ACWA Bill Goes to Governor; Water Rights Measure Dies on Assembly Floor

ACWA-sponsored legislation addressing penalties for wastewater discharge reporting was sent to the governor while a strongly opposed bill on water rights died on the Assembly floor as the legislative session came to an end Tuesday night.

Lawmakers also passed a handful of bills on local government compensation, including a measure prohibiting automatic raises exceeding cost-of-living adjustments for specified local officials. The bills emerged in the wake of salary abuses reported in the city of Bell.

SB 1284 (Ducheny), sponsored by ACWA, addresses high penalties for water agencies and others for failing to report there was no wastewater discharge or failing to report a discharge that did not violate environmental standards. It cleared its final legislative hurdle last week and is now on the governor’s desk.

Read more…

Aganomics question on farm water

From David Zetland at Aguanomics:

Economists often assume that people use their foresight to weight the costs and benefits from actions on their current and future selves.

For example, a farmer without neighbors* will not overdraft an aquifer today because he will want water tomorrow, for himself or his descendants.

But what if he makes a mistake and really does use the water “unsustainably”?

There appear to be three ways to respond to this mistake:

  1. He’s screwed up. Let him suffer.
  2. The government should intervene, to rescue him from his folly and regulate sustainable use.
  3. Allow the market to correct the problem, so an outside buyer replaces him and restores sustainability, i.e., the long term flow of value from the land and water.

Note the problems with (2) that do not exist with (3). The government is a monolith that can make a similar mistake (intervening too much or too little or in the wrong way), but many market players compete to provide the best solution. Second, the government does not get rewarded for clever action (more profits) so there’s no incentive to get things right. A new buyer, OTOH, would benefit from the profits of a good action.

What do you guys think of this problem and the solutions? Do you have example of wise governments or dumb markets? Please DO ignore problems and solutions involving property rights and/or commons.*


* I am intentionally avoiding a tragedy of the commons race among neighbors to pump before others do, etc. 

Economists often assume that people use their foresight to weight the costs and benefits from actions on their current and future selves.

For example, a farmer without neighbors* will not overdraft an aquifer today because he will want water tomorrow, for himself or his descendants.

But what if he makes a mistake and really does use the water “unsustainably”?

There appear to be three ways to respond to this mistake:

  1. He’s screwed up. Let him suffer.
  2. The government should intervene, to rescue him from his folly and regulate sustainable use.
  3. Allow the market to correct the problem, so an outside buyer replaces him and restores sustainability, i.e., the long term flow of value from the land and water.

Note the problems with (2) that do not exist with (3). The government is a monolith that can make a similar mistake (intervening too much or too little or in the wrong way), but many market players compete to provide the best solution. Second, the government does not get rewarded for clever action (more profits) so there’s no incentive to get things right. A new buyer, OTOH, would benefit from the profits of a good action.

What do you guys think of this problem and the solutions? Do you have example of wise governments or dumb markets? Please DO ignore problems and solutions involving property rights and/or commons.*


* I am intentionally avoiding a tragedy of the commons race among neighbors to pump before others do, etc.

————————

Trager Water Report comment:

Generally, the private solutions would be better, with government acting only as referee to private contracts. But it also depends on what sort of government one has. If it’s a reasonable local government, then even #2 might be tolerable. But if it’s a distant, unreasonable government — what America now has — then expect the worst.

U.S. Supreme Court Rules on Takings Clause in Florida Case

Ruling Important for California Water Agencies

Best Best & Krieger E-bulletin:

The U. S. Supreme Court waded into a thorny constitutional thicket by considering whether the courts, like other branches of government, are subject to the limitations of the Takings Clause of the U. S. Constitution when they change the definition of property. Under the Takings Clause, the government must pay compensation to a property owner when it “takes” his property for public use, as when it exercises the power of eminent domain. The Supreme Court has held that the Takings Clause also applies – and therefore a property owner is entitled to compensation – when the state excessively regulates his property, although the courts have not clearly defined how far the states can go in regulating property.  

The question raised in Stop the Beach Renourishment v. Florida Department of Environmental Protection was whether the Takings Clause also applies when a state court restricts a property owner’s rights by changing the definition of property – that is, whether there can be a judicial taking of property. This is a very important issue in California and other states, particularly in the field of water rights regulation. The California Supreme Court held in 1983 in the famous Mono Lake case that the public trust doctrine applies to water rights, and therefore water users are subject to public trust limitations. If a judicial taking can occur, water users in California may be able to challenge the application of public trust principles to their rights, or at least seek compensation for the loss of their rights.  

The Supreme Court in Stop the Beach Renourishment unanimously decided Thursday, 8-0, that no taking had occurred because the Florida Supreme Court had not changed the definition of property. The Florida Supreme Court had held that the State of Florida owned the beach lands that suddenly emerged when the State filled beach erosions caused by hurricanes, and that the lands did not belong to the owners of beachfront property. The U.S. Supreme Court held that the Florida Supreme Court’s decision was supported by the State’s “background principles of property law,” and thus the Florida Court had not changed the definition of property. (Justice Stevens, who owns Florida beachfront property, did not participate in the case.) 

In California, the state courts have in many cases defined property, and in some cases redefined it. In the water rights field, for example, the California Supreme Court many years ago adopted the doctrine of riparian water rights, and held that riparian rights have priority over appropriative rights – and thus limited the rights of appropriative users. More recently, the California Supreme Court held in National Audubon Society v. Superior Court that the public trust doctrine applies to, and therefore restricts, water rights. If a judicial taking can occur, water users in California whose rights are restricted by court decisions defining their rights would have the right to challenge the court decisions and seek compensation for the loss of their rights. Thus, the judicial taking doctrine has enormous significance for California and other states. 

Source here…

Water board shoots down Eel River request; state says feds have authority over PG&E’s water rights

“State water authorities have rejected a conservation group’s claim to reduce diversions from the Eel River to the Russian River and improve conditions for salmon.

The petition to the State Water Resources Control Board looked to revoke the Pacific Gas and Electric Co.’s water rights for the Potter Valley Project. The Friends of the Eel River claimed that the diversion to the Russian River was an “unreasonable use” of water under state law. Federal fisheries officials have actually ordered a reduction in diversions to the Russian River because salmon there have too much water.

Read more…