THE VALUE OF WATER, PART 8--INVALUABLE

Is attempting to value water a valueless exercise? Clearly, water has value. We understand that humans, and all life upon which we depend, cannot exist or thrive without sufficient water. When deprived of adequate water resources, we suffer. When too much water floods our land, we also suffer. Accordingly, water is a paradox. It is necessary for life, but at the same time, it can suppress life. How, then, can its value be measured?

We can see water, we can feel water, we can drink water, we can use water in many ways. However, we cannot measure its worth with a dollar price. We can only arbitrarily assume a price when we suffer an economic loss due to insufficient water or even excessive water.

The old cliche is that one never misses water until the well goes dry. Obviously, the value of water becomes subjective for ever user who depends upon, and is affected, by water. When there is not enough water available to satisfy demand, we likely highly value it. When rain events or rivers flood our land with too much water, our valuation likely diminishes. This result is only human.

Direct, quantitative calculation of the value of water is impossible. Indirect measurement using a surrogate, such as the cost of crops due to drought, provides a speculative economic impact that may have resulted from influences in addition to lack of water. Further, calculating the dollar value of a water source, such as an aquifer, necessarily must be based upon assumptions, not hard evidence. For example, the extent of ground water below the Earth's surface is not fully known and is affected by the rates of rain events and withdrawals.

Clearly, ratemaking for water service cannot be predicated upon the subjective valuation of water by each user. More importantly, rates do not compensate for the price of water. They compensate for the price of water service received by each user.

So, it is possible to conclude that water has infinite value, which cannot be measured and is incapable of price. In other words, it is invaluable and priceless. This infinite value of water, however, should be acknowledged. For example, we know that fresh water on earth does have some finite amount, so its value must be recognized by conservation and wise use.

THE VALUE OF WATER, PART 6--NEGATIVE VALUES

The assumed negative values of water can be illustrated by at least five examples.

First, water in excess, in the form of flooding, can have a substantial negative impact upon life and property. Indeed, during flood events, water can destroy life instead of sustain life. The measure of such negative value of water may equate to the often difficult and arbitrary value of lost life and the replacement cost of lost property, including economic losses.

Second, absence of water, in the form of drought, obviously can have a substantial negative economic impact, ranging from loss of crops to displacement of people. The Dust Bowl in the United States in the 1930s illustrates this effect. Further, the negative values of crop, home and income losses can include collateral impacts due to health, social and educational challenges.

Third, certain contaminates carried in water can have serious adverse health consequences if such contaminates are not removed by treatment before water is used. The costs incurred to heal illnesses or to suffer destruction of crops contaminated by polluted water can be measures of negative value.

A fourth example of negative value of water may be illustrated when sources of water become depleted. A recent Yale led research study sought to measure the value of natural capital assets such as water. The study demonstrated pricing of natural capital by focusing on the Kansas High Plains groundwater aquifer, which supports the region's agriculture-based economy. The study found that groundwater extraction and changes in aquifer management policies reduced the state's total wealth held in groundwater by a total of $1.1 billion in the period 1996-2005. (See Yale News, March 14, 2016, "What's Nature Worth. Study Puts a Price on Ground Water and Other Natural Capital.")

Finally, public perception of tap water appears to imply a negative valuation regardless of compliance with all applicable regulatory standards. It appears that people in the United States are willing to pay significantly more for bottle water than for tap water. A 2013 American Water Works Association study found that tap water costs only $0.004 per gallon, or 1/300 of the average price of a 16.9 oz bottle of water. Another survey found that the public was willing to spend from 250 to 10,000 times more for bottled water, although USEPA estimates 40% of bottle water actually is more highly treated tap water.* Does the greater cost and use of bottle water indicate a negative value for tap water? Should it?

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*Bui,"No Sacred Cows:Getting To The Crux
Of The Matter," Journal AWWA,June 2016,
p. 12

THE VALUE OF WATER, PART 4--SCULPTOR

Water is the great sculptor of Earth. It has many chisels available to the task--rain, snow, ice, vapor and flowing water in various environments. It uses all of these tools to erode the earth, to dissolve the earth, to move the earth, to deposit the earth, to lift the earth, and generally to carve the earth constantly into a myriad of features.

A well known example of water's sculpture in the United States is the Grand Canyon. It is carved by the Colorado River over endless time into a spectacle.

Another example are the moonscape Badlands in western South Dakota. Here, water has worked in several ways to build up and to tear down. Sediments were deposited when the area was under a shallow sea. Later, when the Black Hills uplifted, streams and rivers deposited more sediments from the Hills. Sediments became soft rock formations. However, when streams and rivers diverted away from the area, depositions faded in favor of erosion to now constantly carve away these formations.

