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When water fails: Economic considerations of water scarcity on food, energy and the environment (Part 2 of 3)*

*This is the second of three posts related with the potential effects of the current California’s drought. In this one we will talk about consequences on food production, energy and the environment. Take a look at the first post here.

Water as an energy consumer

Energy is needed to pump, treat, transport, heat, cool and recycle water. According to the California Energy Commission 54 TWh of electricity and 4,284 million therms of natural gas are consumed annually in the entire water cycle. These amounts represent 21 and 32 percent of the state’s total use respectively.

Whereas environmental and agricultural sectors account for the vast majority of total water consumption, urban water end-uses are responsible for 58% of total water-related electricity and 98% of total water-related natural gas consumption. Furthermore, urban water supply and treatment, and wastewater treatment accounts for nearly 20% of water-related electricity use. Meanwhile agricultural supply, treatment and end-use account for an additional 22% of all water-related electricity consumption (CEC, 2005).

Table 1: California water and water-related energy use per sector (in percentage).

Table 1: California water and water-related energy use per sector (in percentage).

As described above, spatial variations in precipitation and water demands across California necessitated the creation of huge water conveyance systems that are now some of the largest single user of electricity in the state. For example, the State Water Project consumed an average of 7.81 GWh of electricity per year between 2005 and 2009 (more than 3% of the state’s total electricity consumption), although during this period, it also generated 4.99 GWh of hydropower per year. Despite the high energy intensity of these conveyance systems more energy is used every year to pump groundwater locally to supply water.

Taking all those facts into consideration, and given that urban water use is the principal water-related energy user (Fidar et al., 2010), we might expect that urban demand management policies to reduce residential water consumption per capita during drought through attitudinal changes would result in a decrease in water-related energy use. A significant proportion of residential water savings will come from outdoor reductions, and given that outdoor water is unheated, the reductions in water-related energy will not be as large as might be expected from Table 1. Savings in indoor water use will translate directly to a significant reduction in residential energy use, and as is shown by (Escriva-Bou et al., ongoing research) a 5 percent reduction in indoor water use in a single-family home translates to a 7 percent reduction in water-related energy and a 2 percent reduction in total household energy use. It should also be noted that overall residential energy use would increase during periods of high temperatures because of greater air conditioning use (Scanlon et al., 2013).

In the agricultural sector, as surface water becomes limited, an increase in energy use from pumping groundwater on those farms that have the ability to switch their water source must be expected. Although only studied during a short range of time, between 2006 and 2012 non-residential electricity consumption for two of the most important agricultural counties in California —Fresno and Tulare— shows that electric consumption is inversely proportional to precipitation (Figure 5). In 2014, this is likely to be exacerbated because the drought is more severe than previous ones. The same trend should be expected if high-value croplands and urban utilities buy water through the market increasing water transfers: again those agricultural users that are able to switch between water sources will sell surface water and energy use will increase due to greater groundwater pumping.

Fig5

Figure 5: Non-residential electricity use in Fresno and Tulare counties.

The final consequence that we would to point out is that delta exports to the Central Valley and Southern California will be reduced. Therefore the State Water Project (SWP) and the Central Valley Project (CVP) will reduce their energy consumption. As we mentioned previously, the SWP is the largest single user of electricity, thus a considerable amount of energy will be saved.

Water as an energy source

California produces roughly 70 percent of its electricity from power plants located within the state or plants located outside the state but owned by California utilities, whereas 30 percent is imported from the Pacific Northwest and the American Southwest. On average 54% of within-state electricity production is natural gas-fired, 16% comes from hydropower, 15% from nuclear plants, 6% from geothermal, and the remaining 9% is shared between renewables —wind and solar—, coal, biomass and other sources (CEC, 2014).

Most of these energy sources need water in different ways. Whereas hydropower is completely dependent on water availability, it consumes only a negligible part through the reservoir’s evaporation. Thermoelectric power plants, including natural gas and nuclear plants, heat is removed from the cycle with a condenser using cooling water (Torcellini et al., 2003). Even though thermoelectric generation accounts for ~40% of water withdrawals and 3% of freshwater use in the US (Scanlon et al., 2013) and thus competes directly with other freshwater users in California, most generators use saline water and so are thus unaffected by water scarcity.

