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Business Observer Friday, Jan. 22, 2016 2 years ago

Fiat Water Use

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When lawmakers adopted a massive water bill, they expanded the state's control. Rather than go California, water pricing would be better.
by: Adrian Moore Staff Writer

Florida House and Senate leaders gave themselves big high-fives in the opening week of the 2016 legislative session after adopting a 134-page bill of water regulations and policies that give the state's water districts more central power and control over the allocation of water.

Reading through the legislation is almost akin to water torture, and the more you sink into the details, the more it appears lawmakers have adopted have conservation provisions that seem to be coming from, of all places, California.

If you paid attention at all to California's drought over the past year, predictably California lawmakers have responded to the drought with a wide range of draconian water conservation mandates and regulations and an unprecedented government commandeering of water resources and decision making. Certainly water scarcity is a concern, but there are better ways to address it than with more centralized regulation.

FLORIDA DOING A GOOD JOB
In recent years, Florida did a pretty good job managing water uses. The U.S. Geological Survey reports that between 2000 and 2010, while Florida's population increased by 18%, freshwater withdrawals decreased 22%. Notably, the decreased water withdrawals included public supply, agricultural use and industrial/commercial uses. And this trend appears to be continuing.

That said, the Florida Department of Environmental Protection projects that by 2030, even with reduced water use per person, population growth will demand an increase of about 1.3 billion gallons of freshwater per day. That's a lot of water.

The good news is the state's water supply regions have all developed plans that identify new water supply projects that, if constructed, would produce around 2.2 billion gallons per day of new fresh water by 2030, more than enough to meet projected new needs. The bad news is state and local agencies have not figured out how to fund and build about half of those projects, so they are arguing we need more water conservation mandates and regulations to fill the gap.

NEW WATER SUPPLY
But rather than plotting how to force all of us and the farms and businesses of the state — not to mention all of the visitors — to use less water, legislators should have been, and should be, focusing on those projects that create new water supply. The ones identified in regional water supply plans are a good start. Funding them should be a priority.

A good, longer-run engineering approach to the problem is desalination plants. Desalination was crucial to Israel coping with its massive 2004-2010 drought. The Tampa Bay Seawater Desalination plant had a rocky start, but helped pioneer ways to make desalination projects more cost effective and manageable. There should be more such plants in the state.
Desalination, when done right, increases water supply without putting any more strain on the underground aquifer.

The DEP acknowledges that desalination plants will be increasing part of the solution in the future, but focuses more on new water conservation regulations than on figuring out how to speed up the development of those desalination plants.

THE MISSING PIECE
The focus on water conservation regulations and central planning of water resources ignores a basic rule of economics: the single most effective way to conserve a resource is to price it. Charging more appropriate prices for using water incentivizes consumers to use less, but lets them figure out how to do it, rather than some centralized water conservation regulators. Let people, farmers and businesses figure out the best ways — for them — to use less water, by changing habits or adopting new technologies.

At the same time, better water pricing could help fund those new water supply projects, including desalination plants. Having clear prices at which new water supply can be sold makes financing the construction of needed facilities much easier to accomplish.

In the 1990s, Australia underwent a massive shift from water conservation regulations and mandates to a system based on tradable water rights and pricing. Now water prices there reflect not just the cost of delivery, but also the scarcity of the water. When water becomes scarcer — due to population growth or whatever — the rising price creates a strong incentive for someone to invest in creating new water supply.

With such a system, environmental groups or state or local agencies would be free to purchase water resources for environmental conservation if they so desire. Instead of calling for “free” water transfers to environmental conservation projects, they would have to consider the price of water and the impact on others, and prioritize their investment of resources to provide the water for habitat. And some water rights where there are already dedicated flows to habitat could be initially allocated to that purpose.

In every way, water markets and pricing would incentivize more sensible use of water resources and spur investment in new water supplies to meet any growth in demand. Certainly they would do so far more effectively than would central planning by state agencies purporting to know how much water each of us should use and how we should use it.

Taking a top-down, centrally planned and managed approach to water conservation is not a surprise in California, but it is still a terrible approach, and Florida should not follow its lead.

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