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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…


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