post

Four reasons the east is in deep water

by Chris Corbin



I specialize in western water markets. Even so, I am currently working on a project in 9 eastern states. This project has made me realize the eastern United States will face some serious water challenges.  This isn’t the first time I’ve made this observation; it has just become that obvious to me.  And, here’s four reason’s why:

1. The wrong doctrine. The west’s prior appropriation doctrine receives plenty of criticism, but one thing it does successfully is allocate a private property right to water, regardless of land ownership. Attaching water to adjacent lands and allocating a reasonable use–as does the riparian doctrine–is the foundation for failure. For example, what is reasonable use?  How can you transfer water where it is needed most? Who is using water and who is not? How much water is being used? Etc.

2. No measurement. This isn’t only a problem in the east; the west needs to make great strides in measuring water use. However, in many cases the east will allocate groundwater permits under “regulated riparianism” with no measurement requirements or tracking. Some eastern states don’t even require a permit for groundwater use. Sound good? NO.

3. Planning doesn’t solve market problems. Dwight Eisenhower said it best: “In preparing for battle, I’ve always found plans are useless, but planning is indispensable.” Rather than being market driven, the east appears to be  large-scale water planning oriented. Planning is good, but in my experience, plans don’t solve the local supply and demand challenges or allocate resources efficiently. Markets do.

4. Lack of clearly defined water rights. This plays on #1, #2, and #3 but it is the biggie, so I saved it for last. If the east, west, north, and south don’t clearly define rights to water, we are all in trouble. As with land, clearly defining these assets will allow for markets to trade these resources efficiently.  And, yes these markets will bubble, and yes these markets will burst, and yes these markets will lead to creativity, innovation, and solutions that didn’t exist previously.

Chris Corbin is the founder of Lotic LLC — a water rights marketing and management company, and a PERC Enviropreneur Institute alum. Check out his blog or follow him on Twitter.

Comments

  1. Read “Governing the Commons: The Evolution of Institutions for Collective Action” by Nobel Prize winner Elinor Ostrom. Her writings and theories are based on actual worldwide case studies and not assumptions about what works and does not work for managing common pooled resources.

    You will see there are many implicit, unstated assumptions in your statements and conclusions that are not universally true. I think if you read her works and others in her field, you would revise and restate with less certainty about what works and does not work and what causes success or failure when managing common resources.

  2. Milton – Thank you for your comments. Also, thank you for the reference. I’ll take a look. For the record, my statements were based primarily from my observations in the water market and were not intended to capture “universal truths.”

  3. @Chris and Milton — The work of the Ostroms (both Lin and Vincent) concentrates on communal management of resources (water, forests, etc.) via informal institutions. While these institutions can provide robust, sustainable, equitable and efficient management, they also take years (decades!) to evolve and a considerable amount of social capital. See, e.g., http://www.aguanomics.com/2009/01/priests-and-programmers-review.html

    Chris’s OP on the danger facing the East is correct in the sense that they do not have institutions for deal with with scarcity (recall Atlanta v. everyone else). Riparian rights are amazing, as long as neighbors are able to cooperate to limit overuse.

    I am not sure that the East is going to move to quantified rights via prior appropriation (there are “club good” solutions), but there’s certainly the danger of a trainwreck ahead…

  4. Hi Chris,

    I tend to share your view. But I can’t prevent myself from continuing to think that water is so abundant in some parts of the Northeast, such as where I live in Western/Central New York, that we can withstand incredibly poor institutional arrangements. That, plus not many people want to live up here where the winters last 5 months, the spring muds last for 2 and property taxes are higher than anywhere in the nation. I just don’t foresee that much pressure on the abundnant water resources here.

    I really would appreciate your thoughts on this.

  5. wintercow20 – Thank you for your comments. Your web name appears appropriate based on the local climate description you provided. In all seriousness, I think you brought up a great point. The supply and demand relationships that drive the need for market transactions don’t exist everywhere. These markets are highly localized and fragmented–even in the arid west.

    I frequently receive inquiries to market western water rights where no “real” demands exist. Without a willing buyer, it’s hard to put together a deal, which I believe is the point you just accurately made. Even in these locations, it’s nice to have the market structure that encourages and allows for trade. You never know what the future will bring. I’ve seen deals where ranchers traded water rights for cows because the markets existed and they could.

    Basically, I’m a fan of the gains from trade. Here’s an example of 7th graders trading of candy bars to get what they really wanted: their idea. http://activelymovingwater.com/?p=258 Without assigned rights to the candy and allowing trade, this wouldn’t have been possible.

  6. It appears some feel my friends and fellow innovators Chris and David go too far and extrapolate too much. I’m inclined to tease them that neither one goes far enough.
    The biggest — and yes, universal — overlooked threat/opportunity surrounding water use in the Eastern U.S. today is manifest in that photo that appears unremarked upon just above the post: the electric lights that reflect intense energy burning consumption in the densely populated East.
    According to the U.S.G.S., energy demand is the fastest growing user/polluter of freshwater in the U.S., outstripping comparatively static domestic, commercial or agricultural use. And efforts to move to ‘clean energy’ (nukes, hydro, geothermal are extremely thirsty) can exacerbate the water-energy nexus, especially as irrigation or rain-fed farmers grow crops of calories for fuel rather than food.
    Let’s see: vertically integrated rent-controlled natural monopolies of energy suppliers depend for their very existence on vertically integrated rent-controlled natural monopolies of water suppliers, and the democratic public in the Eastern U.S. demands subsidized, or free, supplies of both priceless resources. How do you say “Let our race to the bottom begin!” ?
    The great Elinor Ostrom doesn’t take up the challenge of how to reverse rapidly and painlessly the tragedy of the commons the energy-water nexus, but two largely unrecognized but Nobel-worthy entrepreneurs do, in this remarkable post:
    http://www.circleofblue.org/waternews/2010/world/giving-our-choke-point-the-heimlich-maneuver/

  7. The consumptive use of water for energy production in the US is around 3 percent of the total water used . Mostly, the water is used for cooling and returned to its source. The water becomes hot as it cools the energy producing facility. The water is retained and cooled before it is returned to its source. Some evaporation occurs in the cooling process, which accounts for the 2 percent loss. Many times the water, if not used for cooling, would evaporate anyway from its natural source, such as a lake or reservoir, so there may not be any increase in evaporation loss by using it for cooling.

    So on a gross use basis, energy production is a very high user of water, but since almost all the water related to energy production is used for cooling the facility and returned to its source, the net use is very low.

    On a consumption basis (net water used after return) instead of a gross withdrawal basis, irrigation and livestock account for 85 percent of the use of water in the US. Energy is not a big net consumer of water.

    http://www.nrel.gov/docs/fy04osti/33905.pdf

  8. Jamie Workman says:

    Milton — all good points. But alas it seems even the mere withdrawal and use of the USGS-tracked 201 billion gallons per day for energy still destroys water’s real value (‘opportunity cost’ in economistspeak, I think) in the Eastern U.S. Let’s agree to set aside the unpleasant aspects of Appalachia’s dead orange streams from aside acid mine drainage or mountaintop removal and focus on the poaching of fish.
    “A 500 MW coal plant burns 1,430,000 tons of coal, uses 2.2 billion gallons of water and… the water it uses for cooling is raised 16 degrees F on average before being discharged into a lake or river. By warming the water year-round it changes the habitat of that body of water.” http://www.ucsusa.org/clean_energy/coalvswind/brief_coal.html
    But I fear that to really fathom the full extent of the water-energy nexus, we need to take into account the raw materials mined. Taking the full life cycle analysis into account, coal production consumes/destroys (not uses, which is an order of magnitude higher) between 3,000- 4,200 gallons per ton of coal.
    Total U.S. coal consumption was a billion short tons. I’m sure my math is flawed, but back of envelope that translates into 3 to 4 trillion gallons of fresh water…destroyed for the electric power sector which uses 94 percent of all coal.
    The good news is that coal consumption is down 11 percent; the bad news is that much of that dip is attributed to the recession. The badder news is that all industry efforts to produce energy via “clean coal” require even more water. The federal Sandia National Labs said it increases water consumption 40 percent; even the energy industry’s in-house lobby concedes it increases water consumption 23%. The worser news is that the ‘clean energy’ alternative of biofuels (corn ethanol) is destroying far more water than coal or gas, thanks to bipartisan subsidies to ensure we burn the grain calories for electrical generation and automotive combustion, rather than in our tummies and cells to make the most of a day.
    Here’s the thing: replacing just 10 percent of energy consumption with first gen clean biofuel would double agricultural water demands. The IPCC urges our legislators to aim for a 25-80 percent target by 2050. Follow the energy origins to the water destroyed to produce raw coal, or grow raw biofuels, then add that into the 5% consumption figure. I think we can all agree that it’s not a pretty sight. Hence, the importance in the East of the watergy nexus: ease off the sprinkler if you want to save energy; flip the light switch if you want to save water.

  9. Jamie makes good points, so I’m mostly in agreement. I’ll add that the lack of a price for water (at all, or accurately reflecting scarcity) is the main reason for high diversion (and some consumption) of water by energy guys. When they pay per unit extracted, they quickly find ways to recycle the water…

    Read this: http://www.westernresourceadvocates.org/everydropcounts/

    Most discussion of the water-energy nexus misses the point on prices, since the people in these businesses think they can manage their way out of every paper bag.

    Oh, and one other thing: without water, many energy plants (let alone refiners, who pollute like mad) could not even run, no matter how you measure “consumptive use”)