The right (and wrong) worries to have about water

And what we can do to improve the situation.

In grade school we were taught that water is a renewable resource that covers most of the planet and, quite literally, falls from the sky. I remember water cycle posters from second grade: a storm cloud that dropped rain in the mountains, which collected into rivers, which flowed into lakes or oceans, whereupon the water evaporated to form a new storm cloud. The point was that water moves through this cycle but is never used up. Despite that immutable bit of Earth science, modern society has long been preoccupied with the fear that our water resources are on borrowed time, as though we might accidentally turn the entire planet into a desert.

This fear is pervasive in mass media. The movie Chinatown was released in 1974 and the villain who secures a monopoly over life-giving water has since become an archetype. In Rango from 2011, the rich water thief is an evil folksy tortoise. James Bond gets in on the trope in Quantum of Solace. The 2015 film The Big Short is ostensibly about the 2008 financial crisis but ends with an ominous description of investors shifting their focus to water.

If these examples speak to a moderate anxiety, more apocalyptic options are available. There are now five Mad Max movies set in Australia, with water becoming more precious in each iteration. In Tank Girl from 1995, you can watch Malcolm McDowell rule a desert world — Australia again — and kill his enemies by desiccating them with a spiky suction cup (apropos of nothing, that movie is partially animated because they somehow forgot to film about 10 scenes). In the New York Times bestseller The Water Knife, water rights — which can apparently be carried around like bearer bonds — are worth killing over and somehow still enforceable in a dystopia.

In public policy discussions, our fears can manifest in odd ways. We worry about almond farming (a thirsty high-value crop) but not alfalfa (a very thirsty low-value crop). We worry about evaporative water loss from data centers in Virginia (a region with a near inexhaustible supply of fresh water) but we also put water-guzzling golf courses in Phoenix (a desert).

How did we come to be so incoherent? We worry about a crisis that doesn’t exist while doing very little to reform water management institutions. Less panic and more moderate bureaucratic change (riveting solution, I know) could make us richer while improving the environment.

Source

Importing each other’s water problems

For most of human history, freshwater concerns revolved around agriculture. Things were fine as long as there was enough water to grow crops. Some cultures, like the Khmer Empire, came up with ingenious solutions for water management but were still undone by changing weather patterns. Often, however, civilizations arose in areas where the supply of water relative to possible uses was effectively unlimited.

This was the case when the eastern U.S. was first settled by Europeans. One didn’t need to worry about water at all since the amount available was so vast relative to any possible use for it. In fact, as the historian Anthony Carlson describes in Perilous Waters, we spent many decades preoccupied with draining freshwater wetlands to create more farms. The term “reclamation” initially referred to reclaiming swampland, rather than reclaiming water for arid regions.

The situation changed with the turn of the last century, when we became capable of fouling water at scale. Our first foolproof plan to deal with water pollution was to ignore it. As described by the historian Mike Wallace in Greater Gotham, New York City’s industries operated on the assumption that tides simply carried away any pollutants. The city tested this with dye at one point, realized it wasn’t true at all, then… kept dumping sludge in the rivers. Today, some of the city’s waterways are EPA Superfund sites and the billions of oysters that once lined its bay are long dead. Despite localized disasters, society maintained the belief that we couldn’t possibly damage water resources at a large scale. One could simply go to Long Island to see clean water.

It was in the drier West that we had to worry about getting enough water for the first time. The military explorers Stephen Long and Zebulon Pike popularized a notion that the Great Plains were a “great American desert,” incapable of supporting agriculture. Pike especially was relieved due to his concerns that American democracy might not be sustainable across too vast a geographic expanse, noted historian of the American West Patricia Limerick in an interview.

Humans turned out to be ingenious engineers and simply built our way around nature’s constraints. Water is seasonal in the West, so in the 1800s we began assembly of a vast infrastructure to store and distribute it, eventually enabling large-scale agriculture. We were so enthralled with our success that we seemed to forget any constraints existed.

