Water grab: The laws of economics trump the state and federal lawful approval

The state engineer and the BLM may have both given the Southern Nevada Water Authority a green light to pump up to 84,000 acre-feet of groundwater a year from four rural valleys in Lincoln and White Pine counties, but that doesn’t make the project economically feasible — and it isn’t.

While various coalitions, alliances, do-gooders, sage huggers, animal lovers and assorted rural politicians greeted the approval news with apoplexy, Eureka Republican state Sen.-elect Pete Goicoechea explained why the pipeline probably never will be built: “Spending $15 billion for 84,000 acre-feet of water is not cost-effective,” he said. “The project is not economically feasible …”

Yes, you can give your grandson permission to fly from the roof of the barn, but the laws of physics dictate that, if he tries, he’ll crash. Likewise, economics dictate the rural water grab is a pipe dream, as explained in this week’s newspaper column available online at The Ely Times and the Elko Daily Free Press.

Groundwater permits were first sought in 1989 to ensure a continued water supply for the rapidly growing Las Vegas metropolitan area and to supplement drought-prone Lake Mead, from which the valley now gets 90 percent of its water.

But a not-so-funny thing happened on the way to the spigot.

The housing market in Las Vegas incinerated. Property values plummeted by half and home foreclosures and business closures and unemployment rates were the highest in the nation as the recession hit.

In fact, according to water authority records, the system’s water use fell by more than 44,600 acre-feet between 2007 and 2012.

One study for the water authority projects costs for the rural water importation project would in most years over the next decade exceed $2,000 an acre-foot. This is while Colorado River water has in recent years been sold to farmers in California and Arizona for less than $20 an acre-foot. That same study estimates water rates in Las Vegas would triple if the groundwater is tapped and piped south. Imagine what would happen to water consumption if that happened. Some of the member districts of the authority are already trying to figure out how to increase rates because they aren’t selling enough water to cover expenses.

The 44,600 acre-feet already saved in five years is more than half way to the 84,000 acre-feet of rural groundwater. All that’s needed is a bit more conservation.

But the real solution is to allow water rights to be bought and sold in a free market like any other commodity.

Economist Thomas Sowell explains in his book “Basic Economics”: “There is no need for government officials to decide arbitrarily – and categorically – whether it is a good thing or a bad thing for particular crops to be grown in California with water artificially supplied below cost from federal irrigation projects. Such questions can be decided incrementally, by those directly confronting the alternatives, through price competition in a free market.”

Read the entire column at Ely or Elko website.