The Great Lakes formed when global warming caused the glacial continental ice sheet to retreat, carving out the Lakes' basins. The same glacier also carved much of the features of such states as Wisconsin, Minnesota and Illinois, creating flat lands, hills, valleys and countless smaller lakes. Before the glacier, much of middle United States was under an extensive shallow sea, resulting in layers of limestone prevalent in the area today.

Water also floods from rivers, enriching some adjacent land , eroding other land and creating new land. However, not all of water's work is above ground. Consider caves and the interesting formations within them; and, of course, there are the sinkholes that pop up.

Even the absence of water can become a sculptor of earth. The lack of rainfall for several years in the 1930s created the Dust Bowl in the Great Plains, eroding topsoil and displacing farms and their residents.

We enjoy, and utilize, water's sculptures for recreation, commerce and sustenance--and even just to admire the scenery. So, what is the value of water as sculptor of Earth? What do you think?

DROUGHT: CAN GOVERNMENTS LEGISLATE CLIMATE CHANGE?

At an early age, school children probably learn that the age of a tree can be determined by counting rings in a cross section of its trunk. These rings reveal more than just age, however. By their width, they also reveal good years when rainfall enabled expanded growth, and bad years when conditions were less favorable.

Researchers have examined tree rings in Mongolia to study changes in climate as revealed by the rings.* As of the late 12th Century, Mongolia had been experiencing extensive drought. However, in the early 13th Century, the legendary Genghis Khan marched across Asia to establish his huge empire. Analysis of tree rings appears to show that Genghis benefitted a dramatic climate change that facilitated his rapid conquests. The climate change yielded a wet period that produced hearty grasslands for horses and livestock. "Wetter, milder conditions than the previous decades of drought would have given Genghis and his army significant advantages, including a constant supply of horses, increased agricultural production and other resources needed to support a centralized government and large military."**

Interestingly, after many years of favorable climate conditions, beginning in the 1990s, drought has returned to Mongolia. This climate change, in turn, has produced large livestock losses, soil degradation and migration from the countryside to cities.

The climate changes in Mongolia are just one example of the many documented climate changes in the Earth's history. In effect, they appear to be a natural attribute of the Earth, caused without any human activity connection. Whether climate changes are occurring today continues to be debated. If in fact climate changes are occurring, whether they are caused by human activity continues to be debated.

It seems that those who perceive that human activity is causing climate changes propose to change climate by legislation and regulation. Genghis Khan did not change climate to produce conditions favorable to his plans. He benefitted from a climate change that occurred naturally. If historically climate change is a natural phenomenon of Earth. can governments legislate climate change? If they could, that indeed would be climate change caused by human activity.

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*Juskalian,"Climate and the Khan",Discover,
July/August 2015, p.31

**Id.at p.34-35

DROUGHT: ROUNDING UP THE UNUSUAL SUSPECTS

"But I don't want to go among mad people", Alice remarked.
"Oh, you can't help that," said the Cat: we're all mad here. I'm mad. You're mad."
"How do you know I'm mad?" said Alice.
"You must be," said the Cat, "or you wouldn't have come here."

----Lewis Carroll, Alice in Wonderland

In the 1930s, the center of the United States became the "Dust Bowl" due to prolonged and pervasive drought. The dust was farmland topsoil wind eroded and blown away in dust storms, along with hopes and livelihoods of farm families. As memorialized in John Steinbeck's "Grapes of Wrath", migrant workers and farmers displaced by years of Dust Bowl misery relocated to perceived better times in California.

Now, portions of California and several other western states are experiencing prolonged and pervasive drought which is stressing and displacing lifestyles and livelihoods of residents. Moreover, much of California is naturally dry, and is dependent upon external water sources to sustain population centers and irrigation agriculture. So, the choice now is becoming one of serious reduction in water use or migrating elsewhere, perhaps even back to the center of the country.

The usual approaches to reducing water use have been well publicized, such as
* recycling wastewater
* prohibiting yard watering
* mandating utilities to reduce water deliveries
* mandating reductions in farm irrigation
* requiring installation of low flow water appliances
* adopting inverse rate blocks that rise with volume

These "usual" approaches may produce some success, but perhaps some more "unusual" approaches could also help.

For example, on June 24, the U.S. Department of Agriculture announced a partnership that would invest millions of dollars to restore the Sierra-Cascade California Headwaters, which is the water source for agriculture and some 25 million residents.