In the early 20^th century, western water reclamation projects — this time, with “reclamation” coming to mean capturing and retaining water, rather than draining it to make swampland arable — kicked into high gear. Eastern congressmen were initially “not willing to tax the farmers” of their own states to take western lands “and convert them into sugar-producing lands.” But opposition was short-lived and congress created the Bureau of Reclamation in 1902. By the 1930s, the government was addressing agricultural surpluses on one hand (by paying farmers to take land out of production) while, with the other, building reclamation projects that would put more land into cultivation.

Meanwhile, the East and West seemed eager to import each other’s problems. It was puzzling enough that Eastern cities consistently placed sewage lines next to their freshwater intake sites, according to Limerick — but it was even more strange that, learning nothing from the failures back east, Western cities did the same, ending up with their own pollution issues.

Nonetheless, there was an unshakable belief in engineering our way out of anything.

Mistakes, mistakes, mistakes

So it happened that optimism veered into recklessness. Nationwide, we polluted with abandon, exemplified by the time Cleveland set the Cuyahoga River on fire in 1969 — the “mistake on the lake” — and managed to get a Lake Erie reference in the Lorax by doing so. (Point of fact, we set that river on fire at least 13 times, but the 1969 one received national attention.)

Out West, it was as though any sort of water conservation counted as defeatism. The tragedy is that this era’s engineering feats were remarkable! We built an industrial economy and did manage to enable farming in a region that should’ve been too dry for it. But then we deluded ourselves into thinking we’d never have to care about where our water comes from.

In Science Be Dammed, Eric Kuhn and John Fleck describe how, starting with the Colorado River Compact in 1922, we’ve consistently allocated more water than the river has. Crucially, this was never an honest mistake: Before the compact was signed, U.S. Geological Survey hydrologist E.C. LaRue famously warned that water level projections were being rosily based on an unusually wet period. He was ignored.

Even more gob-smacking examples of self-deception are available. The Dust Bowl by Ken Burns explains how farmers fatuously assumed bumper rains would last forever during the anomalously wet 1920s. They undertook a “Great Plow-up,” tilling vast tracts of prairie grasses — which had adapted to uncertain rainfall over eons — and replacing them with drought-intolerant crops. The resulting ecological catastrophe was the second time the region’s homesteaders got burned: In the 1800s, they’d told themselves that “rain follows the plow” (i.e., planting a region will make it rain there) until an 1890s drought proved them wrong.

The problem of water quality first captured national attention insofar as it affected drinking water. In The Search for the Ultimate Sink, historian Joel Tarr explains that water quality was seen as a public health problem and “solved” by treating only our incoming drinking water. Of course, treating drinking water made us much healthier (I, for one, am happy to have never had cholera), but it did nothing to keep industrial waste from our waterways.

If anything, it made that problem worse because it meant less political pressure on polluters. Things shifted by the middle of the 20^th century, as society came to view water pollution more in environmental than epidemiological terms, thanks to new and more visible chemical pollutants, like synthetic organic chemicals that could add thick layers of foam to rivers.

We became gradually more conscious of the problem of water scarcity as we ran out of low-hanging fruit for irrigation projects. Sensibly enough, the best western reclamation sites — dams, reservoirs, irrigation canals — were built out first, so each additional one was more and more marginal. By the 1970s, additional projects just didn’t make any financial sense; by the 1980s (the canonical book on the topic, Cadillac Desert, was published in 1986) we started to see the downsides of our century-long water management spree. These drawbacks included mineral accumulation on irrigated land, pushing animal species to the brink (it’s very difficult for salmon to spawn in a dammed river), and overdrawing the Colorado so persistently that it would no longer reach the sea.

Also, we just got richer. This explanation for why we started to care about water management (and any environmental issues really) can be attributed to more than a few academics, notably among them historian Samuel Hays and economists Gene Grossman and Alan Krueger. Perhaps that’s because it’s obvious in retrospect: A wealthier society has more attention and resources to devote to the environment. It’s easier to care about whether salmon can spawn when one isn’t worried about contracting typhoid from the municipal water supply.

