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Planet-Profit Report, reporting on sustainable development in the Western United States.

Is water too cheap? Part One

An expert shares his market-driven plan to fix a crisis

Robert Glennon, the author of Unquenchable: America's Water Crisis and What to Do About It, believes water is too cheap and says it’s a chief reason this country now faces a water crisis. As he puts it: “The United States may fret about running out of oil, but water lubricates the American economy just like oil does.”

Glennon, the Morris K. Udall professor of Law & Public Policy at the University of Arizona, isn’t all doom and gloom. He has a solution: A market-based strategy that would allow farmers to offset their consumption and, in turn, sell that unused water to the highest bidder. In short, water would become a new kind of cash crop. 

Glennon, who is scheduled to speak at the Modern Energy Investor Forum in Denver that begins Wednesday, sat down with Planet-Profit Report contributor Kirsten Korosec to explain the state of water in United States, his strategy to fix the problem and the role renewable energy will play in the Southwest. 

Planet-Profit Report: What is the state of the water supply in the southwestern United States? How dire is it and is there any hope?

Robert Glennon: Well, it’s a crisis and the crisis is now. The drought in the Colorado River system is in its 11^thor 12^thyear;In California and in Oregon, the commercial fishing season has been cancelled for the third year in a row because there’s not enough water;  Idaho, I think Wyoming and Arizona have denied permits for three new coal-fired power plants because there wasn’t enough water to run them; solar plants are having a hard time finding water supplies; Aquifers are having the ground water table drop and scores of commercial land, residential projects in southern California have been canceled for lack of water.

So, all of those things point to a crisis and the crisis is not just about the bunnies and people who want to hug trees. This is about business.

PPR: How have water laws, particularly those in the Western United States shaped our current situation? Has it created or exasperated the problem we have today?

RG: Yes, it has because it’s been too permissive. In every Western state for surface water, there’s a thing called the prior appropriation doctrine. Meaning, first in time is first in right. But the doctrine has been very loosely enforced, the rights are not clearly defined or have not been adjudicated by the courts, so all you really have is claims of water rights rather than rights that a court has examined and upheld.

And then for groundwater, states like Arizona and California have bizarrely decided to govern groundwater by rules that are completely different than the surface water regime, even though every hydrologist will tell you that groundwater and surface water is intimately connected. They simply represent molecules of water that are at different points in time in the hydrologic cycle. So to have two different rules is bizarre. And worse, the rules for groundwater are essentially you can pump whatever you want. There’s no limit on it.

So long story made short, is that legal rules have been very permissive, often out of touch with hydrologic reality and the enforcement mechanism has been wanting.

PPR: Is it impossible to tackle the water laws at this point?

RG: No, not at all. And anyone who thinks we’re going to scrap it and start anew is not thinking politically clearly.

So having set up the crisis, the question is what to do about it? Business as usual solutions – meaning dams, new wells and new diversions – those are not viable options. There are dreamers who think there’s going to be new oasis out there or that we’re going to tow an iceberg from the Arctic or divert a river from British Colombia. Those are just zany schemes with no chance for ever being pulled off.

PPR: So, what’s a realistic solution?

RG: Well, actually quite a few things.  One is conservation. It sounds simple enough and it’s obvious enough, but we haven’t done enough of it.

Two, we can reuse water. We’re doing that in Tucson. Ten percent of what Tucson provides is reclaimed water and we can do a lot more of that.

Three, in some places desalinization. It’s expensive, uses lots of energy, it’s got a waste problem of its own. Still, if you have few options, lots of money and high value of use then that’s an option.

The fourth is price.We need to get our hands around the price of water. Very simply, we’re spoiled in the United States. We wake up in the morning and turn on the tap and out comes as much water as we want for less than we pay for cell phone service or for cable TV. It’s bizarre. We need to do something about that. So, getting the price of water right will help a lot. Here again, the business community comes in.

And finally we need to reallocate water. All the water there is – is. So, we’re not going to make any more water. When you talk about reallocating water, what we’re talking about is farmers doing with less because farmers use between 70 and 80 percent of every Western state’s water.

Bottom line is what I want is for development to pay its own way and this is fine with the business community. What the business community can’t stand is the word ‘No.’ The word, ‘Yes, but’ so long as what follows the ‘but’ is clear of what the business community has to do, it’s no problem.  It’s just the cost of doing business and you amortize it in. 

PPR: How does this work?

RG: So if you’re going to talk about freeing up water for new projects, whether those are residential, commercial construction, a Google server farm, an Intel fabrication facility and more, they all need water. And they all are high value uses.

If you try and use regulation to make farmers more efficient, you get enormous pushback. It’s politically impossible and I think, morally and ethically wrong to simply ask the farmers to absorb these new costs.

It’s the non-farm community that wants the farmers’ water. So rather than pretend that you’re going to get Congress or state legislatures to take water away from farmers, that’s not going to happen. You need to create a situation where the farmers benefit from the system.

The incentive I have is a market-based incentive: Greed.  Show them the color green and let them make decisions about whether it makes sense to sell some of the water they’re using to the developer or not.  I’m talking about actual use rights; rights that are currently being used to grow something being transferred to a developer.

Robert Glennon is scheduled to be the keynote luncheon speaker at the Modern Energy Investor Forum on Thursday, Sept. 23. Learn more.