The Opportunity Cost of Water

(Photo: rumpleteaser)

With the continuing drought in South Texas, the issue of how to allocate scarce water resources has flared up again. Rice farmers south of Austin want water from the Colorado River for their crops; yet the two storage lakes on the river, which provide most of the Austin area’s drinking water, are less than half full.  As one rice farmer told the the Austin American-Statesman: “Water availability should be based on sound hydrology and not on political pressure.” It should be based on neither—it should be based on economics—what is the opportunity cost of the water?  In particular, one might ask why the U.S. is growing rice at all.  It is hard to believe we have a comparative advantage in rice-growing and that it shouldn’t all be imported.  That’s especially true about rice grown in dry South Texas. We grow rice because of entrenched interests that obtained water rights many years ago.  The rice farmers get heavily subsidized water precisely because of the political pressure this man deplores—and they now want to compound the effects of bad policy.

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  1. scott foster says:

    Hidden due to low comment rating. Click here to see.

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  2. mohammad says:

    oh, what will we do without our Texmati?!

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  3. Enter your name... says:

    I’d be happy to address the issue with sound hydrology. Sound hydrology says to quit growing rice in the desert or near-desert areas. That applies to both southern Texas and southern California.

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    • James says:

      Sure, but sound hydrology also suggests not building major urban areas in desert or near-desert areas, too. At least unless you can convince the people who move to them to do without bluegrass lawns, car washes, and toilets that use water.

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      • Enter your name... says:

        I’m not so sure about that:

        * An urban person probably doesn’t flush his toilet more often than a rural one, so the location of the flush toilets doesn’t affect how much water is used.

        * An urban resident may not own a car at all, whereas rural ones commonly own at least one for every adult. When I grew up in the country, we had six vehicles for four drivers, and washed them all with a hose because the water-efficient car washes were miles away.

        * There may not be a single blade of grass at an urban home. Neither my home nor my in-laws urban home has any grass, and I understand that having either no grass or a postage-stamp size patch of grass is pretty typical in urban areas. When I was growing up, we mowed two acres of grass, and ours was the smallest lot around.

        If I needed to put a million people in a desert area, I’d choose a dense, walkable, urban city over a sprawling suburb or rural area. San Fransisco residents use only two-thirds the amount of water that the average American does, and less than half of some sprawling cities like the greater Dallas/Fort Worth area.

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      • James says:

        “An urban person probably doesn’t flush his toilet more often than a rural one…”

        It’s not the frequency with which any one person flushes, but the number of people doing the flushing. At any given location, there is going to be a certain amount of water available – in Austin, for instance, there might be enough to support say 20,000 people doing their flushing &c. Put a million people there, and there’s not enough water to go around. Ration it by putting a high price on it, and you take it away from important uses (such as supporting an ecosystem) that no one is willing to pay for.

        “There may not be a single blade of grass at an urban home. Neither my home nor my in-laws urban home has any grass…”

        Well, that’s you. Satellite photos of any southwest urban area show that lots of people living there do grow lots of grass, wash their cars with hoses, and so on.

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      • Enter your name... says:

        Are those “southwest urban areas” actually “dense, walkable cities”, or are they just overgrown suburbs? The sprawl nightmare that is called Oklahoma City, for example, is definitely in the latter category.

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    • Dwight K Schrute says:

      i remember listening to a rice farmer from the Central valley of california at a conference I attended complaining that she couldn’t compete with rice producers in Vietnam or Thailand. The first thing that occurred to me is that the central valley would be a desert (albeit a very fertile one) so it doesn’t take a genius to say rice shouldn’t be grown in a desert.
      The view of the farmer is obviously different as they have historical water purchase rights, but one would think the value of the water would be higher in less water intensive crops.

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      • James says:

        The northern part of the Central Valley, say north of Stockton, is not actually a desert. It gets about 20-30 inches of rain per year, though the Mediterranean climate means that virtually all of it falls between October and April.

        The Delta areas where IIRC most of the rice is grown are also naturally swamp/marshland, fed by melting snow from the Sierra Nevada.

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  4. Enter your name... says:

    There are, by the way, good reasons for a country not to import all of a staple food like rice. If you import 100% of your staple foods, then your food supply is vulnerable to wars and other massive disruptions. It’s not a good policy to have a food that many people eat every day to be dependent on the ability of the port workers and employers to get along, much less to be dependent on good political relationships between China and the U.S.

