What is the Right Price for Water?

by Rachel Baker on March 26, 2015

While this draught is well within historical measurements, the dry situation in California has people taking a serious look about finding the right price for water. Below is an article that takes a look at the policy and laws and recommendations from economists to help ease the challenges created by the draught in California.

Here’s the Article:
Finding the Right Price for Water

Since drinking water is a human right, experts all agree that the base amount a person needs to survive, about 15 gallons a day, should be subsidized. Carson says that increasing block rates effectively deals with this issue. In the past, water in urban districts was priced at a decreasing rate since delivery costs fell as the quantity of water delivered increased. But now for the sake of conservation, the first block of water—the amount necessary for survival—is subsidized. Carson says that over 70 percent of water use in California urban areas is outdoors. It’s the issue of how to price water for swimming pools, lawns, and agriculture that’s tricky and politically thorny.

The drought’s cost to agriculture has been estimated to be as high as $1.5 billion. According to a report by The Hamilton Project, agriculture accounts for over 80 percent of water consumption in the American West. Though water for farming does not require treatment the way water for cities does, farmers still pay significantly less. Glennon estimates that some agriculture water bills can be as low as a few pennies for thousands of gallons. “Often times, the people in urban areas are paying 10 times the price per unit of water,” says Carson.

Because agriculture saps up such a significant amount of the water supply, full-blown panic of a drinking-water shortage is in some sense overblown. Glennon estimates that a 4 percent reduction in agriculture and livestock water consumption would translate into a 50 percent increase in water available for all residential, commercial, and industrial users. His proposed solution to the drought is a water market where the resource could be easily traded. For example, a dry-year option so some farmers can have a revenue stream while forgoing growing their crop during a dry year so water can be diverted to other farmers or users with more urgent need.

This article was written by: Rachel Baker – Click to follow on Twitter; or you can follow her at The Crafty Veteran on Bloglovin

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