As is shown in Figure 6 hydropower generation has fallen significantly during previous drought events, averaging 28.12 TWh in drought years versus 41.51 TWh/year in non-drought ones during the last three decades. Accounting for differences in comparative costs of electricity generation obtained from Klein (2010), hydropower has a levelized cost of $70.04 /MWh whereas the potential substitute, Advanced Combined Cycle (CC), would cost $114.36 /MWh, thus the average loss amounts to $593 million /year.

Another potential concern is if decrease in hydropower generation have a direct effect on electricity prices. As Figure 6 also shows, the relative share of hydropower as a proportion of California’s total energy generation has been decreasing, meaning that any effect on electricity prices will be relatively small because of the reduced dependence on hydropower.

Fig6

Figure 6: Total in-state power generation plus imports (electricity consumption) vs. hydropower generation.

Water and energy as food inputs

Although California’s economic growth is today more reliant on other sectors, its agricultural output remains the highest in the U.S. and this sector, which accounts for 80 percent of total water withdrawals, is highly competitive in the international agricultural market. Nowadays the agricultural sector generates 1.3 percent of the Gross State Product (GSP) and employs 6.7 percent of the state’s private sector labor force (AIC, 2013). These are statewide aggregate data, but if we focus on agricultural regions such as the Central Valley, the share of the gross production and agricultural labor market is much larger for some counties, and more importantly, is usually correlated with poorer regions which are home to more vulnerable inhabitants. Therefore, while the potential impacts on the agricultural sector may not significantly impact the state’s economy as a whole, the effects in these agricultural regions will be intense.

As we have noted previously, water scarcity will have direct consequences on food production inputs:

i.         Water shortages could reduce sources available for crops, meaning that if no alternative water source exists, the producer will have to apply less water, decreasing yields, switch to a less water-consumptive crop which is likely to be less profitable, or reduce the area planted for a year.

ii.         If the producer has an alternative water source, they will get additional water but with an increase in production costs because of the energy required to pump groundwater or alternatively because water must be purchased through a water transfer scheme. Both situations will lead to a decrease in total profits ceteris paribus.

Extrapolating these local implications to a statewide scale, a drought would result in reduced total revenues and agricultural GSP, and the labor market will be damaged, especially in regions dependent on agricultural. Howitt et al. (2011) estimated that $370 million was lost in gross revenue as a result of the 2009 drought, implying 7,500 job losses.

Fig7

Figure 7: Agricultural labor force and agricultural gross state product.

California agriculture is driven by the interactions between technology, resources and market demands (Medellin-Azuara et al., 2011). Technological improvements are reflected by the increasing linear trend of agricultural GSP, whereas the variations above and below this trend are dependent on international market prices —because only a few California crops have market power— and resource availability.

For all those reasons, it is very difficult to foresee the effects of the present drought on overall agriculture revenues but it is certain that it will increase production costs as water becomes expensive during times of shortage and more energy is used to pump from the aquifers. Final effects on net revenues will depend largely on prices determined by the international trade.

Regarding food prices, there will not be any effect on the internationally traded market goods such as grain, rice or corn because California is a price taker, and in the California-specific crops such as berries or nuts the effects will be uncertain because of the many other variables involved, but ceteris paribus an increase in prices would be expected that reflects the increase of input costs.

Water, energy, food and the environment

Direct consequences of water scarcity on the environment are obvious: as a water-stressed region, traditional economic demands will try to get as much water as they can, thus environmental flows will compete with other uses and it is expected that aquatic species will be severely damaged. However, because of California’s unique water system configuration where the Delta plays a main role as a water hub and is susceptible to the effects of salinity (Knowles and Cayan, 2002, 2004) even in driest years it has to remain a minimum runoff in order to maintain salty water far away from water exports sources in the south delta. This economic positive effect of environmental flows will definitely help to prevent rivers running dry, even during drought periods, but there will still be negative effects on aquatic habitats that should be taken into consideration to minimize future species losses.

