Supply and Demand, But Not In Water
Thanks to a reader comes this article from the NY Times that yet again discusses a water shortage and possible government action without once mentioning the word "price." If water prices floated like gas prices, we wouldn't have to discuss things like these:
Within two weeks, Carol Couch, director of the Georgia Environmental
Protection Division, is expected to send Gov. Sonny Perdue
recommendations on tightening water restrictions, which may include
mandatory cutbacks on commercial and industrial users.If that
happens, experts at the National Drought Mitigation Center said, it
would be the first time a major metropolitan area in the United States
had been forced to take such drastic action to save its water supply.
But of course politicians love being responsible for resource allocation through command-and-control government, because it creates winners and losers and both will then donate to the next election cycle. Atlanta already has fairly expensive water, but a quick 50% rate hike about 3 months ago would have likely obviated this shortage while also providing the municipality with additional funds to develop new sources.
I wrote a lot more about water scarcity and the price mechanism, including the observation that Phoenix ridiculously has some of the lowest water prices in the country, here.
postscript: One of the media tricks to make things look worse and panicky is to present asymmetric charts. For example, the NY Times presents this drought map:
All you see is what one presumes to be normal in white and then a lot of drought. But in fact, this chart is truncated. It omits all the data for areas that are wetter than usual. Here is the chart for September form the NOAA with both over and under precipitation over the past 12 months:
Whoa, that shows a different picture, huh? Basically, about as much stuff is wetter than normal as drier than normal. Which is exactly what one might expect in any period. And by the way, if you look at the last five years, the US is pretty freaking wet:
