Monday, June 27, 2011

Environmental Freakonomics: Bottling Water Not So Bad After All?

Bottled Water As I got deeper and deeper into my Natural Resources Law and Policy material on water, I lamented to a friend that "we just don't have enough water." My friend, an economist, said "no, we just don't have enough properly priced water."  My concern was driven by a Scientific American article about the Ogallala Aquifer, which supports the breadbasket of the world and stretches all the way from South Dakota to Texas.  In West Texas alone, the number of irrigation wells grew from 1,166 in 1937 to more than Ogallala  
66,000 in 1971.  The overdraft of the aquifer in 1975 was equivalent to the entire flow of the Colorado River, but today the aquifer is being depleted at an annual volume equivalent to 18 Colorado Rivers.  In some places agriculture is withdrawing four to six feet a year, and nature is putting back half an inch.  Natural aquifer recharge would would take 6,000 years if it were to be fully drained.

In a fascinating guest post on, Charles Fishman describes some of the drivers of water overconsumption within the context of a very interesting case study. Fishman highlights a move by the National Basketball Association's Cleveland Cavaliers to remove all of the 18 water fountains in Quicken Loans Arena (the "Q"). As an alternative to the water fountains - which, of course, provided free water - the organization directed people to free cups of water available in the concession stands, or patrons could purchase a $4 bottle of Aquafina. Of course, to receive either of those options, people had to be willing to stand in line - which can be a lengthy proposition at a sporting event.  Three months passed, and over 1 million spectators attended events in the Q with not one complaint.  About halfway through the NBA season, however, a newspaper reported the removal of the water fountains.  The fans were furious, even though the Q had sold out 29 home games prior to fans' awareness of the removal. The Q scrambled to put the water fountains back in.

This story demonstrates, first, the entitlement people feel toward things that they obviously do not need - which is a disturbing commentary on the societal drivers of overconsumption and environmental degradation as a general matter. But second, the story raises some very interesting facts about water and why we should consider paying more for it. Fishman notes that if you buy a 17 ounce bottle of water for $0.99, you could take it home and continuously refill it every day with tap water for 6 years before you spent $0.99 on that amount of tap water! Even cheap bottled water is 2,000 times more expensive than tap water at home.  This demonstrates an amazing disparity between what we are willing to pay for water when we are at sporting events, on road trips, going to the beach, etc., and what we are not willing to pay, and indeed feel entitled to, in our homes - the place where most water overconsumption occurs. Fishman notes that "[R]esidents act as if increasing the water bill from $23 a month to $30 a month will force them to choose between their heart medicine and their water," even though the average household water bill in the U.S. is less than half the average cable TV or cell phone bill.

Though there are obviously big problems with bottled water - not to mention the toxic chemical and waste disposal issues posed by the plastic used to manufacture them - when considering overconsumption of water it may be useful not to rely too heavily on conventional wisdom ("convenient wisdom") regarding the parcelization of water resources. As Fishman notes, "'Free' is the wrong price for water. In fact, the lack of a price for routine water service is the most important thing that’s wrong with water — resources that are free are wasted; there’s no incentive to learn to use them smartly; there’s no money to maintain and modernize the existing water system; there’s no incentive to reach back and protect the source of something that’s free."

- Blake Hudson

Economics, Food and Drink, Sustainability, Water Resources | Permalink

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Great observations Jim. I certainly agree. But I do think this conveys an interesting insight into the psychology of consumption as a general matter - simply using the medium of bottled water as an example. If the same expectation of payment that you highlight came to be the norm for all water usage - toilets, sprinklers, showers, etc. - then we might see a shift in consumption patterns. Thus parceling up water into discrete units of toilet flushes, sprinkler uses, and showers, and paying an appropriate (commodity) price for them (2000 times the current price we pay, perhaps?), would result in behavioral change. And of course you see this in some Western areas with rationing policies during the dry months, etc. But I think that's the global point Fishman was making, as all of those uses roll into the monthly home water bill.

It reminds me of the time I was in New Zealand at a hostel. I went to the common room, and it was about 58 degrees Fahrenheit. So I decided to go turn on the heater. A sign said "One Dollar (Kiwi)." I thought, with indignation, "I'm not paying a dollar for heat!" Boom - behavioral change. All of the sudden I wasn't so cold and could do without consuming those resources.

Posted by: Blake Hudson | Jun 28, 2011 7:43:49 AM

Fishman is a great writer but he's comparing apples and oranges. Drinking water comprises a tiny fraction of our household consumption, which is dominated by lawn sprinklers, toilet flushing, and showers. There all kinds of things that cost a fraction of what we pay for because of convenience. The issue is not the cost of the water but that we now regard drinking water as a commodity. While the Q may have replaced its drinking fountains, the fact is that most Americans now regard water as no different than Coke or Pepsi and expect to pay for it. I'm not the first to observe that drinking fountains are going the way of pay phones -- both are a vanishing breed in the American landscape.

Posted by: Jim Salzman | Jun 27, 2011 6:54:00 PM

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