The indirect effects of water scarcity will depend on the variations of energy use associated with water use, and their consequent greenhouse gas (GHG) emissions. Summarizing the variations on water-related energy production and consumption mentioned above the main effects on GHG will be:

i.         An increase in GHG emissions due to the substitution from hydropower to thermoelectric electricity generation is expected, and using an emission factor of 499.1 g CO2e/kWh (Spath and Mann, 2000) it would result in an average 6.68 millions of tons of CO2e per year accounting to the difference between average hydropower generation in normal and drought-period years, that it will have an economic value of $75.75 million given the current price of the GHG allowances.

ii.         If urban water use decreases following the demand-side management policies that will be implemented, a reduction in urban water-related energy use and greenhouse gases would be expected, that could be significant, considering that that most of the state’s water-related energy consumption is associated with urban uses, especially heating water. Escriva-Bou et al. (ongoing research) have quantified water-heating related CO2 emissions in single-family homes as 9.3 percent of total per capita GHG emissions, thus saving indoor water uses represents a way to significantly reduce GHG.

iii.         Finally, expected increase in groundwater pumping to substitute surface water shortages will lead to an increase in GHG emissions that should be directly related to the food production sector. The same effect would be expected in urban water utilities which have the ability to shift from surface water to groundwater sources. In the literature reviewed I do not find reliable data to assess this factor, thus it is a field that should be explored.

The variation of GHG emissions related with the water cycle is at least very symbolic since water systems in arid and semi-arid regions are increasing their vulnerability with global warming (Hartmann et al., 2013).

 

References

AIC (2013) The measure of California agriculture. Highlights. University of California, Davis. Agricultural Issues Center. Available at http://aic.ucdavis.edu/publications/moca/MOCAbrochure2013.pdf. Accessed 21/4/2014.

CEC (2005) California’s Water – Energy Relationship. Prepared in Support of the 2005 Integrated Energy Policy Report Proceeding. California Energy Commission. November 2005. CEC-700-2005-011-SF.

CEC (2014) Energy Almanac. The California Energy Commission. Available at http://energyalmanac.ca.gov/electricity/. Accessed 21/4/2014.

Escriva-Bou A, Lund J, Pulido-Velazquez M (ongoing research) Modeling residential water, energy, carbon footprint and costs in California. University of California Davis.

Fidar A, Memon FA, Butler D (2010) Environmental implications of water efficient microcomponents in residential buildings. Sci Total Environ 408:5828-5835.

Hartmann DL, Klein Tank AMG, Rusticucci M, Alexander LV, Brönnimann S, Charabi Y, Dentener FJ, Dlugokencky EJ, Easterling DR, Kaplan A, Soden BJ, Thorne PW, Wild M, Zhai PM (2013) 2013: Observations: Atmosphere and Surface. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

Howitt RE, MacEwan DJ, Medellin-Azuara J (2011) “Droughts, Jobs and Controversy: Revisiting 2009.” Agricultural and Resources Economics Update 15(6): 1-4.

Klein J (2010) Comparative costs of California central station electricity generation. California Energy Commission. Final Staff Report. January 2010.

Knowles N, Cayan DR (2002) Potential effects of global warming on the Sacramento/San Joaquin watershed and the San Francisco estuary. Geophys Res Lett 29.

Knowles N, Cayan DR (2004) Elevational dependence of projected hydrologic changes in the San Francisco Estuary and watershed. Climatic Change 62:319-336.

Medellin-Azuara J, Howitt RE, MacEwan DJ, Lund JR (2011) Economic impacts of climate-related changes to California agriculture. Climatic Change 109:387-405.

Scanlon BR, Duncan I, Reedy RC (2013) Drought and the water-energy nexus in Texas. Environ Res Lett 8.

