Editorial: Let the free market ‘invisible hand’ distribute water

As Ronald Reagan once said: “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.”

Those words came unbidden to mind when a gaggle of government satraps gathered in Carson City to discuss how best to dole out water during this drought.

The drought forum was set up by Gov. Brian Sandoval, who asked its participants to recommend how to deal with the ongoing water shortage.

The most frightening thing reported out of the session was talk about changing the state’s water law.

“I think ultimately water rights management has to evolve from the strict prior appropriation to more of a paradigm of shared risk,” John Entsminger, general manager of Southern Nevada Water Authority, was quoted as saying.

The first Nevada water law was passed in 1866 and recognized the vital role mining was playing in the state’s economic growth. Though all water within the state is subject to state regulations and controls, the law recognizes the basic principles of prior appropriation and beneficial use.

First in time is first in right.

But then those with the rights must use it or lose it. The holders of those rights may not speculate in water rights or hold on to water rights they do not put to beneficial use in a timely manner. “If they stop using the water, they will lose the water right,” the Nevada Department of Conservation and Natural Resources explains.

But water is a property right, and as such it may be bought and sold.

At the drought confab, according to press accounts, some questioned this concept and asked whether giving water right holders access to water at the expense of others in times of drought benefits the public good — whatever that means.

There appeared to be a sentiment for treating water as a communal commodity to be distributed by some government agency — to each according to their needs?

But just as water seeks its own level, so too free markets seek and find the fairest and lowest price and widest distribution for any commodity.

Murray Rothbard, one-time UNLV professor of economics, once wrote: “If the government wants to conserve water and lessen its use, all it need do is raise the price. It doesn’t have to order an end to this or that use, set priorities, or decide who should be allowed to drink more than three glasses a day. All it has to do is clear the market, and let people conserve each in his own way and at his own pace.

“In the longer run, what the government should do is privatize the water supply, and let water be supplied, like oil or Pepsi-Cola, by private firms trying to make a profit and to satisfy and court consumers, and not to gain power by making them suffer.”

This was echoed by newspaper columnist and economist Thomas Sowell 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.”

Creating a free market for water would encourage innovation and efficiency, allowing water to flow from low-value uses to high-value uses while providing both parties of the transaction a profit.

Public officials should resist the urge to “manage” the water supply and permit the free market to apply its “invisible hand.”

A version of this editorial appears this past week in the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

23 comments on “Editorial: Let the free market ‘invisible hand’ distribute water

  1. Anonymous says:

    Government intervention in the free market is a recipe for disaster. This has been shown over and over again throughout history. The Fed has added a net increase of just below 4 trillion dollars to its balance sheet and to what end? A dismal jobs report, stagnate wages, excessive government and personal debt, a manufacturering sector becoming non-existent in the US, durable goods orders sinking….Pick any economic indicator…they are all lower, much lower than we have been lead to believe by the main stream economists.

  2. Patrick says:

    “Those that cannot afford to drink water must die”

    Murray Rothbard

  3. Rincon says:

    A free market for water is a great idea, but would it be free for the taking at its source with no limits on quantity?

  4. Patrick says:

    Rincon: forgetting entirely that a free market isn’t a free market when anyone is forbidden to do anything, exactly what is “great” about a free market for water?

  5. Patrick says:

    Here’s a good article about the drive to get water into the hands of the wealthiest Connie’s and people on earth and what it means to the rest of us.

    “How much for a breath of air?”

    “If you can’t afford a breath of air, you die”

    Murray Rothbard


  6. Rincon says:

    Ity depends what a “free market” for water is. Raising the price of water to allow those willing to pay more to have more is reasonable. If water cost a bit more, they would stop growing cotton in California, which is about as smart as making popsicles in the Yukon. The question though, is who gets the water at the source? If we let anyone and everyone have the right to suck as much water out of a body of water as they desire, we might find Lake Mead dropping a lot farther.

  7. Steve says:

    You don’t pay for water. You pay for processing it to a potable condition, you pay for the delivery methods and you pay to have the waste or used water removed.

    You have the option to do all this on your own, go to the lake, fill up your barrel and purify it, then find a way to discard the used and waste water.

    You will find the costs associated far exceed what we all currently pay for water.
    Allowing the market to set these costs and try to make a profit while doing so would result in automatic individual rationing.
    And the wealthy would not see any difference, they currently use as much as they want, paying more or less on an open market would mean little to them.

