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California water crisis
I think the important thing to remember is that that which mathematically cannot continue will not continue. Due to the entrenched nature of special interests and lack of free markets, I expect a hard crash and reset rather than a rational response to a resource shortage. Due to the size of the investments at risk when this happens, I expect this to help cause a national or even global recession. For a time frame, I will guess mid-2020s, likely after the next bust and the next boom.
Mathew
You are right about the inevitability of the math, and the irreconcilable nature of the social and political dispute. I think the national economic impact will be less than you fear.
The big loser will be California agriculture, which contributes less the 3% the state GDP Food costs, as a percentage of household incomes have declined by half in 50 years, to less than 15% of median household income, even as the labor and processing values ( from an economic, not subjective viewpoint) have increased.A 40% decline in an economic sector generating 2.5% of state GDP would be unpleasant, rather than serious.
Consumers of California grown food, particularly items like fruits and vegetables where substitution opportunities are scarce, will feel the pinch.
Certainly, the Rice, Dairy and Almond industry will have serious problems.
I hope you are right about the extent of this. I worry that these effects will spiral into something much larger.
If we can survive the arithmetic surrounding public debt, off balance sheet liabilities and onerous taxation, some broke cattlemen and higher Kale prices, while unpleasant will be survivable.
The sad part is, the whole scenario would have been so simple, and cheap ( free) to avoid.
Not a bad summary. 85% of the water in the state contributes 2.5% of state GDP. water rates very from $50 per acre foot to $1400 per acre foot. Water deeded to Ag can’t be sold for other purposes ( voided).
So we grow rice in the desert, and produce subsidized alphallpha cubes that are shipped to China for their dairy industry!!!
Bizarre.
Just does not make sense unless you add the correct dose of politicians.
The state is one of the bigger water wasters. Lots of leaks that go unfixed for years at a time, but no fines for the agencies who ignore the mandate that ‘we the people’ must abide.
Then yesterday’s news had this story:
Classic.
Toni
You make a great point. In most cases the money from rates go into general revenues, and so can be spent on immediately expedient ( vote getting) initiatives, without providing for maintenance and deferred maintenance, One of the great debates concerning lining the Imperial( All American) aqueduct ( connecting the Colorado River to the Imperial Valley) was who would get the saved water. When the beneefit is confined to a few, and s massive, and the costs are spread among many, the fight to be a beneficiary is intense.
