A ongoing battle in court and public opinion rages in California over the environmental status of the Sacramento-San Joaquin River Delta (both rivers meet, and flow into San Francisco Bay; a rather rare type of system seen in only a handful of places around the world, like the Ganges–Brahmaputra). The status of a small fish called the Delta Smelt, as well as salmon, have led to less water allowance for Central Valley agriculture via California's great waterworks infrastructure, an ongoing shock to the most productive agricultural region in the world. There's little free market in water anywhere, but we can reconcile that over time via a tad more "separation of water and state." I testified in the Water and Power Subcommittee of the U.S. House of Representatives Water and Power Subcommittee this week on these concerns. The specific vehicle was H.R. 3176, the Reclamation States Emergency Drought Relief Act. My written testimony is linked here (prepared in just a couple days so please excuse typos!); and oral remarks appear below.
I am Wayne Crews, VP for Policy at the Competitive Enterprise Institute, and I thank the committee for the invitation to address federal drought relief funding and planning. I come at this issue from the perspective of one who spends most time on tech and frontier industry policy issues, including compiling an annual federal regulation report called Ten Thousand Commandments. Given environmental barriers to urgently needed water in the West, I completely understand the desire for the funding in H.R. 3176; and granted, the dollars sought are trivial in context of current budget battles. But I caution against fostering any further “Declaration of Dependence” on federal dollars in any sector. The regulatory reforms and infrastructure liberalization actually needed for plentiful, adaptable, environmentally conscious western water should dominate attention. The good news is, water is not getting more scarce overall; it’s an earthly constant. The bad news is, we artificially interrupt access to water. So management and allocation of that constant supply does matter. The Western and California natural environment is a world wonder; but so too is the remarkable manmade infrastructure. Western environments are some of the most altered on earth. And yet--environmental protection is not alien to providing plentiful water; the opposite is true. Restraints like waste stream recapture, conservation and stewardship, property rights regimes, liability, and insurance, must evolve alongside infrastructure. Governments often magnify environmental damage and risks. Water resources and environmental amenities should be better integrated into the property-rights, wealth-creating sector, an evolution long-since derailed not just here, but elsewhere like in electromagnetic spectrum, electricity and transportation grids. Instead of the Drought Reclamation Act, I advocate increasing separation of water and state. We should lessen having Government Steer While the Market Merely Rows. Federal policies can be contradictory: We hear a lot about a federal “infrastructure bank,” and are endlessly regaled about the urgency of bolstering critical infrastructure—-but these sentiments are certainly undercut by onerous environmental and permitting regulations that aggravate drought out West. The fact is, as a free society becomes wealthier, cross-industry creation of infrastructure like water should become easier, not harder. The vastly poorer America of 100 years ago built overlapping, redundant infrastructure. So if we can’t supply and price water effectively, man-made policies are the matter, not genuine drought. Infrastructure can take many forms, but all around, better reservoir storage, pipelines and canals, trucking and transport, and crude oil carriers can aid supply and lessen artificial drought—and lessen impetus for federal funding. So too can improved trades between cities, farmers and private conservation campaigns. Improving water infrastructure can also reduce the waste that now depletes some 17 percent of the annual supply, as noted in a Competitive Enterprise Institute report by Bonner Cohen. All this can supplement direct sourcing alternatives including drilling, gray and wastewater treatment and reclamation; stormwater harvesting and surface storage, and, OK, even desalination where it’s economically rational. When linking investment to human needs, private investors can test low-probability projects, counting on the rarer success to offset failures. Markets need to be good at killing bad projects. As CEI’s founder Fred Smith always puts it, instead of trying to improve speeds by picking the particular horses to run on the economic racetrack, we must improve the track itself so all the horses can go faster. And letting jockeys keep more of their earnings means more jobs. Thus, we need sweeping regulatory liberalization, also. In my written testimony, I cover reform options to enable a private sector flush with research and investment cash to dwarf H.R. 3176. Finally; this is the water and power subcommittee, and I think it’s vital to step back and explore dismantling regulatory silos that artificially separate our great network industries like water, electricity, transportation and telecommunications. Leaving antique 19th and 20th century infrastructure regulation intact hampers 21st century investment. Our primary challenge is to discover the true value of water itself, to integrate modern water resources further into the market process and the sophisticated property rights and capital market systems of the modern world. Despite everything, gallons cost less than a penny, and yes, even fill swimming pools and quench lawns in deserts. The last time I spoke in the Subcommittee, I was asked if I thought access to water was a “right.” Now, committee members who believe it is must consider the full implications of that question; What makes abundant water—the most critical of critical infrastructures--possible.