In Nature's Fortune (Basic Books, 2013), Mark Tercek, along with conservation biologist Jonathan Adams, argues that economic growth and environmental stewardship are not mutually exclusive, and that in fact, saving nature is the smartest commercial investment any business or government can make. In the following excerpt, the pair explains how money and saving nature combine to change our concept of conserving water.
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Rebalancing water consumption to sustain the competing needs of agriculture, cities, rivers, and lakes requires changing ingrained patterns of behavior. That includes changing who uses water, for what, and how much they pay for the privilege.
A popular view among economists places the last part, price, above all other considerations. Indeed, some who study the problem believe that getting the price right would magically solve our water problems and all sorts of other natural resources problems as well. If only investing in nature were that easy.
People around the world have been buying and selling oil for 150 years but have yet to figure out an economically and environmentally sensible way to do the same with water. When the price of oil goes up, people drive less and turn down the heat in their homes, and businesses seek efficiencies or alternative energy sources. Get the price of water wrong, on the other hand, and the consequences are dramatic. Raise the price of water and yes, some people will use less—but rising prices might also force farmers out of business and cause food shortages.
The controversy over sharing water between farms and cities in Southern California has a simple cause: not enough water to go around. The contentious issues are allocation and value. Should farmers use water in the Imperial Valley to grow vegetables or should the residents of San Diego use it for drinking, cooking, and household needs? Elsewhere, the issue is not scarcity but access, moving small amounts of water at high cost by building new pipes and treatment plants, to get water to poor urban areas. In either case, the underlying principle is clear: water, like all earth’s goods and services, should not— or at least not always—be free.
That principle is far easier to state than to enforce. Basic necessities such as water, fish, timber, or land safe from floods have to be affordable, even to the poorest people who may be unable to pay anything at all, but at the same time not so inexpensive overall that no one has any incentive to conserve the resource. Markets offer one obvious way to approach the problem.
To have a market, you first need to have property; after all, you cannot rightly sell what you do not own. But what parts of nature can people own?
People own coal deposits and oil fields, forests of valuable timber, and pastures for grazing. Can they also own all the water underneath that pasture, or in the river that runs by it? Can anyone—a government, a business, or an individual—own the diversity of a forest, or the flood protection that a coral reef provides?
Unease over private ownership of an important part of nature can be seen in a global context. In June 2010, the United Nations General Assembly declared, without one dissenting vote, that water was a human right. The vote was not unanimous: forty-one countries, including the United States, Canada, the United Kingdom, and Australia, abstained over concerns about sovereignty. That not one country voted against the resolution suggests that not even the worst despots would take the public stand that they have a right to deny someone water. Ownership of water, unlike oil, has an unmistakable moral component.
The widespread assumption that water and some of nature’s other gifts are and should always be free has deep roots and is thus difficult to upend. In the developed world at least, just about everyone knows two things for certain: when they turn the tap for their morning shower, the water will be clean; and when they get the bill, it will be small. Even in Santa Fe, which in 2011 was the US city with the most expensive water, an eight-ounce glass of tap water costs about a dime. Even that may overstate the case, as Santa Fe is an outlier. The city faced water shortages, so in 2008 it began building a huge, costly project to divert water from the Rio Grande—a project that residents pay for on their water bills. Most everywhere else, even bone-dry Phoenix, a glass of water costs a fraction of a penny. The scarcity of water thus bears almost no relation to its price. Water in the desert is inexpensive, while rainy Seattle has among the highest water prices in the United States. That’s due partially to Seattle’s need to pay off debt on water treatment plants, as well a conscious decision by Seattle lawmakers to keep rates high to encourage conservation.
In fact, most of us hardly even pay for water at all. The water bills we receive are not for the water itself, but instead for the pipes that bring water to the house and the people who keep the system working. The price of water does not reflect its importance—a lapse that has hidden the risks of water shortages for decades.
Reprinted with permission from Nature's Fortune: How Business and Society Thrive by Investing in Nature by Mark Tercek, with Jonathan Adams and published by Basic Books, 2013. Buy this book from our store: Nature's Fortune.
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