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World's Largest Water Diversion Plan Won't Quench China's Thirst

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Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#11

Post by jimmywanger »

nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

You subsidize one way or another.

Farmers are land rich and cash poor.

You can subsidize them for their water, or capital investments, or you can not get food.

Domestic food security is a national security issue.

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#13

Post by etaioinshrdlu »

jimmywanger wrote: post #11
nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

You subsidize one way or another. Farmers are land rich and cash poor. You can subsidize them for their water, or capital investments, or you can not get food. Domestic food security is a national security issue.

From a free market perspective, I would think it to be more efficient to directly subsidize farmers, ie, with generous tax credits, than to subsidize water.

Then you get to subsidize food but still have an efficient allocation of water.

Farmers might be more incentivized to grow crops with less water requirements but more food value.

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#14

Post by yorwba »

jimmywanger wrote: post #11
nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

You subsidize one way or another. Farmers are land rich and cash poor. You can subsidize them for their water, or capital investments, or you can not get food. Domestic food security is a national security issue.

The point is that subsidies should not be proportional to water use, but to food production. Otherwise there is little incentive to make more efficient use of water, and that leads to farmers planting crops that sell at a higher price but require disproportionally more water.

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#15

Post by raverbashing »

nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

While subsidies might be incentivizing waste, this is better than the alternative, which is not having enough food.

The "free market" solution to take food out of people's table is a very good way to have some politicians at the gallows in no time (see Arab Spring)

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#16

Post by adventured »

yorwba wrote: post #14
jimmywanger wrote: post #11

Earlier quoted context omitted.

You subsidize one way or another. Farmers are land rich and cash poor. You can subsidize them for their water, or capital investments, or you can not get food. Domestic food security is a national security issue.

The point is that subsidies should not be proportional to water use, but to food production. Otherwise there is little incentive to make more efficient use of water, and that leads to farmers planting crops that sell at a higher price but require disproportionally more water.

It's an extremely important point when you consider the water going to things like almonds in California, the majority of which are then exported. Their almond crop alone consumes enough water to supply Los Angeles and San Francisco combined. Only 20% of California water is for non-agricultural purposes.

Or put another way, the total economic value of all exported almonds from California is about $3.5 to $4 billion. The water use is about on par with the entire city of Los Angeles for that almond export crop. The metro area of LA has a trillion dollar economy by comparison (250+ fold larger than the almond exports). That's an economically irrational imbalance.

The obvious question becomes: is that what California wants to do with its scarce water resources, export large parts of it at an extremely low value basis? At some point in the near future it's likely some hard choices will need to be made, including whether to invest extremely large sums of money into more desalination plants or to begin restricting the most voracious water consumers (cattle are another one, although I'm unsure of their export ratios).

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#17

Post by danmaz74 »

nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

Did it ever occur to you that pricing hundreds of millions of poor Chinese farmers out of their ability to grow food to eat, so that much richer exporting industries can have more water, while being a "market solution", might not be an acceptable - even a humane - solution?

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#18

Post by rukittenme »

danmaz74 wrote: post #17
nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

Did it ever occur to you that pricing hundreds of millions of poor Chinese farmers out of their ability to grow food to eat, so that much richer exporting industries can have more water, while being a "market solution", might not be an acceptable - even a humane - solution?

Did it ever occur to you that by not pricing out poor, upstream farmers that hundreds of millions of poor Chinese workers will die of thirst?

I think its perfectly reasonable to value a scare resource at a market rate. If the rate is too high to be tolerable then the government has an incentive to invest in water infrastructure. And people have an incentive to move where resources are under less strain.

Or we could just rape the environment for short term gain. It seems to be everyone's solution on every side.

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#19

Post by nlperguiy »

nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

Imagine if farmers were growing luxury vegetables like tomatoes, potatoes, beans, instead of growing several magnitudes more of cheap crappy grains that are then filtered through bodies of animals.

Of course issues exist, because inefficiency is subsidized.

For example, growing quinoa is a freaking gold mine yet there's still not enough competition.

Yet growing corn and wheat is a life living on the edge of bankruptcy yet it is heavily subsidized by the state everywhere.

There's no free market in farming, probably never will be because the ruling class is afraid of food shortages and set-in-stone food luxury standards.

Re: World's Largest Water Diversion Plan Won't Quench China's Thirst

#20

Post by WalterBright »

raverbashing wrote: post #15
nshepperd wrote: post #9

> Still, in many cases there’s little incentive for farmers to save water. Agriculture uses 62 percent of China’s water, but crops have a relatively low marginal value. So the government bans the sale of agricultural water to industry, which pays 10 times the price, to ensure food supply. This discount on water is effectively a cash subsidy for agriculture that increases with the amount of water wasted instead of use…

While subsidies might be incentivizing waste, this is better than the alternative, which is not having enough food. The "free market" solution to take food out of people's table is a very good way to have some politicians at the gallows in no time (see Arab Spring)

> The "free market" solution

Free market agriculture has been far more successful at eliminating hunger than any other system.

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