We began to fix our mistakes. On pollution, the Clean Water Act in 1972 marked the point where we got serious about the problem. The act federalized standards, imposed limits on “point sources” of pollution (e.g., a “point source” might be the pipe dumping sludge from a particular factory), and it provided vast sums of money to fund municipal sewage treatment.

On scarcity, there was no, shall I say, watershed moment. Rather, there were various marginal changes that made an impact over time. Urban areas made real progress on demand management, so much so that total usage fell despite large population gains in the southwest¹. Federal plumbing standards helped in this regard. (Anyone who has come across the odd dive bar with a pre-standards-era toilet can attest that they use something like an Olympic swimming pool worth of water to flush). Additionally, some water was reallocated from agricultural to urban uses, and farmers began to use water more efficiently (though there is still much work to be done on both of those fronts).

As a result, water quality today is much better than in the 1970s. Water scarcity is still an open issue, but the West has managed to avoid essentially all of the dire predictions from the 1980s: Instead of running dry, cities greatly reduced per capita water use; aquifer depletion didn’t make farming impossible so much as force us to substitute crops; the speed of sedimentation (which fills in reservoirs making them ineffective over long timescales) was vastly overstated; and salinization of farmland proved to be something of a manageable headwind rather than a catastrophe.

The trouble is that our perceptions are stuck in the era of burning rivers. Pollution is still a concern everywhere, but these days mostly from agricultural runoff, which looms large now simply because we’ve been so successful at addressing industrial waste. Outside of periodic droughts, water scarcity is mostly a concern in arid regions. Even in arid regions, and even with climate change, there is a vast amount of water available. Conservation is good for the environment and, in the long run, would make farming more sustainable, but cities just are not going to run out of water for human consumption.

What’s left to worry about today?

So, what exactly are the water management problems we face today? I sat down with several resource economists and a water policy specialist to find out.

Brian Gray, an expert on water law at the Public Policy Institute of California, told me that the federal Clean Water Act and state-level water quality laws have significantly reduced municipal and industrial water pollution, at least from his vantage point as a California specialist. Nationally, we’ve seen a marked improvement as quantified by researchers David Keiser and Joseph Shapiro.

That said, an improvement does not imply full success. As a New Yorker, I’ll note that the Gowanus Canal remediation has been in progress for nearly two decades and the plan for mitigating the city’s combined sewer is scheduled for geologic timescales. My sarcasm aside, Gray stressed that the federal law explicitly exempts agricultural sources of pollution (i.e., runoff) from regulation because these were thought impractical to measure (being diffuse rather than “point” sources of contaminants).

Agricultural pollution mostly entails phosphorus and nitrogen; these aren’t industrial toxins but the ecological impact is quite large. The EPA rates over 40% of streams in poor condition for these nutrients, which harms wildlife (the chemicals cause algae blooms, which can, among other things, leave water hypoxic). The effect on human health is more difficult to quantify: It’s unclear exactly how bad high phosphate exposure is and it can be tricky to measure how many people are exposed. That noted, exposure rates seem to be small and concentrated among households with private wells.

These constitute a gap in our remediation efforts but there’s cause for hope on that front: Gray said that many farms, especially in California, use canals and pipes for drainage, which makes tracking pollution more feasible. California, for one, is beginning to regulate these discharges under state law.

The resource economists I spoke with — Eric Edwards at UC Davis, Nick Hagerty at Montana State University, and Jonathan Yoder at Washington State University — all focused on Western water rights, simply because water scarcity, while occasionally an issue in the East, is ubiquitous and more severe in the West.

A common refrain from them was that it is often enormously difficult to actually trade water rights, meaning that even though the arid West still has a lot of water, an overly complex system makes us inefficient at allocating it. Simplifying the process would make it easier for cities to grow, allow farmers to profit from the sale of their water rights, and would allow us to leave more water for the environment.

