Title: Water in America
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Title: Water in America
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Language: English
Publisher: The Economist
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Spatial Coverage: North America -- United States of America -- Florida
 Notes
Abstract: The Economist Article October 4, 1986 Colourless, odourless, tasteless-priceless
General Note: Box 7, Folder 2 ( Vail Conference 1987 - 1987 ), Item 36
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
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Volume ID: VID00001
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Full Text







WATER IN AMERICA


Colourless, odourless,

tasteless-priceless


Water-once something that only westerners worried about-is now a
preoccupation of all Americans. Some states have water shortages;
others have all the water they need, but wonder how safe it is to drink.
Increasingly, environmentalist and economists are finding that gov-
ernment cannot guarantee enough water, of good quality, where it is
needed. They are turning to market forces for help


Take any flight from Chicago to San
Francisco, or from St Louis to Los Ange-
les, and a proposition becomes starkly
clear below. God made the western Unit-
ed States to be a desert, and man made
parts of it bloom.
Since the middle of the last century,
westerners have learnt how to cultivate
what was, almost within living memory.
the largest tract of virgin land outside
Siberia or Australia. Cantaloupes now
grow in Nevada; cotton in Arizona; or-
anges, and almost everything else, in
California. These crops make up an agri-
business like no other in the world, a
mixture of huge companies and small
farmers, all dependent on water.
That the politics and economics of
water should have shaped the west for a
century is a fact well known in America,
though dimly understood outside it. What


is new is that water is becoming a n
of national concern. Historically, t
sue in the western states has bee
quantity of water needed to sustain
ing. That issue is still as critical as
But the scale of need has been
increased by the millions of new mij
to the west. And now, in the rest
country, and in the west as well, the
different worry-about the quality
water that people drink.
In New Jersey, and in many
eastern states, drinking-water poll
has become an urgent matter of po
debate. In California, where a r
survey found 19% of wells to have
elements of potentially harmful or
chemicals, and 6% of them to have
titles of those elements above the s
"action" levels, water pollution ha
come the biggest issue in this


The aqufer will love it
S THE ECONOMIST OCTOBER 4 1986

(


natter
he is-
n the
farm-
ever.
much
grants
of the
re is a
of the


governor's race. The only big, new envi-
ronmental programmes of the Reagan
administration have concerned water
quality.
In some states. notably Arizona, the
preferred solution to a shortage of water
is nothing less than to change the shape of
the economy, by substituting for agricul-
ture (which consumes 80-90% of Arizo-
na's water) an economy based on indus-
tries and services. But that shift implies
that the population of the sunbelt states
will continue to grow-and more people
means greater demand for drinkable wa-
ter. Moreover, though agricultural pesti-
cides, and particularly fumigants, can
pollute water, they usually do so in areas
of low population. Industrial wastes, like
the toxic trichloroethylene (TCE) found in
many solvents, pollute water supplies in
the very places where millions of people
live. A survey of wells in California found
that the most polluted ones were in the
Los Angeles basin.


Overdrawn aquifers
other Water quality would not be such a huge
lution problem were it not for the importance to
litical America of groundwater. According to
recent Congress's Office of Technology Assess-
trace ment (OTA), groundwater provides about
organic 40% of the country's water for irrigation,
quan- and 80% for all water uses (both in the
tate's home and to sustain livestock) in the
is be- country's rural areas. Groundwater is
year's found in aquifers, permeable saturated
zones of rock that can be "mined" by
^A wells. The aquifers range from tiny pock-
ets, which supply just a small community
Sor a few houses, to the giant Ogallala
aquifer, which underlies parts of eight
states from South Dakota to Texas.
Especially in the west, the aquifers are
being depleted. Withdrawals of ground-
water increased from about 35 billion
gallons a day in 1950 to almost 90 billion
gallons a day in 1980. Each year. Arizona
uses 2.5m acre-feet of groundwater more
than nature can replenish (an acre-foot is
the amount of water needed to cover an
acre to the depth of a foot, or 2710(XN)
imperial gallons). Parts of west Texas.
above a depleted part of the Ogallala, are
already dusthowls. In other areas, exces-
sive drawing from an aquifer can mean
that the water becomes saturated with
harmful natural salts, making it useless
for crop or east. In coastal areas like
Long Island, overdrawing an aquifer can
shift the underground boundary between 3







