do not know anyone who really eats almonds. But USDA subsidizes almond growing in the I5 valley, thousands of acres and billions of gallons of water. These almonds must be stored somewhare, I do not know where. Yet USDA policies mandate what is grown and who gets paid. Thus in some perverse manner the USDA policy and payments mandate excess agriculture and thus massive amounts of water usage.

3. Lawns: People moved from the East to California and wanted it to look the same. New York gets 45" of rain a year and it has winters and dormant plants. LA gets less than half that and no winter. Thus trees and lawns are fed by water to do what they would not do normally. The result is the sucking of water from where it was naturally for eons.

Thus charging more may help but perhaps examining the underlying Government rules and realigning them would help. Try peanuts and get rid of almonds!