Water is simply too cheap (October 5, 2015)

If there is one fact about California’s water crisis that we should all keep in mind, it’s that while nature causes droughts, man causes shortages. Despite outrage over water prices, the price of water — even in Apple Valley — approaches zero. Because water is falsely cheap, people overuse it, and that leads to what is happening today in California.

Of course, the whole story is complicated, as agriculture uses about 80 percent of California’s water, and farmers pay even less than we do. Breaking down water usage this way still doesn’t take into account environmental water use. While measurements differ, the bottom line is that in California much more water is diverted for agricultural and environmental use than for residential use.

Either way, water isn’t subjected to market forces the same way other goods and services are. What seems to anger Apple Valley residents, beyond drought surcharges, is that the Apple Valley Ranchos Tier 1 price for water is $2.52 per hundred cubic feet (HCF). In Hesperia, for example, where residents buy water from the city, the Tier 1 price for water is only 90 cents per HCF. There are all kinds of market distortions here, including that Ranchos is both guaranteed a profit and is being forced to sell less of their product. However, Ranchos cannot subsidize prices by spreading costs out amongst taxpayers the way governments do. So what do these prices actually mean, then?

There are 748 gallons in every HCF of water. So Ranchos’ Tier 1 customers are paying 33 cents per 100 gallons of water, while Hesperia Tier 1 residents pay 12 cents. The most the former will pay (Tier 3) is 42 cents per 100 gallons, while the most the latter will pay (Tier 4) is 30 cents. Sure, there is still a discrepancy, but one thing is very clear: even in Apple Valley, the price of water is near zero.

Today, some Apple Valley residents will pay about $2.85 per gallon for regular unleaded gasoline. While they pump, they may buy a 16.9-ounce bottle of water for nearly $2. But three-tenths of one cent for every gallon of water pumped directly into their home is just too steep.

Yes, water is a necessity. But further removing water from market forces is not the answer. It will only lead to future shortages and more government restrictions, fines and surcharges. The reality is that we should all be paying much more for our water.

Ryan Richards, Hesperia

Source: Daily Press