Government Water and Drought in California

6679Kathryn Muratore writes in today’s Mises Daily

The total privatization of water is the best way to avert disaster in the arid west. The disaster is not necessarily imminent, but it is inevitable because there are no significant incentives to conserve this resource in its current socialized state. Privatization does not mean selling dams and reservoirs and municipal water companies to private investors who are then allowed to operate as protected monopolies. Privatization means that you own the rights of the water on your land, and individuals can own real estate in water (lakes, rivers, oceans). A transition to such a state of affairs is likely to be painful, as 100+ years of damage by socialization of water must be undone.

Rather than allow the west to remain unsettled as farmers and irrigation companies died, both figuratively and literally in the former case, Teddy Roosevelt’s bizarre focus on preventing foreign invasion led him to break rank with the Republicans and provide irrigation subsidies to western farmers. Powell adds, “It was curious that Roosevelt, who crusaded against private monopolies, approved of the Reclamation Service [now Bureau of Reclamation] as a dam-building monopoly.”

The Reclamation Act led to another market distortion and, ultimately, corruption. Land speculation took off as investors tried to predict where the feds would build a dam and encourage settlement. The Owens Valley scandal, in which water was unethically diverted from local irrigation to Los Angeles by the Reclamation Service, led to further distortions. The city government acquired the water monopoly and below-market water prices followed, encouraging a further increase in population.

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