WATER IN AMERICA

salt and fresh water, thus drawing up salt
water into drinking supplies.
This pattern of depletion and natural
contamination is problematic enough if it
just makes farmland unusable. But 118m
Americans-half the country-rely on
groundwater for their drinking supplies,
and a minimum of 1-2% of the country's
groundwater is contaminated by things a
lot worse than common salt. The OTA
thinks the real figure is likely to be
higher. Present guesses are based only on
those aquifers already surveyed, and the
science and technology both of mapping
aquifers and of measuring their contami-
nation are still young. Moreover, as the
Californian study found, most contami-
nated aquifers are close to population
centres, so the effective contamination of
drinking water is much higher than that 1-
2%.
In America's cornbelt, where ground-
water provides 75% of drinking supplies,
nitrate pollution from fertilisers is already


acute. In 1984, 40 public water sources in
Iowa contained higher than permitted
levels of nitrate. Certain pesticides can
soak down into aquifers as well-in par-
ticular a group called the nematocides
that is used to kill roundworms. The
federal government decided to ban some
nematocides after they were found in the
groundwater of California and Florida.
No one is really sure how dangerous
this contamination is. Medical-testing
techniques are often a source of contro-
versy, but it is at least clear that some
contaminants, like TCE and nitrates, can
cause cancer in some concentrations. In
1984, the OTA, typically guarded (which is
why its reports are respected), would
conclude only that "a variety of informa-
tion suggests that the consumption of
groundwater contaminated with chemi-
cals can result in acute, subchronic and
chronic human health impacts." But how-
ever small the health risk may be (and
36 many argue that it is negligible), that is


somewhat beside the point. Water quality
has become a politically charged issue.
Ordinary people think they can choose
whether they smoke or drink alcohol. But
they have little or no control over the
water they drink, which makes any health
risks within it that much more scary.
Doubts about the quality of groundwa-
ter have come as a surprise to many
Americans. For years, farmers and indus-
trialists assumed (if they ever thought
about it at all) that the layer of soil and
rock above an aquifer was a natural filter
that would purify any gunk they dumped
on the ground. Hydrologists now know
that such assumptions are wrong. Pollut-
ants can, and do, leach into aquifers. It all
depends on local circumstances. In Geor-
gia, for example, some aquifers are cov-
ered by 300 feet of clay, which is enough
to cope with anything that the twentieth
century might drop on it. Florida, in
contrast, is a 500-mile long, low promon-
tory of limestone and sand. According to


an official at the Environmental Protec-
tion Agency (EPA). "if you stub your toe
there, you hit the water-table. If you spit,
you pollute it."
When surface water-a river or
stream-becomes polluted, it can often
be treated, or, over time, cleanse itself.
But the problems of cleaning aquifers are
immense. Government officials know
that even if every source of contamination
were blocked tomorrow. plenty of dross
would remain in the soil and rock above
aquifers which would take decades to find
itsway to the water-table. Ending con-
tamination now, even if that were possi-
ble, would only help to prevent future
pollution. To find a cure for what is
already in the ground is much harder.
Once polluted, aquifers have a tenden-
cy to stay that way. Water moves in them
only slowly. at rates of 5-50 feet a year.
Contaminants typically form "plumes"
that continue to be highly concentrated.
They do not disperse into adjacent water


where their effect would be diluted.
A technology is being developed that
may one day allow aquifers to be cleaned
up, or at least "lined" so that plumes
not move too far. The OTA reports tha,
both biological and chemical treatment of
contaminated aquifers might one day be
useful. Micro-organisms, for example,
could be injected into an aquifer to gob-
ble up contaminants. But that technol-
ogy, though it has been used for oil spills,
is still only at the R&D stage and its
potential is highly uncertain.
Alternatively, a spoilt aquifer can be
pumped dry. But that carries danger of its
own, because pumping can shift the
boundary between contaminated and
pure water. Besides, something has to be
done with the polluted water; it cannot
simply be wished away.
Consider the northern Central Valley
of California. There, the run-off from
some newly irrigated marginal land was
dumped into some reservoirs-the Kes-
terson lakes-which were then found to
have such high levels of selenium that
wildfowl in the lakes are dying in their
thousands. Knowledgeable health offi-
cials say that the only thing to be done
with the lakes is to drain them into San
Francisco bay, which is at least cleansed
daily by ocean tides. Try telling that to
residents of the bay area.

