Many libertarians and conservatives have been calling for a free market in water in California. I agree that would likely be the best solution overall. However that solution will have inevitable pushback from farmers, who benefit from their existing usage rights. My understanding is that California farmers have a “use it or lose it” right to water resources. In other words, they can use the water or not use it, but they can’t re-sell it. This leads to a lot of waste, including absurdities like planting monsoon crops in a semi-arid region. If the farmers could simply resell the water they don’t use (at or near the residential water price), there would be more water to go around, and farmers would probably actually come out ahead of the game. While less beneficial overall, it might be politically easier to implement.
If everybody understood the problem, then allowing farmers to keep their current level of water rights but also allowing them to choose between irrigation and resale would be a Pareto improvement. “Do I grow and export an extra single almond, or do I let Nestle export an extra twenty bottles of water?” is a question which is neutral with respect to water use but which has an obvious consistent answer with respect to profit and utility.
But as is typical, beneficiaries of price controls benefit from not allowing the politicians’ electorate to understand the problem. If you allow trade and price equilibration to make subsidies transparent and efficient, you risk instead getting the subsidies taken away. That extra single almond is still more profitable than nothing.
Many libertarians and conservatives have been calling for a free market in water in California. I agree that would likely be the best solution overall. However that solution will have inevitable pushback from farmers, who benefit from their existing usage rights. My understanding is that California farmers have a “use it or lose it” right to water resources. In other words, they can use the water or not use it, but they can’t re-sell it. This leads to a lot of waste, including absurdities like planting monsoon crops in a semi-arid region. If the farmers could simply resell the water they don’t use (at or near the residential water price), there would be more water to go around, and farmers would probably actually come out ahead of the game. While less beneficial overall, it might be politically easier to implement.
If everybody understood the problem, then allowing farmers to keep their current level of water rights but also allowing them to choose between irrigation and resale would be a Pareto improvement. “Do I grow and export an extra single almond, or do I let Nestle export an extra twenty bottles of water?” is a question which is neutral with respect to water use but which has an obvious consistent answer with respect to profit and utility.
But as is typical, beneficiaries of price controls benefit from not allowing the politicians’ electorate to understand the problem. If you allow trade and price equilibration to make subsidies transparent and efficient, you risk instead getting the subsidies taken away. That extra single almond is still more profitable than nothing.
I think the public understands that there are farming subsidies and is in principle okay with farming being subsidized since the new deal.