California’s lawmakers punted on voting for an $11 billion water bond that would have funded projects like water storage, Bay-Delta sustainability, groundwater clean-up, and advanced water treatment and recycling. The bond also included special funding for interpretive centers, and other pet projects. With politicians pulling levers on water management and funding it is worth pondering whether public management of water is the most efficient and effective model? A lesson from ocean fisheries suggest otherwise.
Over the past two decades fishery managers in California, New Zealand, and elsewhere have implemented Individual Fishing Quotas (IFQs) to great effect. An IFQ is a privately-held, marketable right to a certain amount of fish, set through scientific monitoring, in a specific fishery. The IFQ owner can sell or lease the right, fish the right, or retire the right for conservation. IFQs allow commercial fishing fleets to haul their catch while drastically reducing the gladiator combat they engaged in before IFQs. Evidence shows that where properly implemented IFQs have dramatically improved fisheries and fishing industry efficiencies.
IFQ critics, including commercial fishers, argue that fish should not be “owned,” that only the richest will be able to afford IFQs, and that IFQs are subject to monopolistic effects. In response to the criticisms, folks at places like Environmental Defense Fund, an NGO, design limits on IFQs and lobby to impose them.
Happy with her share
If IFQs can reduce fishing fleet conflicts while enhancing fishery health, could they also work on a local scale for freshwater allocation? Water, like fish, is a common resource that does not respect political boundaries, but is the subject of significant political conflict and occasionally physical ones. If water were allocated via market mechanisms it would need a niftier acronym than IFQ. Let’s arbitrarily call an individual quantum of water a Freshwater Individual Share (FISh). Like IFQs, a FISh would function best with a scientifically-defined limit on how much of the target watershed or water body is open to market allocation, some of which would be open only to locals, and shares can be perpetually retired for conservation purposes.
FISh have at least three advantages over the prevailing government water monopoly. One, they would encourage private negotiations rather than wasteful lobbying of governmental bodies and knee jerk litigation that often entrenches acrimony and stubbornness. Second, FISh shareholders will have an incentive to maintain the quality of the water source because they aren’t assured a specific identifiable “stock” of water but a measurable flow from it. Third, FISh would more accurately quantify the value of the water source than what happens under the commons regime. (Interpretive center anyone?) High prices would motivate rationing when flows runs low.
Freshwater markets do have a mixed history around the world, but often because they were poorly conceived and implemented. And critics are certain to argue that water is a common good and thus should be solely managed by the government. Yet IFQ programs, which the government continues to enforce and manage in terms of catch limits, show that well-designed individual ownership over common resources actually restores the health of the resource while reducing human conflict over it. As freshwater quality and quantity diminishes, the dispersed, unquantified costs of common management increases. Wouldn’t it be better to know the true cost of water than just punt it down the road?