A libertarian approach to water policy

by on July 4, 2007 at 6:45 am in Economics | Permalink

Presented in one long, excellent blog post (do read it), here is a partial response.  I’ll note that water policy has long been an area where libertarian insights are hardest to apply.  Property rights in water (to the molecules?  to a flow?  to water of a certain quality?  what is the natural unit?  …and don’t even get me started on water tables) are more of a fiction than, say, property rights to your toothbrush.  That makes administrative law more important, more valuable, and more of a balancing effect for water than for most other sectors of the economy.

If you wish to purge yourself of all libertarian tendencies, just study water law for a few months.

If you wish to increase your libertarian tendencies, study farm policy, corporate welfare, teachers’ unions, or anti-marijuana laws.  A stroll by the HUD building isn’t a bad refresher course either.

Barkley Rosser July 4, 2007 at 10:58 am

I provided a lot of comments on the earlier round of this, which remain relevant
and are reinforced by the linked commentary. Let me emphasize a new institutionalist
element that I think you, Tyler, are aware of, but which I think I am the only one to
mention: the issue of conflicting principles of property rights for riverine usage.
The two principles are fist use and riparian, and they have never been fully resolved
to the best of my knowledge. On first use, the Indians and their treaties would appear
to have the edge. In contrast to my earlier remarks, I think the farmers would get more
help from the riparian. But, in any case, one cannot organize a market until one straightens
that matter out, and, of course, that is fundamental to any application of the Coase
Theorem, which assumes clear property rights. In this case, they are not clear, and while
various government bureaucrats over a long time have complicated things, it is not clear
that they would be clear even without the interventions of the politicians and bureaucrats.

anon July 4, 2007 at 11:42 am

How are libertarian principles at odds with unions (teachers’ in particular)? I was under the impression that the constitution granted freedom of association and that countless international treaties affirm the right to unionize; if a group of workers chooses to withhold its labor, that is perfectly within its rights. I doubt you actually have a problem with the tenure system in academia (or at least didn’t as an assistant professor). I’ve always thought the hatred for teachers unions stems from pure classism as opposed to any reasoned arguments.

Pablo July 4, 2007 at 11:47 am

You might also be interested in this calculation over on triple pundit about the economics and costs of exporting bottled water all the way from Fiji. Which also seemed like a crazy idea to me.

http://www.triplepundit.com/pages/askpablo-exotic-bottled-water-002401.php

Ethan Zuckerman has more:

http://www.ethanzuckerman.com/blog/2007/07/03/fiji-water-endlessly-fascinating

Pablo July 4, 2007 at 12:42 pm

Also this post on the reason blog on water, public choise and privatization:

http://www.reason.org/outofcontrol/archives/2007/07/bottled_water_c.html

Yancey Ward July 4, 2007 at 1:17 pm

To the anonymous commenter at 11:42 a.m.,

It isn’t free association of workers into unions that libertarians object to, but rather, the use of state power to force employers to deal with such unions. Some object to this principle because they believe that employers have more natural power and, thus, the law should balance this with labor law. Libertarians don’t care to address, with governmental intervention, natural disparities in bargaining power, nor should they.

A better counterargument is that employers have more access to state power and, thus, a non-natural advantage in bargaining power, an imbalance that should be addressed by the state putting its finger on the balance to even things out. Of course, the libertarian counter to this argument is that the solution to the problem should address the fact that employers corruptly use state power, not to allow workers to do the same.

anon July 4, 2007 at 1:51 pm

To Yancey:

Your points are well taken if selective of facts. If you’ll recall, the government has always retained the right to enjoin strikes and force workers back into work, especially public employees. In many states, strikes are expressely illegal for teachers and stiff fines are enforced. So, the government meddles in the rights of workers to refuse to work as a group. To strike a balance, federal policy coerces employers to bargain in good faith with a certified bargaining representative of the employees. There are reasonable justifications for these policies including but not limited to industrial peace. Another crucial point, secondary strikes are prohibited. This is a crucial tool to even bargaining power. With all of the restrictions on employees self-association rights, the requirement (which is very modestly enforced) that employers bargain with union is hardly onerous.

Eric H July 4, 2007 at 6:06 pm

“the government has always retained the right to enjoin strikes”

Always?! And you think it preserves workers’ rights? Take a look at this from the Mutualist Blog:

http://tinyurl.com/2pysg2

Also, hasn’t GMU’s own former resident of parched Arizona, Vernon Smith, written about property and aquifers? Can we solicit a guest post?

Yancey Ward July 4, 2007 at 8:52 pm

anon,

Selective of facts? I just answered your question as to what libertarians had against union law. Your points are rather meaningless in this regard since the use of state power to coerce workers back into their jobs is just another aspect of labor law that libertarians are opposed to (I am, of course, ignoring those cases where workers have signed contracts to not strike). If one is unhappy with this part of the law, then they should oppose the use of coercive government power against all parties.

Should there be a law that forces you to bargain in good faith with a car dealer?