Briefly, a water right is the right to do something with a water source. The right may specify use (e.g., consumption of water, diversion of a stream, etc.), point of use (that is, exactly where the water may be drawn), quantity of water, return requirements (how much water must be returned to the source after use), and so on.

In the U.S., water rights fall into two main categories: The first is riparian, under which water rights are tied to land abutting a water source; with this regime people are allowed “reasonable use” and rights are usufructuary, meaning land owners have a right to the water but do not legally own it. This type of right is the default in the East.

The second category, prior appropriation, is common in the West. Under that doctrine, rights are not tied to the land. For instance, one may own a plot of land but not have the right to place a well on said land — to do so, you’d need to purchase the relevant water rights. Prior appropriation rights are based on seniority, which means, if I ignore a lot of nuance, one owns a senior right if he or she happens to have an ancestor who first came along and put a water source to a “beneficial use”. Riparian rights tend to work best where there’s a lot of water to go around, which explains why the West uses a different doctrine.

Riparian rights are straightforward: One acquires the right with a parcel of land. So the market for them is just the land marker. Thus, when we talk about water markets, we’re usually referring to prior appropriation rights. In a prior appropriation water rights market, one may theoretically purchase rights to water, but the process is rarely straightforward.

Edwards explained that if a large city wanted to increase its water supply, the matter isn’t so simple as just using the municipal budget to purchase water. For one, many farmers have water rights but cannot sell them because rights are often collectively managed by water districts that coordinate among farmers. If the city finds willing sellers, the two parties cannot simply agree to the transfer. Other farmers could protest that changing water diversion patterns would impact them. Such issues often end up in court. The process is so Byzantine that water brokers exist to work through the bureaucracy, and, of course, they have to be paid.

The end result is a huge gap between what a buyer pays for rights and what a seller might receive. Yoder said the economic literature is “full of transaction cost estimates” estimated to be roughly 1/3 the value of a sale.

In some places, it’s not just transaction costs and market frictions gumming up the works. The Colorado River Basin is perhaps the biggest water management problem we have right now. Yoder noted the initial over-allocation means that we’ve just fought over the water rights since. It’s difficult to even talk about transferring water rights if there’s uncertainty over which states’ initial claims will win out. How can something be transferred if we can’t even agree who controls it?

None of the economists advocated a completely deregulated system. After all, a large share of western water disbursements are managed by the federal government. Plus, when we talk about trading water rights, we’re often considering public entities acquiring them from one another. Does a public utility in Phoenix need a given amount of water or should it go to a public utility in San Diego? The point is that a functioning market for water could allow the cities to trade effectively (with each other and with farmers), ensuring neither suffers in a drought.

What of more science-fiction sounding solutions? Perhaps we’ll succeed in making electricity so cheap that large scale desalination is practical? Well, no. Hagerty allowed that it’s a “potentially exciting option, particularly valuable for reducing urban water uncertainty, but depends a whole lot on how cheap electricity could get.”

But, water is heavy and slippery and, thus, expensive to transport. Even if desalination were free, piping it from the coast for agriculture would be hugely expensive relative to moderate changes in our water management institutions. Hagerty added that, right now, having to use desalination in California represents a “huge policy failure” because it’s just so expensive relative to the water we already have. It seems working amicably together is still our best option for managing the most salient of natural resources.

Overall then, our water management problems can be attributed to misaligned incentives and rickety market mechanisms. Boring bureaucratic details. So why, instead of reasonable technocratic changes, were people being hectored to stop drinking almond milk a few years ago? Why are the papers filled with articles about data center water use now? Why so much paranoia? And, above all, why do people seem to worry about a lack of water instead of a misallocation of the vast amounts of water we already have?

Yoder suggested a status quo bias, explaining that soda-pop bottling plants have faced local resistance too. People worry about new water withdrawals. The specter of a single “data center” industry also gives a nationalized face to what were once just various local fights over commercial water use. At my prodding, Yoder agreed that the public “often lacks a sense of scale.” Hagerty said, “one of the biggest problems is that a lot of journalists are not quantitatively literate.”

