MWD and the case for optimism in western water

The folks at Montgomery and Associates recently took a look at the Metropolitan Water District of Southern California as an example of why water management problems, once a region actually confronts shortage, are manageable:

MWD’s response demonstrates that supply-demand imbalances can be resolved through active management. In practice, active water management generally means acquiring more expensive supplies. Basic economic theory tells us that as more expensive supplies are added to a utility’s portfolio, overall cost of water to the consumer rises. In response to these rising costs, customers will reduce their water use. One result is that water demand in the aggregate falls, thus providing another element of the overall solution.

In light of this dynamic process, the question is not whether water will be available — because it will — but rather, how much will it cost, and how will the additional cost be distributed among water users?