Spath PL, Mann MK (2000) Life cycle assessment of a natural gas combined-cycle power generation system. National Renewable Energy Laboratory. U.S. Department of Energy.

Torcellini P, Long N, Judkoff R (2003) Consumptive water use for U.S. power production. National Renewable Energy Laboratory. U.S. Deparment of Energy. December 2003.

 

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When water fails: Economic considerations of water scarcity on food, energy and the environment (Part 1 of 3)*

Introduction

California is currently suffering one of the driest years on record and as a persistently water-stressed region all the alarms have been activated. If the drought persists, there may be serious economic consequences for California’s agriculture, which may suffer from a rise in unemployment. Water scarcity will likely decrease hydroelectric power generation affecting electricity prices and indirectly lead to an increase in greenhouse gas emissions from substitutive sources. More broadly, the drought will affect the living standards of most Californian residents, as urban water conservation strategies are implemented through water price increases or even rationing of this valuable resource.

The wide consequences of this severe drought have led to increased attention from both scientists and policy-makers, as it is becoming increasingly clear that water, food, energy and climate systems are highly interdependent. The water cycle is energy intensive and most energy sources require some water inputs. Food production relies on irrigated croplands, which consumes large amounts of energy and water. The energy consumption of the water cycle and food production combined results in the daily release of many tons of greenhouse gases into the atmosphere. The economic consequences of these connections are huge and sometimes very complex to understand, making their assessment a challenging task.

Traditionally, professionals of each of these disciplines have worked in isolation, often making many assumptions regarding data from other fields. Fortunately the scientific community has come to realize the potential implications of shared approaches, and recent studies have begun to assess the important relationships between water and energy, food and water, and energy and climate change. While simple assessments of an individual aspect of this problem are essential as a foundation, more integrative approaches considering all aspects of this problem will be required to determine the most economically efficient policies for tackling water stress in the future.

In this essay I want to identify the economic threats that food, energy and environment systems have to deal with by comparing findings from previous drought events, showing the necessity of multidisciplinary research. We first summarize the main features of California’s water, energy and food production systems, accounting for their economic implications and their consequences on the environment. After that I present some promising interdisciplinary research topics and finally, based on local conclusions, we develop some considerations of water scarcity on a global context.

Water itself

California has a Mediterranean climate with rainy winters, dry summers and huge temporal and spatial variability in water availability and demand. Among other consequences, this has resulted in significant investment in the hydraulic infrastructure that exists in the state today. Normally 75 percent of California’s average precipitation occurs between November and March (DWR, 2012). Although70 percent of runoff occurs north of the Sacramento-San Joaquin Delta, 75 percent of the state’s demand lies to the south (Hanak et al., 2011), especially for irrigation of the high-value croplands, with peak usage falling within the dry season.

In an average year, California uses roughly 80 million acre-foot of water to irrigate crops, supply potable water to cities and maintain ecosystems. According to the California Water Plan (DWR, 2009) 49 percent (39 MAF) of total freshwater is used for environmental purposes, 41 percent (33 MAF) is consumed by the agricultural sector and only 10 percent (8 MAF) is diverted to urban areas.

Another feature of California’s climate is the multi-year hydrological cycles that cause alternation between wet periods and persistent droughts (Figure 1). Even though there is only limited evidence for an increased trend globally in drought or dryness since the middle of the 20th century (Hartmann et al., 2013), changes in population and economic development over the next 25 years will dictate the future relationship between water supply and demand to a much greater degree than will changes in climate (Vorosmarty et al., 2000). These two factors —multi-year uncertainty in resources and increasing demands— represent the greatest challenges currently facing water management researches and decision-makers in California.

F1

Figure 1: California historic statewide precipitation, main rivers’ runoff and drought periods.

Considering all of this information, the rainy season is almost ended and 2014 has been a very dry year so far. Considering that 2013 was also dry, current water management strategy is garnering much attention and many minds are focused in developing the best-response actions under an uncertain future. As is shown in Figure 2, for the first time since the beginning of this century, a significant percentage of the state is classified within the Exceptional Drought category according to U.S. Drought Monitor, and the whole state is below normal levels of humidity.

f2

Figure 2: California statewide percentage area in U.S. Drought Monitor Categories. Data source: Fuchs (2014).

