Wednesday, March 10, 2010

Peter Gleick on Temperance Flat and CVP subsidies.

From Peter Gleick's City Brights Blog:
Water Number: 19%. As Bettina Boxall of the LA Times noted in her story this week, our experience with paying for past infrastructure should be a huge warning today. Irrigators who benefit from the federally built Central Valley Project have enjoyed the equivalent of a massive 60-year, interest-free loan. Not only have they failed to repay their share of the costs (having only repaid about 19% of their $1.2-billion share of the capital costs), but the federal government charges them no interest. Pretty sweet. Give me $1.2 billion in a very long-term, zero-interest loan and I can find you hundreds of thousands of acre-feet of water. Buy everyone efficient fixtures (washing machines, toilets, showerheads, urinals, drip or sprinkler systems, etc.) and get repaid over time through water bills savings.Read more:

In this same spirit, I would say give me $1.2 billion in interest free loans (and an apparant 300 year repayment schedule) and I will create tens of thousands of high paying jobs in the San Joaquin Valley that diversify the local economy.

Rather than spend $3.3 billion on Temperance Flat, I propose that the state gives Peter $1 billion to find new water and me $1 billion to create jobs. The state will get more water, more jobs and save money.

Even better, just vote no on the water bond. Let water prices rise to encourage conservation and investment in local supplies (like water recycling). Create jobs by spending or investing your money elsewhere, while preventing future tax increases or education cuts to pay off these bonds.


  1. Let water prices rise to encourage conservation and investment in local supplies (like water recycling).

    I don't object to this, but see it as similar to sewer rates rising. My understanding is that the real cost of these are the dollars in local spending that used to buy other things, and will be spent on water bills (infrastructure) instead.

    Do you have different objections to sewer rate increases and water rate increases? (Because you mentioned in my comments that you think sewer rate increases pose a burden on poor people, and are calculating the lost jobs from that.) What's your thinking on why this is less of a burden than collecting the same money through bonds?

    Then, I'll add that Prop 218 is distorting these issues. It is so hard to pass local rate increases (even well supported ones) that people are doing peculiar work-arounds instead, like statewide bonds.


  2. OtPR,

    Good question, given some my other comments.

    Of course, rising water rates have impacts similar to sewer and should be considered. I have never argued that sewer rates should be subsidized, and I am arguing here against water subsidies.

    If we were going to subsidize one of these (water or sewer), I would argue for subsidizing sewer. Why? Assuming that water use is metered (yes this is an embarrassement for Sacramento and some other areas, but one that is being corrected), increasing water rates encourage conservation and other positive behaviors; especially if done with increasing block rates. Metering sewer rates by the amount of pollutants coming from a source is a much tougher thing to do. Even if we could, adjusting how much I eliminate into the toilet is a lot tougher than taking shorter showers.

    Sewer bills tend to be fixed per household, whereas water bills rise with consumption, large lots, landscaping, etc. Thus, I also think sewer rates hit the poor more than water rates.


  3. I forgot to address the bonds. Yes, there isn't much difference between water bill and bonds/taxes in terms of taking money out of people's pockets. The key difference is the behavioral incentives, the water subsidy encourages water waste and the state taxes discourage work/investment. So, I don't believe in a financing system that discourages work/investment in order to subsidize water waste.

  4. Yeah, the different percentage of fixed/variable rates occurred to me after I closed the comment box, although I think it may be an artifact of older cities mostly having water delivery systems installed already. If they were starting from scratch, or installing something big and new (comparable to a tertiary treatment facility), the ratios might be closer.

    I see what you mean about incentives. Thanks for spelling out your thinking.