One of the most dramatic periods of conservation in the Unites states was during World War II, when many materials and foods were needed for the war effort, forcing citizens to conserve. Two aspects come to mind: (1) citizens were well educated as to the need to conserve resources; and (2) many items were rationed, a form of mandatory conservation. Could these two aspects be applied to help reduce water demand in drought environments? For example, could a per capital standard of average daily water use be established for households, with high volumetric rates applied to excess monthly use?

Agriculture can pose a more difficult issue. There is a significant difference, obviously, between land that produces annual crops such as corn and land that is used for orchards of fruit and nut trees that take years to mature. Perhaps some land can be taken out of temporary production, with governmental financial assistance. Or, irrigation rights temporarily waived or reduced. However, some farms may have contractual water rights which would likely require mutual consent for reductions.

One unique source of additional water could be human sweat. A Swedish engineer created a device to harvest sweat from clothing and to purify it to drinking water. A sweaty T-shirt is said to have produced two teaspoons of clean water. However, sweaty socks may be more productive. A pair of human feet is said to yield a half-pint of sweat every day. If true, sixteen pairs of socks could yield one gallon a day. Perhaps, here is an opportunity for another government program to establish a sock exchange where people would bring in dripping socks and pick up dry ones.*

Two other solutions may be available. If people in California do not like the drought and water use limitations, they might consider moving to the Midwest, where there has been so much record-breaking rain this year that it is a "Flood Bowl."

Or, if people want to stay in California and want more rain, why not just ask God?

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* Festa, "Sweat", Discover, July/August,2015, p.98

DROUGHT: WATER UTILITIES CONFRONT CONFLICTING POLICIES

"If you don't know where you are going any road can take you there."

---- Lewis Carroll, Alice in Wonderland

The photo depicts the arid wonderland of the South Dakota Badlands. They are a drought stricken moonscape that stands in dramatic contrast to the verdant Black Hills 50 miles to the west.

The Badlands once were full of rich vegetation and animal life also. Fossils evidence now extinct critters such as sabre tooth tigers, sheep-like oredonts, rhinos and miniature horse. At another time, the landscape was under water.

Some have asserted that parts of California naturally are arid and subject to drought--where farming must depend upon irrigation and cities on water sources located elsewhere. Whether current drought conditions in California and other states may be due to climate changes or temporary weather conditions, water utilities must deal with drought in some rational manner. Unfortunately, they can confront conflicting policies that make rational solutions difficult. Some of these policy conflicts include the following:

* Legal Duty To Serve vs. Service Restrictions. Generally, water utilities have a monopoly in their given service areas. This is because of the costly infrastructure required to provide water service; rarely are there competing water utilities within the same service are. For their monopoly status, water utilities incur certain obligations: whether by statute or by court decision, water utilities generally are required to satisfy the water demands of customers within their service areas. This obligation likely can be expected to apply to both investor-owned utilities and to municipal-owned utilities.

However, there can be a conflicting policy when, for example, state or local governments seek to impose restrictions on the amount of water utilities may deliver to their customers. The restrictive regulation limiting water delivery can clash with the legal obligation to serve customer water requirements.

* Higher Rates To Force Conservation vs. Cost Of Service Ratemaking. Some have urged dramatic increases in rates, such as inclining rate blocks as volume of water delivered increases, as a way of forcing reductions in water usage. However, while such measures may appear to have merit from the standpoint of objective, they can clash with applicable legal requirements that to be reasonable, rates must be based upon costs of service.

* Higher Rates To Force Conservation vs. Affordability. Some have argued that higher rates will enable "market forces" to naturally enable the desired reductions in water usage, and thus conservation. However, such a policy may well conflict with the notion of affordability of water. While "affordability" is not a precise concept, one can assume that higher water rates will take a larger chunk out of low income earner budgets. Moreover, affluent customers may feel no pain from higher rates and continue to use their typical amounts of water, thereby reducing the effectiveness of the conservation effort.

* Higher Rates To Force Conservation vs. Reductions In Revenue. Assuming that increased rates are successful in creating reductions in usage, the end result of conservation may also be a reduction of needed revenue to the utility as eell as excess treatment and delivery capacity that still must be funded--pushing rates still higher or forcing excess capacity to be abandoned as no longer used and us full.

* Contracts vs. Abrogation Of Contracts. A water utility serves customers pursuant to contract, which includes the tariffs of a regulated utility and ordinances of a municipal utility. However, if a governmental authority imposes service restrictions, does such an action also abrogate the contracts between utility and its customers?

For water utilities in limited source water environments, determining the best road to travel can be perplexing and full of potholes of policy conflicts. Indeed, the best destination may not be clear. It may seem that the only road available could be a circle.