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.

Newspaper surely would not rock the advertising boat

Sunday morning Las Vegas newspaper

Sunday morning Las Vegas newspaper

It was surely a coincidence.

The Las Vegas newspaper on Sunday carried a banner story that jumped to two full pages inside. The headline declared: “We have enough.” Enough water that is for continued new housing development.

“We have enough water to support future growth, even with cuts that are anticipated if Lake Mead continues to decline,” the water district manager is quoted as saying.

Wrapped around that front page was something people in the industry call a spadea, which is essentially a three-page ad. A half-page flaps over the cover and two pages form the back of the section. In this case the ad was for the Summerlin housing developments, with half of that devoted to the developer’s new housing development called The Cliffs.

The Cliffs, according to the ad, is a 450-acre development that will add 1,700 new homes to the valley abutting the mountains to the west.

It is also a coincidence that the Sunday paper has two sections devoted to 18 pages of mostly real estate ads, including a full-page one for a 313-new home development called Ascaya.

“So whether we should stop growing is really a philosophical question. It’s the water authority’s job to provide the tools to let the community be what it wants to be through its zoning, business licensing and investment decisions,” the news article quoted John Entsminger, general manager of the Southern Nevada Water Authority,” as saying. “If the community doesn’t want growth, that’s a community decision. It’s not in our purview to stop issuing water commitments when we have sufficient water resources.”

Population growth? Not a problem.

Global warming? No sweat.

Drought? That third intake pipeline will let the valley suck water from Mead even if the lake levels dip so low Hoover Dam would have to shut down.

Perhaps this story will make up for the column a couple of days earlier under the hed: “Desalination dawdling could leave Southern Nevada high and dry.”

Of course, the new owners of the newspaper would never stoop to coordinating the news with advertising interests.

But tell me again just why the water district and the rural counties are spending millions of dollars on lawyers, engineers and court costs if the valley doesn’t need that $15 billion pipeline to bring groundwater from eastern Nevada.



You’ll just have to drink less, even if you are willing to pay more

Hoover Dam and the ‘bathtub ring’ (NY Times photo)

Water is in the news, especially its scarcity.

Recently The New York Times published a 1,500-word article on this topic, datelined Lake Mead, Nev.

Never mind the credibility of the author, Michael Wines, was blown to hell by his second paragraph in which he says of the Colorado River: “The once broad and blue river has in many places dwindled to a murky brown trickle,” though everyone in the West knows that pioneers used to say of the silt-laden river: “too thick to drink and too thin to plow.” Never broad nor blue.

The article meanders through a series of factoids about drought, attempts to tap lower into Lake Mead for Las Vegas water, conservation, the historic pact that divvied up the river water, recycling and much more.

The article quotes John Entsminger, newly appointed head of the Las Vegas Valley Water District and likely heir to head the Southern Nevada Water Authority, as saying, “The era of big water transfers is either over, or it’s rapidly coming to an end. It sure looks like in the 21st century, we’re all going to have to use less water.”

The Wall Street Journal has a column talking about the shortage of water from one end of California to the other and how it is affecting homeowners, farmers and ranchers.

Jane Ann Morrison had a Review-Journal column about Entsminger’s qualifications to head up the water agencies. She too quoted Entsminger on the likelihood of Las Vegas having to get by with less. “The next chapter is not a discussion of how can we get more water, but how can we all co-exist with less.”

Everyone is wearing blinders. It is all about government allocating existing water supplies, building huge infrastructure, conservation and recycling sewage effluent.

No one but no ever suggests the one and only means of fairly allocating water to willing users: the free market.

I’ve quoted columnist and economist Thomas Sowell on this a couple of times before, but it bears repeating:

“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.”

No bureaucrat who wants to keep his job would ever suggest such a wild and crazy thing.