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.
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.