Jeff Sachs on water policy

by on March 26, 2008 at 3:56 pm in Economics | Permalink

Chapter five of Common Wealth is called "Securing Our Water Needs," an important topic but one neglected by most economists.  One lesson is that climate change will put a big stress on water supplies.  So far, so good, but the recommendations start with greater international cooperation:

A first step, at least, would be to focus on the hardest-hit lands, specifically the world’s drylands.  Fortunately, these are covered by the UN Convention to Combat Desertification, which has 191 member governments as signatories.  Unfortunately, the treaty as it now stands is little known and has little clout and financial backing.  Rather than reinvent the treaty, however, it would be better to reinvigorate it.

I would say it needs invigoration, not reinvigoration.  It is no accident that the Convention has little clout and little financial backing.  Many such Conventions are toothless objects, designed to appeal to a least common denominator within the process of the Convention itself (recall, it has 191 signatories).  No one is opposed to "international cooperation" but it is no accident that truly international bodies have to either find a way to make profit (e.g., the World Bank lends to China) or they are usually very strapped for funds.  That’s just not where the political rents are and that isn’t going to change.

Since Sachs calls this a "first step," his position is in some sense invulnerable.  Whatever you really think should be done can be called the next step.  Sachs writes, however, that the next step is more finance if I understand him correctly he wants to increase funding by more than a factor of 100).  I would prefer finance from national governments, or even from the states or provinces, than finance at the level of international organizations.  Most of the 191 signatories just aren’t that good at R&D, funds accountability, or even technology adoption.

I might add that national governments are the ones that subsidize the price of water to ridiculously low levels, most of all for agriculture.  My first step is to remove all these water subsidies, allow water prices to rise, institute more water trading, and then see which innovations the private sector decides to finance (hmm…those are my first four steps).  One role for government would be to ensure that patent law does not hinder international transfer of worthwhile innovations, a point which Sachs makes in other contexts.  That sounds less glamorous than a big international plan, but I think it has a better chance of succeeding.

Anonymous March 26, 2008 at 4:50 pm

Your (Tyler) proposal makes sense. Therefore, it will not be adopted.

MostlyAPragmatist March 26, 2008 at 5:55 pm

Can you point me to data on water subsidy programs in the Third World? I was only able to find studies of US programs. Agricultural subsidies can be to large farms in prosperous countries (think Napa Valley) or they can be to small families in poor countries (think subsistence farmers in Namibia). Which kinds of agricultural subsidies are you referring to? I’d think it would make a difference.

Bill Stepp March 26, 2008 at 6:06 pm

Since governments create patent law, why do you think they can be entrusted to see that it doesn’t interfere with the international transfer of technology?
Or slave traders policing immigration and being entrusted to achieve the goal of having a free labor market? Can a fox be entrusted to guard the chicken coop?
The only way to ensure that patent law doesn’t hinder the transfer of technology internationally is to abolish patents. This also has the happy result of freeing up the transfer of technology within nations, getting rent seekers out of the public trough, and spurring innovation.
Oink oink.

Grant March 26, 2008 at 7:25 pm

Given that clean drinking water is a purely private good, why would any neoclassical economist support a ‘plan’ to provide us with clean water? Especially one dependent on something as absurd as international governments coming together for the public good? I understand that the distribution of clean water is often considered a natural monopoly, but the supply of it isn’t. It seems to me that even very left-leaning economists should support marketization of drinking water.

I can see how owners of water supplies need their property rights protected, of course.

Stephen, I don’t think anyone buying water from Canada will care if the sale of water pays for social services or not.

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Steve March 27, 2008 at 1:42 am

Getting rid of water subsidies? Impossible. Regimes have fallen over the reduction of said subsidies.

Cyrs March 27, 2008 at 8:16 am

Addressing global problems through global agreements has a certain symmetry to it, but in practice is probably non-productive. Except for very simple problems with easily enforceable solutions (e.g. CFCs), anything that 100+ countries can agree to is likely to do nothing at all.

For example on carbon emissions, a meaningful U.S.-China bilateral agreement would cover about half the world’s emission base, be a good template for a global agreement, and while it would be very difficult to negotiate such a thing, it would still be easier to negotiate it than an agreement among 100+ countries, most of which are a negligible part of the problem.

Alan Gunn March 27, 2008 at 10:13 am

Yes, water subsidies are nuts. We’ve spent billions so that people in California can grow rice in what used to be a desert; this is sort of good for a handful of farmers and useless but expensive for the rest of us.

However, if isn’t always simple to privatize water, because the whole setup is full of externalities. Anybody’s use of river water necessarily affects all downstream users, sometimes upstream users, too, and similar problems arise for underground water.

Francesca March 27, 2008 at 12:05 pm

Roger Bate at AEI has done some excellent work on water markets http://www.aei.org/books/filter.all,bookID.862/book_detail.asp
Also, check out International Policy Network’s work on water. http://www.policynetwork.net/main/index.php

Francis March 29, 2008 at 10:07 am

My first step would be to require flippant economists to learn more about the laws governing water in the West. For a start, in California the federal government does not own the water rights in the water it delivers; the rights are generally held by local special districts. The Imperial Irrigation District, for example, owns the right to divert about 2.8 million acre-feet of water from the Colorado River annually.

So, when you talk about removing water subsidies, in many cases what you’re actually saying is that state legislators and voters should change the statutory laws and constitutions of their states to re-allocate existing property rights in a way that you prefer.

And I thought libertarian economists favored protection of private property rights.

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