The Superfund solution .
It is sometimes possible to remove the
sources of contamination of groundwater.
The federal government's "Superfund"
programme, if Congress can decide how
to pay for it, will provide $8.5 billion over
five years to clean up more than 500 of the
most noxious dumps. But Superfund is
costly. Moreover, say its critics, because
90% of the costs of clean-up under the
programme are borne by the federal
government, there is no incentive for
state and local governments to choose the
most cost-effective way of cleaning up
hazardous waste-and every incentive for
them to use Superfund money as yet
another pork-barrel for favoured local
projects or contractors. Anyway, Super-
fund hardly scratches the surface of the
19,000 abandoned and uncontrolled haz-
ardous-waste sites in the country. Nor
does it do anything about the 93,000
municipal or industrial landfills which are
supposedly non-hazardous, but in reality
(because for years there was little moni-
toring of who dumped what into them) far
from clean.
The dismal litany goes on. According
to the EPA, there are more than 180,000
"surface impoundments"-pits and la-
goons with liquid wastes-in the country
and 2.3m underground petrol tanks (th '
EPA quotes studies which claim that any-
where between 3% and 25% of these are
THE ECONOMIST OCTOBER 4 1986


Sources of ground-water contamination
c-.,2 clfaWn


"wodon wo i: ~ nr
0" oSpost i cn. Rnnw.n
Land pead Stpf t Ian Puorr~olg .1 amp or rwlu.e p.4.
ot f9atif cuon C 80*Sas. ..... rs

Pweollon Dscharge Leak*9e Pabcion~w




Ground waler
Conmri Ion
Aeawn aqurller wuw InpUt
D0scharg, or Ifl*Cioon































Babbitt: lord of the waters


leaking). Then there are the country's
20m septic tanks, many badly sited, oth-
ers "cleaned" periodically with solvents
rich in TCE.
For the federal government to seek to
"solve" the problem of groundwater pol-
lution would require sums of money that
would dwarf anything that Superfund's
boosters have ever dreamed of, together
with tight controls on the uses to which
land can be put. In these days of Gramm-
Rudman budget cuts-and of a new fed-
eralism. designed to let the states take as
many decisions as they can-it is not
going to happen, and nobody but the
most starry-eyed environmentalist thinks
it will.
Water quality is going to be mainly a
matter that the states will have to sort out
for themselves. The federal government's
role will probably be limited to setting
standards, giving technical assistance and
spreading the word on the best manage-
ment practices-as the EPA has just done,
for example, on septic tanks. But what
policies will the states adopt? On that, a
debate is only just starting, and it is one
that in its essentials is likely to mirror the
parallel debate on water quantity. Shortly
put, the choice is between regulatory
schemes and public expenditure on the
one hand, and the market on the other.

Cash flows run dry, too
Traditionally. when the west needed
more water for its thirsty farmers. Wash-
ington provided it by building dams and
diverting flows from areas of plentiful
water to areas of scarcity. Although plen-
ty of people in the west still cannot
believe it-some continue to dream up
schemes like diverting British Columbia's
rivers to American farmers-the era of
huge water projects is over. The Central
THE ECONOMIST OCTOBER 4 1986


Arizona Project (CAP), a 330-mile-long
system which, when completed in 1991,
will divert 1,5m acre-feet of water from
the Colorado River to Arizona's farms
and cities, is almost certainly the last of
the behemoths.
The big schemes have been shelved
mainly because of expense. Many people
argue that in California, for instance,
which has been adept .at transferring
water from its wet north to its barren
south, all the easy projects have already
been built. Mr Henry Vaux. of the Uni-
versity of California at Riverside. says
that the schemes of which Californian
water engineers still dream would provide
water costing $400-500 an acre-foot at the
dam-site-before transport costs have
been added. At present, many farmers in
California's Central Valley are paying
only $5 an acre-foot for their water, with
the average somewhere between $25 and
$30.
In the past, the west has done its best to
get the federal government to subsidise its
farmers and bring marginal land under
irrigation. But cost-sharing schemes now
spread the burden of water projects;
about 70% of the construction cost of the
CAP will eventually be paid by Arizona,
not Washington. Thus if western states
wish their farmers to be subsidized, they
will have to do it themselves. That would
mean tax increases for the growing pro-
portion of westerners who live in towns.
But no western governor is going to raise
taxes to the levels that Mr Vaux's figures
imply.