Despite these pressing problems, California is well placed to overcome them. The extensive, integrated and flexible water system that was built mostly during the 20th century has the ability to transfer water between almost any two locations across the state, regardless of distance. As is shown in Figure 3, local, state and federal projects have connected the relatively wet and unpopulated north with the agricultural regions in the Central Valley and the populous cities of southern California, using the delta of the Sacramento and San Joaquin rivers as a water hub.

f3

Figure 3: California’s water network: conveyance and storage infrastructure. From Hanak et al. (2011)

By learning from historical dry events and taking advantage of an intertied water network, California’s water users have diversified its water source portfolio in order to improve its reliability. Most agricultural water users can switch from surface to groundwater sources when the former is scarce, but what is more impressive is the variety of water sources available to some urban water utilities—especially those traditionally more vulnerable to drought. One such case is that of San Diego County Water Utility that sources water from its reservoirs, pumping from aquifers, reusing recycled water, importing water from northern California or from the Colorado River, and in the future through a desalination plant.

Another strength of California’s system which is a result of its integrated network combined with the different economic profitability of water uses and a proper regulation of water institutions, is the water market that has been extraordinarily helpful during periods of drought. As is shown in Figure 4 water transfers have grown substantially since the early 1980s with different phases in its development (Hanak and Stryjewski, 2012). First, in the late 1980s, short-term purchases triggered the water market to alleviate the effects of the 1987-1992 drought. Later, by the end of the 1990s water markets were driven by environmental concerns.  Finally, in most of the 2000s we can observe how long-term agreements have taken the place of short-term transfers as a long-run strategy, while at the same time, a significant part of the water committed in these long-term agreements has not been transferred. As water transfers demonstrate, water has an economical value as a private commodity and, as far as it is possible through water infrastructure connections, urban utilities and high-value farms are able to buy water from low-value producers.

f4

Figure 4: Water transfers in California depending on their nature. Data source: Hanak and Stryjewski (2012).

Therefore, what can we expect from drought? Because agricultural yields depend on applied water, and only certain types of annual crops will survive reduced irrigation, most farmers will maintain this practice to sustain their profits, unless offered incentives, such as revenues from water transfers, to switch crops. If there are cutoffs in surface water, farmers will switch to groundwater sources if they are able meaning that most surface water shortages will be replaced by groundwater. This will result in increased production costs for farmers, and in overexploited aquifers, the current situation will worsen, with the potential risk that further falls in the water table level will mean some wells are no longer usable.

For urban water use, demand-side management policies (DSMP) have become an essential strategy when short-term events such as droughts drastically reduce water reliability and it is hard or expensive to find temporary new water supplies. Therefore, we can expect that policies such as increases in urban water rates, non-economic strategies such as public campaigns, or even water rationing if the situation deteriorates, will be applied more commonly.

In the last few years, a significant proportion of transfers bought in the water market have been committed but not transferred, thus I foresee that both urban and high-value agricultural producers, especially growers of perennial crops with a risk of high losses, will transfer these commitments. If the drought persists, I expect an increase in the number of short-terms agreements. This will result in increased water prices for both urban and agricultural sectors.

References

DWR (2009) California Water Plan. Update 2009. Available at http://www.waterplan.water.ca.gov/cwpu2009/. Accessed 20/4/2014.

DWR (2012) Drought in California. California Department of Water Resources. Natural Resources Agency. State of California . Fall 2012.

Fuchs B (2014) United States drought monitor. National Drought Mitigation Center. Available at http://droughtmonitor.unl.edu/Home/Narrative.aspx. Accessed 21/4/2014.

Hanak E, Lund J, Dinar A, Gray B, Howitt R, Mount JF, Moyle PB, Thompson B (2011) Managing California’s Water: From Conflict to Reconciliation. Public Policy Institue of California, San Franciso, CA.

