Is a market based approach the best solution to dwindling water supply in San Diego. Three local academics certainly think so. Voice of San Diego ("VoSD") recently had three pieces about the water shortage and how to deal with it. The first of these, No Need for Water Cops by W. Erik Bruvold, President of the National University System Institute for Policy Research. Described as a "fiscal conservative" in his institute biography, Bruvold has served in a variety of policy capacities in the last 20 years in San Diego. Mr. Bruvold argues that a market based approach by increasing the cost of water through tiers would go a long way to reducing consumption.
Dr. Lynn Reaser, Chief Economist at Point Loma Nazarene University, a former chief economist at Bank of America, in her piece Water--Meeting our Destiny, points out that there are three methods to address the water problem. Dr. Reaser lists regulation, moral suasion, and pricing as approaches to solving our water shortage. Seeing the first two approaches and inefficient and uneven, with the later probably more tied to the recession, Reaser too points to pricing as a way to reduce water consumption and change the habits of ratepayers. Another local academic argues that there is no water shortage but ends up coming to a similar conclusion as the prior two.
In There Is No Water Shortage, Dr. Richard Carson, Professor at University of California San Diego's Department of Economics, talks about three general principles that San Diego has failed to articulate in regard to how water is priced to households. Carson argues that this failure is due to not recognizing "the key features of San Diego's water supply situation." Carson opens the discussion with a shot across the bow at what he describes as low value and water intensive agriculture in the San Joaquin and Imperial valleys, users of "most of California's water," and the way that water is doled out in California. Carson, indicating that more supply is available at higher prices, says as his first principle that water rationing should never be part of intelligent water policy and that rather that the water supply agency should charge more money to those who wish to use more water. Underpinning the second principle is the need of San Diego to determine who is entitled to low cost water and asking whether developers or current ratepayers should bear the cost of obtaining new water sources. The third principle addresses a need for higher "marginal" prices and an "increasing block rate structure" in order to make supply consistent with demand and to charge those who use more water a higher rate. Carson attacks the argument that an increase in rates will affect those of low income by saying that a blocked structure would encourage more conservation through a lower base fee that would be dramatically reduced.
Each academic presses for a market solution: tiered structure to help alleviate supply issues. Dr. Carson's pointing to inefficient farming practices adds to the equation a piece that isn't often discussed and that might roil certain "Buy California" or "Buy America" or farm activists. All three of the academics are participating in a weeklong VoSD panel entitled The Game of Pricing Water in San Diego: What is This?
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