| |
Price system means real water conservationWhy do we have
water bans?
|
from NewsLink, Vol. 5, No. 3, Spring 2001
For approximately 55 Massachusetts cities and towns, the arrival of summer has for years been marked not only by Memorial Day but also by the advent of outdoor water bans. This year will be no different. Towns like Gloucester, Chelmsford and Rockport in the East, Lanesborough in the West, and Attleboro, Dartmouth and Falmouth in the South may face the prospect of browned lawns.
If you live in one of these communities and think that the deluge in March and the rains in late May will avert the prospect of browned lawns and dirty cars, think again. Massachusetts has experiencied one of the driest springs in recent memory, thus guaranteeing that, once again, the water police will be on patrol.
Fortunately, most cities and towns in the Bay State do not impose water bans. Not one city or town in the Massachusetts Water Resources Authority district, long plagued by high rates and Boston Harbor clean-up costs, will impose a water ban. And, according to the state Department of Environmental Protection, many of the towns that deploy water bans rely on the goodwill of their residents for enforcement. Last year, approximately 20 towns with restrictions made them voluntary.
But residents of other towns face the summer ritual of leafing through local newspapers for information on when and how they may water their lawns.
Why does it have to be this way? Fuels like gas and oil are not now rationed, and food and other household necessities are easy to find. Why this asymmetry?
The solution: A market system.
The answer is that, as with other shortages, water shortages result from providers keeping prices artificially low. Because the price is kept low, people consume more water on bathing, cooking and watering their lawns than is available for those purposes.
The same thing would happen – and indeed has happened in the past – with gasoline, when price restrictions led to rationing. Then it was lines at gas stations and filling gas tanks on alternate days.
As it happens, the price of gasoline has gone up, so consumers are naturally buying less of it or going without other things. According to one recent poll, three in ten Americans are planning to change vacation plans this year because of higher gasoline costs.
When it comes to water conservation, the best solution is to establish a pricing system of the kind that operates with almost every other product. This would allow consumers to regulate consumption and make their own choices. Is a green lawn more important than a long shower? Is green grass more desirable than landscaping that requires less watering? Is a private well the answer? A pricing system that reflects supply and demand would enable consumers to regulate consumption of water just as they regulate consumption of gasoline.
There are ways to bring rational pricing to the provision of water. Natural gas and electric services are metered for tenants while water is metered only for landlords. Metering water also for tenants would discourage use.
What about supply? With higher prices, towns could expand capacity. In some situations, they might truck in water supplies from outside the water district to meet demand. For example, homeowners in Provincetown rely upon trucked water to fill their pools. Other towns encourage the use of private wells for irrigation to lessen the demand on the public water supply.
Trading water rations?
Nobel laureate Milton Friedman once offered a solution.
In 1979, Marin County, California rationed water to 37 gallons per day per person in a household. Any household that exceeded that amount was subject to a steep fine. The scheme was not unlike a pricing system. However, noted Friedman, the scheme didn't provide an incentive for persons who use less than the daily quota. If a family of four consumed less than 148 gallons per day, couldn't it sell its daily surplus to a willing buyer?
Friedman proposed that Marin County authorities set a supplemental price per gallon of water above the quota. If a household used less than the quota, the authorities would pay this price to the family for using less.
Wrote Friedman: “If the price is set so that the amount some families save is equal to the excess amount other families use, total water use would remain the same; the revenues to water authorities would be the same; and every separate family would be better off – those saving water, because their actions reveal that they prefer the money to the water; those using extra water, because their actions reveal the reverse.”
So again this summer, folks in beautiful New England towns like Falmouth, Foxborough, Mansfield and Sudbury will sit on their porches wondering why they can put all the water they want into their mixed drinks but dare not offer a drop to their parched lawns. Such is the enlightenment with which we manage resources in the name of “conservation.”
NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2003. All rights reserved.
HTML format revised on 7/3/03 1:10 PM