Hanak E, Stryjewski E (2012) California´s water market, by the numbers: Update 2012. Public Policy Institute of California.

Hartmann DL, Klein Tank AMG, Rusticucci M, Alexander LV, Brönnimann S, Charabi Y, Dentener FJ, Dlugokencky EJ, Easterling DR, Kaplan A, Soden BJ, Thorne PW, Wild M, Zhai PM (2013) 2013: Observations: Atmosphere and Surface. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

Vorosmarty CJ, Green P, Salisbury J, Lammers RB (2000) Global water resources: Vulnerability from climate change and population growth. Science 289:284-288.

 

*This is the first of three posts related with the potential effects of the current California’s drought on food production, energy and the environment, and the necessity of multidisciplinary researches to improve current knowledge.


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The economics of ecology reconciliation*

r678904_5002161Introduction

The rapid development of Environmental Economic theories and applications in the 20th century, from the early works of Pigou (1932) and Leopold (1934) stating the foundations of the field, passing through the essential studies of Coase (1960) and Hardin (1968), to the generalized implementation market-based programs for pollution abatement in the late nineties, does not avoided the huge ecology degradation directly related with human domination of earth’s ecosystems (Vitousek et al., 1997). Neoclassic approach to environmental economics has based fundamentally on internalization of externalities via taxation or market-based approaches, and the development of tons of different cost-effectiveness analyses that include environment valuation within their variables.

In the same way that traditional reservation and restoration ecology approaches insist on protecting habitat from human uses, it looks like most of the conventional environmental economic analyses embedded a differentiation between human and environmental goals. Recent development of reconciliation ecology (Rosenzweig, 2003) needs a new economic approach that conciliates economic and ecological management accounting for full environmental costs and benefits with the same weight than traditional priced goods and services are accounted.

Theoretical framework

The general approach for an economic analysis of ecology reconciliation starts from the definition of the current scenario. We are assuming that this scenario is affected by humans, and most of the times, exploited by them in order to get some resources. The new theoretical framework has to include the economic goals, and within them, valuate the costs and benefits to obtain an improved ecological system.

Necessities of the field

What is the cost of the extinction of a particular specie? What is the value of an ecosystem? Who is going to burden the costs of the environmental services and how? Although there are many studies trying to solve these and much many other questions recently (i.e. McCarthy et al., 2012), we are just in a starting point in the field of ecological valuation and more research is needed to assess and

Beyond the technical necessities, there is a requirement to change the main approach, from the rivalry between human and environmental goals to the inclusion of economical and ecological complementary management. Probably rather than answer the existential questions mentioned above it would be useful to pose which are the complementary ecological management options that human economic exploitations could be applying in order to minimize environmental costs or even to maximize environmental benefits.

Available tools

As we aforementioned, environmental economics has developed many applications that are currently in the toolbox of a decision-maker. Some of the main and best-developed tools are the assignation of environmental property rights —used mostly in pollution abatement programs—, methods of ecosystem valuation (revealed willingness to pay that includes market price method, productivity method, hedonic pricing method and travel cost method; imputed willingness to pay that contains damage cost avoided methods, replaced cost methods and substitute cost methods; and expressed willingness to pay methods, that are basically contingent valuation and contingent choice methods), Cost-Effectiveness or Cost-Benefit analyses, and finally Pareto-Optimal decision choice (ask Jay about this last one).

Effective application

Most of the success histories come from agriculture or timberlands, occurred deliberately or by accident. For that reason a lot of potential applications could be identified taking into account that a large part of the anthropic land transformation is used in agriculture use, with an actual rate of 13 million ha annually converted mostly from forests (FAO 2002).

Increased environmental sensitivity could drive governments in appropriate rewards for decisions to promote sustainable agricultural practices, and it could be necessary for the long-term sustainability of the agricultural system itself, if we take into account that clean water and air, habitat and food sources for animals and other organisms are a valuated input (Robertson and Swinton 2005).

