Sunday, October 26, 2014
Farmers don't want to give up their property rights to water, and why should they? California's Government has helped farmers keep water property rights by giving out substitutes and using a "first come first serve" water use system. Consumers in urban areas have large water usage, even in the middle of a severe drought. why? Because the more water consumed, the cheaper the monthly bill is. What a nice incentive for consumers in the United States. The Western United States has attempted to limit water consumption by proposing consequences on water usage. Some of those consequences are rewards for not using water and others are penalties for using water. However the price of water stays the same. The equalibrium price for water is not being acieved in the market. consumers and producers are not having a say in what they would pay and supply for water. If the government would take away the substites of water to farmers, and the flat rate of water consumption in uran areas, then the market price of water could start to be reached. Yes the unseen consequences of this would most likely be a rise in food prices and water prices and it will also probebly affect employment. but in relasing the Government's price control on water, water consumption will decrease as the price rises. So next time there is a drought in the United States, there will be less of a panic on the availability of water because the market will sort itself out like it does for other consumer goods.