Here’s what a housing bubble looks like. Housing prices. Red is Arizona, green is Nevada, blue is us here in New Mexico. The three states track together since the 1970s (off to the left of what’s displayed in this graph). Prices in Arizona and Nevada shoot up beginning around 2004, then collapse pretty dramatically. Click through for larger image. Data from St. Louis Fed.
“The Saudi Arabia of X” is a common new energy meme that has been applied, among many things, to the oil shales of the western United States. But its invocation requires some significant arm-waving over the question of water, as this report by Jeremy Miller points out:
But it is water – or more specifically, its scarcity – that is likely to be shale oil’s greatest stumbling block in the arid West.
The United States Geological Survey recently estimated that there may be as many as 1.525 trillion barrels of oil trapped in the rock of Colorado’s Piceance Basin, the region’s richest shale field. And a report released in March by the non-profit Western Resource Advocates, an environmental group based in Boulder, Colo., suggested that oil companies have acquired water rights at hundreds of locations in the upper Colorado River basin, which could be used for future oil shale production.
“There is this theoretical idea that if you could somehow extract all of the oil” from the Piceance Basin, said David Abelson, an author of the report, “you would have more oil than Saudi Arabia.”
The W.R.A. report, citing figures from the Bureau of Land Management and RAND Corporation, argued that increased water use for oil shale development could hamper urban growth in the Rocky Mountain Front Range, threaten agriculture and critical habitat for endangered fish and increase likelihood that Lower Basin states like Nevada, Arizona and California would issue a “call” — a legal decree that forces junior upstream water rights holders to reduce, or eliminate altogether, water use until senior downstream rights are met.
I’ve repeatedly leaned over the years on Kelly Redmond’s definition of drought: “insufficient water to meet needs”.
I was reminded of same today when a friend who lives in Massachusetts sent me a story about water shortages there:
With lawn watering season just getting underway, the state says there are 160 rivers and streams in the state that already suffer from low flows or water levels. Some, like parts of the Jones River in Kingston, run bone dry some summers.
And a new state Department of Fish & Game report shows river fish are disap pearing from many Massachusetts waterways – including the upper Charles and Blackstone rivers – in part because too much water is being taken from them. Brook trout, a local favorite, have all but disappeared from the parched upper Ipswich River. The stock of native bait fish such as common shiners have plummeted in the Blackstone.
Overwatering is to blame for much of the excess demand, local officials say.
There’s never been a “call” on the Colorado River – a need to curtail use in order to meet Colorado Compact delivery obligations. But folks in Western Colorado are preparing for the possibility. Via John Orr’s Coyote Gulch (a Colorado (state) water blog), a release from the Colorado River District explains how it works:
[U]sers with pre-1922 rights would be compensated for entering into an agreement to offer their senior water rights that are exempt from compact administration to junior users who would otherwise be called out by compact delivery requirements. Junior water users, in turn, could “subscribe” to the bank as a sort of insurance policy in the event of a compact call on their water rights. The bank would serve as the administrator and clearing house for those with senior, pre-1992 water rights and those with junior rights needing an alternative source of water. Temporary use of senior rights by juniors would only be permitted if a compact call were in effect or imminent.
The Tree Rings’ Tale: Understanding Our Changing Climate
In his history of of American economic growth, Empire of Wealth, John Steele Gordon discusses the importance of the provision of clean municipal water supplies to the growing industrial cities of America’s east coast. The rich had cisterns, the poor hauled water from contaminated wells, and nobody had very much of the stuff. Indoor plumbing was, to its first users, a delight, and he describes the luxury of soaking in a tub without having to heat water on the stove. But did it come with a cost to our eternal souls? Gordon writes:
Boston, ever vigilant against the possibility that people might be enjoying themselves on the Sabbath, banned bathing on Sundays.
One of the great advantages of the web for us on the content-creation side is the information web users give us, via their clicks, about their preferences. Usually I am not surprised (salacious crime, etc.). But if you had asked me if my little squib about El Nino’s arrival (sub. req. maybe sorta) would be one of the Albuquerque Journal’s top read stories last week, I would have sneezed in your general direction.
Go figure.
Emily Green yesterday detailed the story of Cadiz, the California company that wants to pump groundwater from the Mohave desert and sell it into Southern California’s coastal municipal and industrial market.
CALIFORNIA Governor Arnold Schwarzenegger has endorsed plans by private speculator Cadiz, Inc to tap Mojave ground water, reports the Los Angeles Business Journal. The Cadiz plan, according to a statement from the governor, “will sustainably recover more than one million acre feet of water that would otherwise be lost to evaporation and make it available to help provide a reliable source of water for Southern California.”
At first blush, this would seem like a sensible use of market mechanisms to deal with water problems – willing seller, willing buyer, price set, water delivered. But, in fact, Green’s analysis of the story illustrates two fundamental market failures.
The first is what the economists call “rent-seeking behavior” – the actions of private individuals to distort markets by persuading governments to act in a way that has the effect of subsidizing the action at hand. Cadiz, as Green argues, has this problem in spades, with close associates of the company’s owner placed in key positions throughout government in an apparent effort to influence government decisions favoring the project.
The second involves environmental externalities: side-effects of the project that are not captured in the water’s price:
[Q]uantity of water was also a challenge. In 2002, the Colorado River entered what the US Bureau of Reclamation river masters now call the worst drought of the last 100 years. There was no extra river water to bank in Cadiz’s private aquifer.
This left the option of pumping Mojave ground water water out from under Cadiz land and selling it to Metropolitan and its agencies. Except that so little water flows into the Mojave through rain and snowmelt every year, this option would mean swift collapse of delicate desert ecosystems.
In fact, markets work in relatively predictable ways. Absent intervention to prevent things like this, markets deliver failures like Cadiz with some regularity.
The European Union has released its latest greenhouse gas emissions report, and on paper it looks good. Emissions are 9.3 percent below 1990 levels. But if you look closely at the data, there is perhaps less reason for optimism than the number, on its face, suggests, as Roger Pielke Jr. notes, the largest reductions in recent years have come in sectors not covered by the European cap-and-trade system. In the long run, the major reductions have come either in the former Soviet bloc, where economic collapse explains a large part of the reduction in emissions, or in German and the United Kingdom, where policies unrelated to climate change explain the emissions reduction.