water, water everywhere

early last summer, i was lucky enough to spend two weeks in southern california. but i was unlucky because its blisteringly hot days found me in the shade and, for the most part, alone thanks to my pasty, east-coast complexion, inapposite among the bronzed locals.

to maintain my dignity, i had to make lemonade from an otherwise sour situation. so, i took it upon myself to ponder the divide between our nation’s coasts (aside from the swath of red states lying between them). but the thought of lemonade made me thirsty, and being surrounded by flowing water made it so much worse.

funny, i thought, how in the heat of summer and in the dry air of the california desert, people would just let water run. it gushed from sprinklers and fountains everywhere, joining streams in the streets and emptying into storm drains. it made islands in the road literally so as it poured out of haphazard pipes, for no apparent reason other than flooding tiny patches of soil (i can only assume that the grass died from over-watering).

this made me think that with a little elbow grease, i could turn a tidy profit collecting all this water and selling it. but no, surely someone would already have thought to do that. and moreover, why wouldn’t everyone do what amounts to the same thing by reducing their water consumption and saving on their water bill?

later that day i erupted in archimedean euphoria at the sight of a banner for water conservation. when i was finished, i found my friends – who had stolen away – and explained my euphoria. if the city were really concerned about conservation, they would just raise prices. but here’s the genius part: they could give what’s saved to those who value it more – even in other areas – and then return that value to the consumer as a discount on his bill. that way, no one would lose.

the problem is that california, like most places, lacks an efficient water property system and allocates water rights by use. this means that if the city stops using the water, it can’t direct who gets it, and there cannot be a mutual gain. what’s worse, there is actually incentive to waste water, just to preserve one’s rights therein.

this system of political control does not incorporate the opportunity cost of the water, which is how much outsiders would value it and, hence, what they would pay for it. the key to efficient use – or “conservation” – is to let people capitalize on the situation through a free market.

of course, the slightest hint of commoditization raises alarms (alienation!!!!!), especially in california. but there need not be an evil water conglomerate; all that is needed is a central authority to enforce a few simple rules, monitor “accounts,” and keep track of private bargains – in other words, a bank. the rest could be left to competition. furthermore, there could, and should, be competition between those banks.

and those who fear unbridled consumption must be blind to the fact that people are currently wasting water precisely because they are not paying for it. the best way to conserve is to let people save money by reducing consumption, and the best way to preserve is to let owners invest to protect these resources for the future.

to each according to his need is a great idea. but when allocating a scarce resource – which is any resource – pricing by a valid market provides the best way to include others in their consumption choices and, thus, balance competing interests. with the state of today’s science, an open market can preserve and conserve better than any government.