Jeff Sachs on Developing World Water

Jeff Sachs, of Columbia Univ, has a new development book, and one of the chapters is on pressure on water supplies in the developing world. The blogger is Tyler Cowen, a moderate to conservative economist.

I haven't read the book, so I can't comment, but Cowen makes a good
point about subsidizing water for agriculture. I remember reading
recently that some of the California Imperial Valley farmers are
starting to sell their water rights because that's more profitable
than growing, and it's very profitable because they get their water
below cost in the first place, courtesy of the Bureau of Reclamation
and taxpayer money.

I'm dumbfounded that there aren't tighter restrictions on what farmers using essentially public water can and can't do.

From MR

Chapter five of Common Wealth is called "Securing Our Water Needs," an
important topic but one neglected by most economists. One lesson is
that climate change will put a big stress on water supplies. So far,
so good, but the recommendations start with greater international
cooperation:


A first step, at least, would be to focus on the hardest-hit lands,
specifically the world's drylands. Fortunately, these are covered by
the UN Convention to Combat Desertification, which has 191 member
governments as signatories. Unfortunately, the treaty as it now
stands is little known and has little clout and financial backing.
Rather than reinvent the treaty, however, it would be better to
reinvigorate it.

I would say it needs invigoration, not reinvigoration. It is no
accident that the Convention has little clout and little financial
backing. Many such Conventions are toothless objects, designed to
appeal to a least common denominator within the process of the
Convention itself (recall, it has 191 signatories). No one is opposed
to "international cooperation" but it is no accident that truly
international bodies have to either find a way to make profit (e.g.,
the World Bank lends to China) or they are usually very strapped for
funds. That's just not where the political rents are and that isn't
going to change.

Since Sachs calls this a "first step," his position is in some sense
invulnerable. Whatever you really think should be done can be called
the next step. Sachs writes, however, that the next step is more
finance if I understand him correctly he wants to increase funding by
more than a factor of 100). I would prefer finance from national
governments, or even from the states or provinces, than finance at the
level of international organizations. Most of the 191 signatories
just aren't that good at R&D, funds accountability, or even technology
adoption.

I might add that national governments are the ones that subsidize the
price of water to ridiculously low levels, most of all for
agriculture. My first step is to remove all these water subsidies,
allow water prices to rise, institute more water trading, and then see
which innovations the private sector decides to finance (hmm...those
are my first four steps). One role for government would be to ensure
that patent law does not hinder international transfer of worthwhile
innovations, a point which Sachs makes in other contexts. That sounds
less glamorous than a big international plan, but I think it has a
better chance of succeeding.
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