TGGP July 5, 2007 at 12:33 am

Brian, libertarians object to the state ownership of schools! I suspect that most people thought it more sensible when public sector labor unions were not permitted (not employing union members is a negative right, so libertarians would not object to the government possessing it). The private sector has seen declining union membership because they are outcompeted by union-free competition. The government does not have to worry about competition or even from people abstaining from the “service” they provide, so the public sector is the main refuge of organized labor.

anonYmouse July 5, 2007 at 4:56 am

Tyler

There are plenty of corporate HQs that are as ugly as the HUD building. The Seagram’s Building or Lever House are rarities, not commonplace.

images.google.co.uk/imgres?imgurl=http://www.urbandb.com/canada/ontario/toronto/thumb-bell_trinity_square_2005-08-06_1.jpg&imgrefurl=http://www.urbandb.com/canada/ontario/toronto/bell_trinity_square/&h=113&w=150&sz=6&hl=en&start=11&tbnid=Xu-CqOa6r_KWDM:&tbnh=72&tbnw=96&prev=/images%3Fq%3Dbell%2Btrinity%2Bcentre%2Btoronto%26gbv%3D2%26svnum%3D10%26hl%3Den%26safe%3Doff%26client%3Dfirefox-a%26channel%3Ds%26rls%3Dorg.mozilla:en-US:official%26sa%3DG

a famous ‘sick building’ built in Toronto for the national phone company as was.

Public buildings have a bad rep because they tend to be built in a very cost-conscious environment. The result is often substandard construction and inefficient workspace.

Bernard Yomtov July 5, 2007 at 11:53 am

“Excellent post???”

I admit that the thought of reading a long libertarian post on water rights was not overwhelmingly attractive. But I tried. The post is mostly a rant against bueaucrats. There may be an interesting fact or two buried in there, but by and large it was just as bad as I feared.

Francis July 5, 2007 at 2:53 pm

let’s untangle a few of the issues here.

There was a massive fish kill on the Klamath in 2002. The only reason that the Endangered Species Act was involved at all was that a small percentage were coho, a protected species.

You would need to get Michael Kelly’s deposition testimony, but it appears pretty clear that the NAS report was a red herring. The NAS report was equivocal, as may be expected from an interim report; senior Interior officials used the NAS report to rewrite the biological opinion in a way that was so bizarre that the DOJ didn’t appeal an adverse judgment. The plaintiffs took the case to the Ninth Circuit and won even more than they got from the trial court, apparently exactly on the grounds asserted by Kelly as being plainly irrational. So, it is entirely possible that the Administration didn’t care what the NAS report said. It could be the case that no matter what the report said the Administration was going to rewrite the bio. opinion as to favor the farmers.

But most of the fish kill had nothing to do with the ESA, because the dead fish were chinook. Had there been no dead coho, it would have been very interesting to see if the Tribes would have sued for violation of their treaty rights (for all I know, that lawsuit may exist), or whether the commercial/recreational fisheries would have sued for violation of the public trust doctrine, or whether the other interests (like environmental) would have found other causes of action (Clean Water Act violations, maybe).

California water law is incredibly complex. The simplest version I can give here is that river water is allocated on a first-come, first-served basis, with each claimant limited to the amount of water which can be reasonably used for beneficial purposes. (I know nothing about Oregon water law.)

But where things get really hard is that fish need more than a certain flow of water. They need water of a certain temperature. They need water all the time. They need the water to not have an excessive amount of pollutants and contaminants. They need a certain level of oxygen in the water.

Section 303(d) of the Clean Water Act attempts to address these issues by forcing states to identify those waters which are impaired by any contaminant, then EPA figures out how much the natural flow of the river would carry that contaminant (the load allocation), how much additional contaminant the river can carry without interfering with the beneficial uses of the river (the waste load allocation) then divides up among the non-point dischargers to the river the waste load allocation.

dead easy, right?

In addition to the problems associated with preventing discharges to the river in excess of that which the fish can tolerate, the other major problem is overallocation of water inter-state. Between the demand in Oregon and the demand in California, the river cannot meet all demand in a drought year. (The poster child for overallocation is the Colorado River. But that’s a whole other story.) Users of the Klamath in California claim California property rights; users in Oregon claim Oregon property rights. These rights only come into significant conflict in a drought year. (Note: modeling being done by highly qualified environmental scientists is showing that the Western states are already seeing the impact of global climate change in changes in the patterns of river flows due to changes in snowpack formation and melt. These conflicts will only get worse.)

What, precisely, is the libertarian solution for addressing inter-state conflicts between holders of private property rights?

mickslam July 5, 2007 at 7:05 pm

Lol about the Hud building. Try driving down the Skyway in Chicago all the way through the Indiana toll road. Blight is the only way to describe this area. Or of course you can look at most modern office parks built in the 90s. They are pretty – or are they? I find them um…

I am personally involved with creating a market for water. My job is doing product development for a futures exchange. A gigantic problem is that there is no real market for this commodity. Where can you go and buy lots of water – who do you call? This place, person or company simply doesn’t exist, and the more I look into it, I believe that it cannot exist. The geographic scales involved are too large to be overcome with any meaningful ownership contracts. The delivery systems are simply not designed to be metered in a meaningful. Plus, one of the key requirements of any contract is that quantity and quality can be quantified and then priced. A pricing system that would take into account the important variables for water would be far to complex to be useful. Then, how do you withhold delivery in the case of non-payment with our current delivery systems? How do you refuse delivery in the case of unacceptable quality? How would you determine the correct economic compensation for below quality.

Kyle July 6, 2007 at 4:21 am

Public buildings have a bad rep because they tend to be built in a very cost-conscious environment. The result is often substandard construction and inefficient workspace.

Wha… ?

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