Babbitt's battle
In 1980, Arizona's governor. Mr Bruce
Babbitt, saw the writing on the wall.
Plenty of the state's farmers were getting
groundwater virtually free; they would
have gone on overpumping for years. Mr


WATER IN AMERICA

Babbitt had to choose: either restrict the
use of water by controls, or raise its price
steeply. He went for controls, cajoling his
farmers, businessmen and home-owners
into an extraordinary, and much-ad-
mired, groundwater plan. His scheme
introduces four "active management ar-
eas", which include the cities of Phoenix
and Tucson. These must aim by 2025 to
reach a position where groundwater with-
drawals do not exceed natural recharge.
In three other areas of the state new
irrigation is banned. After 2006, in the
most radical part of the scheme, the state
will have the power to buy and "retire"
irrigated land.
Arizona's solution depends on a set of
regulatory mechanisms that enforce its
code. Those regulations. which limit the
amount of groundwater that can be with-
drawn, also interfere with the uses to
which land can be put. They have been
accepted by Arizonans because most of
them are towndwellers anyway, and look
forward to a typical sunbelt, high-tech
economy: 20 years before the date for
"retirement" of irrigated land, farms are
already being bought up for housing and
industry.

Enter the enviro-economists
The Babbitt approach seems to have a
good chance of working. But farmers are
more powerful in a state like California,
and the regulatory regime needed to work
an "Arizona plan" is horrendous to con-
template. So water shortages there re-
quire some creative thinking, which they
are getting, from both economists and
environmentalists.
The first step, according to Mr Vaux, is
to stop pretending that water is anything
but a scarce commodity. At present.
water is priced as if it were a plentiful
good, at its average cost. If it were priced









WATER IN AMERICA

at marginal cost, he thinks that domestic
consumption per person in southern Cali-
fornia in 2000 would be 180 gallons a day.
At average cost, it might be 196 gallons.
Marginal-cost pricing would doubtless
.force some Californians to stop watering
their lawns (or at least to water them with
treated effluent). But Mr Vaux's estimate
of 180 gallons a day would still be three
times as much as the average figure in
Israel, which is no more of a desert than
southern California.
The big changes would come if margin-
al-cost pricing were supplemented by ar-
rangements which enabled those who
have more water than they need to sell it
to those who are short of it. Under most
of the west's fiendishly complex water
law, private contracts to sell water from
one basin to another are rare, and sales of
groundwater supplies often forbidden
(because those who extract groundwater
typically do not "own" any part of the
aquifer).
That is a shame-most obviously in the
case of surface water. On Mr Vaux's
calculations, if some agricultural areas of
California were allowed to sell the water
in their streams, rivers and lakes to the
urban areas, they would do so. Unless
crop prices rose dramatically, many farm-
ers would find that the most valuable
thing they could husband and market
would be the water they buy on cheap,
long-term contracts from their irrigation
district. Water supplies to the urban areas
would then increase. In 2000, Mr Vaux
thinks, there would be enough water (at
marginal-cost pricing) to sustain a daily
consumption level in southern California
of 219 gallons per person.
Why hasn't water-trading taken off?
Ask any Californian, and he will immedi-
ately reply "Owens Valley". In the first
two decades of the century, Los Angeles
bought, or stole (depending on whose
side you are on), the water from a farm-
ing valley 200 miles away in the sierras.
An aqueduct was built to bring the Owens
Valley water to the growing city and to
the agribusiness in the San Fernando
valley, just north of the Hollywood hills.
The deal continues to hold a morbid
fascination for water buffs in the state,
and still keeps plenty of lawyers happy.
(The true story of Owens Valley is even
more nailbiting than Mr Roman Polans-
ki's 1974 film "Chinatown", which is
loosely based on it.)