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    • Ben says:

      but is rice really an American staple food?
      On average, one American consumes as much energy as;
      2 Japanese
      6 Mexicans
      13 Chinese
      31 Indians
      128 Bangladeshis
      307 Tanzanians
      370 Ethiopians

      I think that that is an even bigger problem.

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      • Enter your name... says:

        The average American eats about 25 pounds of rice a year.

        Currently less than four pounds of that is imported. This is probably a good thing, but there’s no good reason to grow it in the driest parts of the country. Rice should be grown in wet places.

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      • Casey says:

        I have my doubts that we eat 370 times what Ethiopians eat. That would imply they live off 4-5k calories… a year?

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      • Goatherd says:

        I think Ben was referring to total energy consumption, not just food energy.

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      • Enter your name... says:

        On top of that, those numbers are massaged to show end-user consumption rather than the place where the energy is actually used. So the Chinese workers that built your computer didn’t “use” any energy to do so (doubtless a great surprise to the person who pays the factory’s energy bills); that energy was all “used” by Americans.

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      • Ben says: this is where it’s from, I do apologise, it does say “On average, one American consumes as much energy as” which could be linked to electricity etc… but is more likely to be related to food, on the basis that everything related to this data is based on foods.

        I do agree with “Enter your name…” when he/she says “there’s no good reason to grow it in the driest parts of the country” absolutely spot on. We should leave it to China and India etc… who have absolute advantage for rice, spend the money from the subsides not being spent on foods on trying to increase employment, and use the land as maybe a commercial place for tourists? Or some way of making money = everybody’s a winner, it’s all theories, however.

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      • kathi mestayer says:

        rice needs to be grown in FLAT, wet places. maybe south Louisiana and eastern Texas, where there’s a bit more rainfall and lots of flat acres. And it is grown there, too.

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  5. James says:

    I have to go with the sound hydrology. This is yet another instance where economics just doesn’t work (or perhaps it would be better to say that it’s not allowed to work) because the legal/societal framework allows a small number of people to make large profits by dumping costs on the rest of us.

    We could also turn the argument around, and ask why it’s better to use scarce water supplies to foster the growth of large urban areas, rather than to grow food.

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  6. Eric M. Jones. says:

    Texas Rice Growing? Seriously? Texas grows very little rice compared to Arkansas, Louisiana, Missouri, Mississippi, California, etc.

    BTW The Colorado river you refer to is not THE Colorado River that flow to the Gulf of California, but just a tiny rivulet that is a local Austin issue.

    BTW: A large portion of the real Colorado River is siphoned off by Denver, Colorado area via several trans-continental-divide tunnels. I would think this should be a national debate.

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  7. Mikemenn says:

    So, maybe water could be rationed like the Fair Tax rebate. (You know, where the basic cost of living is figured out, and the gov’t pays you back that tax money?)

    So why not figure out what the base amount of water is needed per household based on the number of occupants, figure out how much that will cost at the minimum (or give it away for “free”), and then let the free market decide on the rest of the water? Need water for crops? Let the cost go up or down depending on demand. Don’t want to put in water reduction toilets and sinks in your business? No problem, you’ll just be charged more for it.

    So, kind of let water be sold like gasoline.

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    • crooksandliars says:

      Why does Texas water belong to the people and oil and gas in Texas belong to the land owner?Lets also find out the amount of oil and gas needed per household based on the number of occupants and allocate that to each resident for free and pay for excess usage.

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      • Chris says:

        If you go to the trouble and expense (around $10K) to drill a well for your personal use, the water does belong to you.

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      • Kalle says:

        the water in texas does not belong to the people, but to the landowners. municipalities have either purchased water rights over time, or buy water from the land owners, or the water right owners, because if you own the land, you can sell you water rights…ask T. Boone Pickens, as he is currently spending millions of dollars buying water rights in north texas.

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  8. Kevin Shmevin says:

    End farm subsidies.

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    • kathi mestayer says:

      Even if we found a way to direct water to the real, highest-value uses (free market solution) it’s still a good idea to use less on lawns. The City of Tucson has a no-residential-front lawn ordinance. And lots of lovely desert landscapes. Added benefit; maybe a natural disincentive for burglars? Who wants to race away from a home in the pitch dark through a yard full of barrel cacti?

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