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Are California Municipal Water Rates Too Low to Spur Conservation?

By <a class="post-author" href="/about#w_lusvardi">Wayne Lusvardi</a> -- September 17, 2014

“The popular explanation for the water crisis –- lack of rain -– is clearly inadequate…. But why do Californian’s use so much water? An underappreciated explanation is simple: Water prices have been held down below cost by political forces and by past water infrastructure subsidies covered by taxpayers across the country….“A better solution than water policing? Raise water prices until they hurt (or at least go high enough that Californians notice) – and spur conservation.”

— Kathryn Shelton and Richard B. McKenzie, “The California Water Crisis: Policing or Pricing?”, September 1, 2014.

Water economists from both sides of the political spectrum are claiming that one reason California water use has actually increased one percent in a drought this year is that municipal water rates are too low. Free-market think-tank scribes and water economists, joining with those who advocate government solutions to drought, have called for higher water prices not by market but by government coercion.