In an effort to prove myself the exception, here’s some arithmetic: The thirstiest data center in the world uses about 1 billion gallons of water per year by evaporating it for cooling. (It uses the same type of HVAC system as large apartment or office buildings) That’s enough to grow about one square mile of alfalfa, which is used for cattle feed. That amount of feed would translate to getting about 500 head of cattle to slaughter weight, not counting feed for the breeding herd. There were over 27 million head of beef cows in the U.S. at the start of this year and the U.S. grows over 22,000 square miles of alfalfa each year.

Now consider our most-stressed large water system. The Colorado River Basin flows at, on average since 2000, 12.4 million acre-feet of water each year, or over 4 trillion gallons. The difference between a billion and a trillion is difficult for humans to comprehend, but a billion seconds makes just over 31 years, a trillion makes over 31,000. We consume 13.1 million acre-feet from the Colorado.

The gap we need to close is actually less than 0.7 million acre-feet because of inflows along the river. This isn’t an insurmountable problem; it’s 114,000 cows; we have 27 million of them, not counting milk cows, the breeding herd, and calves.

I asked Edwards, Hagerty, and Yoder about their outlooks for our future. Since we’ve already reclaimed just about all the water we feasibly can, Edwards explained that the available water is a zero-sum proposition but the value we get from it certainly isn’t. “I think there are 1,000 different things people would do to become more efficient, from switching crops or deficit irrigation at low cost all the way up to high cost xeriscaping and rain barrel installation,” he said.

Yoder mentioned policy options that can work well in some circumstances, such as water banks, which allow rights holders to forgo a water withdrawal and “bank” the right to do so in the future. He also sees promise in emerging technologies to reduce regulatory and transaction costs, which would make re-allocating water less cumbersome.

Hagerty focused on the status quo at first, explaining that, even in developing countries with institutions far worse than our own, authorities tend to act in time to ensure adequate water supplies. The counterexamples are well-publicized simply because they are so anomalous. He followed up to explain that we have the option of continuing as we have, but that doing might squander so much potential:

“I think we will continue to muddle through most water scarcity challenges despite our brittle institutions for water management, but I think a lot of these discussions are missing another big issue — it’s not just about how much urban areas will have to cut their water use, it’s also about what our urban areas could look like if more water were available for them. If we had more water, how much housing could be built in some of the most productive, most desirable, and lowest-emission cities in the country? How many people are missing the chance to have a better job, more opportunities, a better life? How many new cities would be built in the Southwest if there were more water for people? We don’t know exactly, but it might be a really big deal — it’s plausible it outweighs all the other problems we tend to think about with water management.”

For my part, I think our unrelenting negativity on this issue is almost the mirror image of our grandparents’ confidence. In both cases, many people have refused to engage with reality or admit that trade-offs must be made. One writer I interviewed for this piece was incredulous when I suggested we may need to set priorities between competing concerns, abruptly ending the meeting and asking not to be quoted here.

However, insisting that we focus on everything at once has a lot in common with refusing to worry about anything: Either way, we excuse ourselves from necessary action. The fact of the matter remains that theatrics — like banning data centers in water-rich New York — will not add one drop of water to the Colorado River. What’s more, there’s no arch villain trying to hold our cities’ drinking water hostage. The truth is more banal: Voters, and farmers, and policy makers are being a bit emotional and a bit short-sighted. We could make things easier for ourselves and the environment if we’d address water management like adults.

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Lawrence Costa is an economist who writes about trains and operas on Substack because he lacks interpersonal skills. His research has focused on housing, labor markets, and education. He once went to Scranton (inadvertently).

1. There is a huge disparity between the value farmers place on water (low) and what cities do (relatively high). Cities could really use some additional water, but it’s a pretty reasonable amount; agriculture will remain the largest user by a wide margin.