Why the production of conservation will solve the water crisis
California is a year away from running out of water. Yet, my water bill is more or less the same as what I would have paid four years ago before the current drought began. Meanwhile, farmers along I-5 in the Central Valley have uprooted their orchards and fallowed their fields because water isn’t available for their crops. Water suffers from massive externalities that are not reflected in its price.
The biggest mistake we’ve made in how we manage our water resources is placing responsibility for water conservation in the hands of the same agencies responsible for providing (i.e., selling) water. How do you tell your customers that you want them to use less of your product? If you’re successful, you’ll soon be out of business. If you fail, you’ll be held up as an example of all that is wrong with the world.
If you’ve wondered why California seems unwilling to avert its looming water catastrophe, it’s because the value of selling water is greater than the value of not selling water. Until there is no more water to sell, California will continue to drink itself dry.
But what about at a practical level? Is there anything can we do?
To solve the water crisis, we must enable the production of conservation.
For more than a century, expanding the water supply has been the favored approach of governments and water agencies. For the most part, bigger dams, deeper wells, and desalination plants have been able to keep pace with rising demand. However, scientists are showing that we have now reached “peak water”. We have transitioned from an age of surplus to an age of scarcity. The new reality is that we don’t have the additional capacity to supply more water to the populations that rely upon it.
If we accept that supplies are limited how do we increase the production of conservation?
Increasing the production of conservation means moving away from “save money on your utility bills” and “do the right thing” as motivational tools. There must be transparent opportunities to create value through conservation.
Consider the difference between giving your friends a ride in your car versus deciding to drive for Uber or Lyft. You might give your friend a ride to the grocery store in the hopes that she might chip in on the gas and because you are a good person. But your willingness to provide this service diminishes rapidly even if you might “save money on your bill” and even if it’s the “right thing to do.”
On the other hand, you might be willing to spend all day driving people around town if you knew that each ride would net you some income. And if you knew exactly how much money you could make with each ride, you could decide how many rides you would offer.
Uber and Lyft work because they take the concept of giving someone a ride — a concept that in the past had been almost purely altruistic if performed by individuals — and transform it into a service with a defined economic benefit.
Conservation production can be achieved the same way. If I could earn money by producing conservation for my community — whether in my own house or by helping out friends and neighbors — I could devote my creative energy to finding newer and better ways to use water more efficiently. I wouldn’t do it in the vain hope that my bill would be lower or for the emotional satisfaction of doing the right thing. I could actually be a force for good in my community and be rewarded for my efforts.
If we made it possible to produce conservation, by rewarding such efforts in the same way that Uber and Lyft do — by the unit of production (e.g., miles driven, gallons saved), we would unleash a tidal wave of innovation that has not been seen in the water sector in generations.