The trading begins
Many environmentalists would be happy
to swap California history for market
economics, especially if it meant stopping
once and for all the prospect of more
valleys in the sierras being dammed. That
is why environmental groups as well as
38 economists are enthusiastic about a pro-


Too nosey In Chinatown
Too nosey In Chinatown


posed trade between the farmers in the
Imperial Valley, in the south-east of the
state, and the metropolitan water district
of southern California. The farmers need
to reline their irrigation canals; Los An-
geles, as ever, needs water. So the city-
folk have offered to buy water at $100 an
acre-foot (a lot less than the $279 an acre-
foot which some of their water now
costs). The Imperial farmers want more,
and the negotiation is at present suspend-
ed (as usual in western water matters,
litigation is in the air).
Trading could thus help deal with water
quantity. But the big breakthrough would
come if it could improve water quality as
well. It might. Economists at the Envi-
ronmental Defence Fund in Berkeley are
looking at what can be done with polluted
water in California's Central Valley, like
that which was dumped in the Kesterson
lakes. They estimate that the cost of
treating water that has run off agricultural
land in the valley might be between $400
and $1,000 an acre-foot. That is more
than Los Angeles now pays for its water,
but less than the $700 an acre-foot that
new supplies, from ugly dams, would
cost. At treatment costs of $500 an acre-
foot, it might pay farmers to clean up
their used water and sell it to Los Ange-
les, which would save both money and the
sierras. Alternatively, farmers could
choose to retire their irrigated land, and
sell their water unused and clean. Either
way, pollution would be eradicated.
Even those most committed to using
the market to improve water quality ad-
mit that surface water is much easier to
deal with than groundwater. But there
too, the market can play its part. The
main problem is that water law makes it
difficult to "own" aquifers. But in a few
places in the west, and in the whole state
of Montana, rights to groundwater ex-


traction are now being defined.
Mr Terry Anderson, at Montana Se
University in Bozeman, says that
rights to groundwater have been estab-
lished, their owners will have an incentive
to sue anyone who pollutes the supply. It
might be possible to go further. As such
"rights" are based on prior use, it might
be possible to give them retrospective
force. Thus their owners might be able
not only to use the threat of litigation to
stop future pollution, but also to use it to
force polluters to clean up messes made in
the past.
Even then, difficult questions would
remain. Much contamination of ground-
water does not,, come from discrete, or
"point" sources; so there is no way of
knowing who is responsible. Often, even
if only one company were clearly to
blame, it will long since have gone out of
business. So the states will often have to
devise regulations to stop "non-point"
pollution, and spend public money to
clear up hazardous wastes. Some states
will use zoning laws to protect an aquifer,
just as they might protect a beautiful view
or an old church.

Glimpsing the future
Some idea of the shape of these water
regulations can be gleaned, once again,
from Arizona. There, Mr Babbitt, I s
last big legislative change in the statr ; e
is a hopeful for the Democratic presiden-
tial nomination in 1988) has introduced a
water-quality law to go with his 1980
measures. It includes a detailed system of
permits and monitoring for all those who
wish to deposit rubbish in aquifers.
Others are taking a slightly different
tack, devising rules that are simple to
enforce. California has a clean-water
proposition on its ballot paper this No-
vember, which would forbid the dis-
charge of a list of chemicals certified by
the governor to be dangerous. The
scheme, says Mr Carl Pope of the Sierra
Club, America's leading environmentalist
group, is a regulatory one without regula-
tors. The state would merely draw up the
list, and citizens would have the right to
sue anyone who discharged one of the
listed substances. The aim. he says, is to
encourage industrialists to steer clear of
dangerous chemicals.
It is far too early to say whether the
market approach to water, the citizen-
enforced rules of Mr Pope. or the regula-
tory. government-led system of Mr Bab-
bitt and the Supcrfund are the way
forward. In all probability, a mixture of
the three will emerge. But it is at st
clear that although the federal gd 7-
ment paid for most of the big waIer
schemes of the past, the federal govern-
ment alone will not pay for the answers to
the water problems ,of the present.
THE ECONOMIST OCTOBER 4 196




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