    One method of delivery results in conservation the other results in regulation.
    And regulations are meant to be ignored. You see that every day on the freeways where the speed limits are mere suggestions.

  8. Rincon says:

    Our water bills in Illinois reflect the costs of processing and delivery because our water commissions generally have no other funding. Who is subsidizing water out west?

    The water available is not unlimited as evidenced by the level of Lake Mead. If Colorado, Arizona and Utah get the chance to tap the Colorado for unlimited amounts of water, you may soon find that Lake Mead is no more. Sucking water out of a river and sending it down a pipe is dirt cheap

  9. Steve says:


    “Sucking water out of a river and sending it down a pipe is dirt cheap”

    Sure opens a window in to the liberal mind, at least when it comes to other peoples money.

    That figure is for the third straw (or “pipe”) and does not include the necessary pumping station (tack on another $650,000,000.00) to get the water delivered to the valley.

    This is a “dirt cheap” total of $1,467,000,000.00

    “dirt cheap” what a crock of crap.

  10. Rincon says:

    On a per gallon basis, it is indeed dirt cheap. At 900 million gallons a day, if it only pumped for 10 years, the cost per gallon equals about $.00045 or 45 cents per 1,000 gallons. Although this does not count maintenance costs, etc., the tunnel is likely to last at least several dozen and perhaps more than 100 years.

  11. Steve says:

    You still don’t pay for water.
    You pay the costs of getting to you.

    Think of it like a well, the water is there for the taking…just got to get to it, so you drill and unless you own your own drill and its fuel source, you pay for getting the well water to your faucet.

  12. Rincon says:

    Of course. Problem is though, that people can use more water than the Colorado River can supply. The fact that it no longer reaches the Gulf of Mexico demonstrates that. So far as I know, Arizona and presumably, the other states along the river are limited by law in the amount of water they can remove. Take away those limits and I suspect those upstream will use it all. A few hundred farms in Colorado, Utah and Arizona would pretty much insure that Las Vegas would get nothing.

  13. Steve says:

    Las Vegas has the smallest allotment of all and recovers almost 75% of it. Then returns that portion to the river.
    Every drop of indoor water used in Las Vegas is recovered. The water not recovered is used outside for landscaping. Even water used in car washes is recycled, then recovered.

    This desert community is an example by which all the big guys could learn and California gets the largest allotment. They are taking lessons from the Las Vegas Valley Water District.
    Arizona and California are Downstream from Vegas, ensuring Vegas will have access to its allotment, though if the lake were to drop below the intakes at Hoover Dam they both lose all access to the water and the hydro power.
    Rest assured, unless the Colorado completely dries up, Vegas will be here to take your money for a VERY LONG time!

    This wiki article is pretty accurate.

  14. Rincon says:

    The Colorado River passes through northern Arizona before getting to Las Vegas. I suspect it could be readily piped south if the need arose, which would cut off Las Vegas. You also don’t seem to appreciate how much water a few hundred farms can use. With no restrictions, it wouldn’t be surprising if several hundred farms or even more than 1,000 would pop up.

  15. Steve says:

    No place to dam it in AZ. Allow me to repeat, Nevada has the smallest allotment and returns 75% of that allotment to the river. Las Vegas is the single most efficient user of water on the river.

  16. Rincon says:

    Dams can be built, but who needs to? Lots of cities and farmers just suck the water straight out of the river. Besides, Utah has the Glen Canyon Dam. Plenty of water available there. Under your plan, I presume private enterprise would be free to remove unlimited amounts of water and sell it to newly irrigated farms nearby. Being efficient won’t help Las Vegas if the people upstream aren’t.

  17. Steve says:

    “my plan” ???

  18. Rincon says:

    Your words: “Allowing the market to set these costs and try to make a profit while doing so would result in automatic individual rationing”. You seem to be advocating a free market for water. Is this incorrect? You also mentioned that water is subsidized. Any examples? If it’s substantial, it would discourage conservation.

  19. Steve says:

    I was reminding you of Thomas Sowell’s words….apparently you didn’t read the article.

  20. Rincon says:

    I think we agree in principle: Water should not be subsidized in any way. The market should be loosened as much as possible. If The Colorado starts drying up hundreds of miles upstream, corrective regulations would become necessary.

  21. […] equitable changes to water law and experiment with allowing water to be bought and sold on the free market, the best way to allocate any […]

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