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Can Sin City survive without the gift of free water?
(Page 3 of 3)
Subsidies, Subsidies, Everywhere, and Not a Drop of Sense
EVER SINCE they first became aware of the possibility of water shortages, Nevada’s political leaders (prominently including U.S. Senate Majority Leader Harry Reid) have complained that the state was “cheated” under the Colorado River Compact, which was first signed in 1922 and ratified by an act of Congress in 1928. This compact divided water up on a 50-50 basis between four Upper Basin states (Colorado, Wyoming, Utah, and New Mexico) and three Lower Basin states (California, Arizona, and Nevada)—with 7.5 million acre-feet of water going to the Upper Basin states and 7.5 million acre-feet of water going to the Lower Basin states.
It was in the further divvying up of water within the latter group that Nevada drew the short stick. While California and Arizona received allotments of 4.4 million and 2.8 million acre-feet of water, respectively, Nevada got a mere 300,000 acre-feet.
But who is to say what’s fair and what’s not fair in the heavily subsidized sphere of water management, with its arcane rules and strong aversion to price increases? Back in 1920, Nevada had a population of just 77,000 people. Today it has more than 2.7 million and the water in Lake Mead continues to take care of most of their needs.
Then, again, as David Zetland observes in his book The End of Abundance: Economic Solutions to Water Scarcity, where is the fairness in today’s world in the way that the original Colorado Compact treated California’s Imperial Valley and Clark County, Nevada, which includes Las Vegas? Both places then had populations of about 8,000 people. But Imperial was assigned 10 times the amount of water because its farmers used more. Under the law of prior appropriation governing water rights, already-haves are assigned the biggest shares—in perpetuity. That gave rise to the following situation described in Zetland’s book:
About 1.9 million people live in [Clark County]. And their $100 billion of economic activity accounts for about 80 percent of the [state’s] economy. Imperial Valley is also in the middle of a desert, just down the river from Las Vegas. Six thousand farmers grow crops worth $1 billion in Imperial Valley, and they use five times as much water as the people in Clark County use.
Toward a Market-Based Solution
UNDER THE CURRENT mix of policies, water authority in Las Vegas has one foot on the brake and the other on the accelerator: Paying people to murder their lawns while encouraging consumption through low water rates.
Here then is the path to a simpler and more rational future—suggested by scholors at the Property and Environment Research Center (PERC), a think tank in Bozeman, Montana, that looks for free-market solutions to environmental problems.
Since water rates appear to be going up anyway, discard the historic cost-based pricing model and move instead to a pricing system that recognizes the scarcity value of water. Replace rationing with price increases. Instead of limiting customer choice, expand it. Allow farmers, homeowners, and others to sell water to others who are willing to pay a premium price for it. Why shouldn’t farmers in the Imperial Valley sell some of their water rights to Las Vegas, if two sides want to strike a deal?
In the case of the proposed pipeline that has kicked up a storm of protest, the water authority should go ahead now in doubling or tripling water rates—and see if that doesn’t avert the need for the entire project. Call this a market-ready—as opposed to a shovel-ready—solution.
Does that sound too radical? If so, consider that the average family of four would still pay only about $1,200 a year for water—or $23 a week—even if rates were tripled. For most people, that’s not even lunch money.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?