Other type of encouraging application observed lately in the Eropean Union is the valuation of agricultural “multifunctionality” as an umbrella term that includes ecosystem services, rural culture, employment, local food and other aspects of a certain classic style of farming (Maier and Shobayashi, 2001)

Local versus global; developing versus developed countries

Local policies might be restricted and isolated in a particular location or they can be interrelated ecologically with other locations; even if these regions are completely isolated, the global economic relations could have ecological implications.

As an example of these kind of relations are that a subsidy in a wealthy country to reduce some sort of pollution could have a decrease in the yield of certain type of crop that should be maintained with less production or substituted for another, and this policy will increase the incentives for poorer countries without these regulations to produce in a more intensive manner as a consequence of general market equilibrium, driving to a probably worst global scenario if we compute the total ecological benefits.

*This is an ongoing work for ECI298: Reconciling Ecology and Economics Seminar at UC Davis (this is the first draft, but it must be edited later).


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Obama’s 2014 State of the Union remarks on Energy and Climate Change

Now, one of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.

One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change. Businesses plan to invest almost $100 billion in new factories that use natural gas. I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas. My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities. And while we’re at it, I’ll use my authority to protect more of our pristine federal lands for future generations.

It’s not just oil and natural gas production that’s booming; we’re becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can’t be outsourced. Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.

And even as we’ve increased energy production, we’ve partnered with businesses, builders, and local communities to reduce the energy we consume. When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.

Taken together, our energy policy is creating jobs and leading to a cleaner, safer planet. Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth. But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods. That’s why I directed my administration to work with states, utilities, and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air. The shift to a cleaner energy economy won’t happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.

you-control-climate-change


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The Jevons’ Paradox or when efficiency becomes inefficient

Common sense drive us to assume that when a more efficient input or process is implemented, a reduction in consumption –or pollution– should be expected after this improvement. But this common belief is not always true, and in some cases when the fact is analyzed deeply and all the interactions are understood completely, efficiency might become inefficient.

In 1865, English economist William Stanley Jevons observed that technological efficiency on coal use led to increased consumption in different industries, and for that reason this effect is called the Jevons’ paradox. Is also called generally as rebound effect in economics due to the response after an introduction of efficient technologies that finally causes an increase in the consumption of the basic resource.

On water resources management these paradox has shown by Ward and Pulido-Velazquez (2008) demonstrating that water conservation on irrigation can finally increase water use.  That paper focus its research in New Mexico, stating that water conservation subsidies are unlikely to reduce water use under conditions that occur in many basins because decreases aquifer recharge and can actually increase depletions when the basin-scale is analyzed. More efficient drip irrigation implies a greater crop evapotranspiration, and furthermore, because economic benefits for farmers increase, it is likely that acreage irrigated will spread out causing a greater water demand.

On the energy side, and considering greenhouse emissions and climate change as a corollary of energy consumption, is where most of the current research is focusing on. Looking as an economist, direct consequence of improved efficiency is a reduction on input costs, and that might cause an increase in consumption in order to obtain more utility. But what can be more interesting –but also more difficult to analyze and explain– is the indirect effect either in the microeconomic or in the macroeconomic scale: a policy encouraging clean energy in California that results in an improvement in energy efficiency for the state can reduce energy costs for costumers that can use the money saved purchasing products more pollutant than the primary energy abandoned; on the global scale, this policy could delocate some energy intensive companies to other countries with less restrictive regulations, resulting in an increase of greenhouse emissions.

It might seem discouraging, but actually is not anything more than a challenge for researchers and policy-makers in order to consider the system as a whole and include all the processes and interrelations that can arise in the analysis. Efficiency does not can be considered as a problem, quite the opposite, it can help us to become more sustainable, but in the decisions that we take, we should be conscious about all what is implying that decision. Definitely we have to keep in mind what Jevons taught us almost 150 years ago.

More information:

Water conservation in irrigation can increase water use, F. Ward and M. Pulido-Velazquez

The efficiency dilemma, by David Owen.

Why efficiency gains accelerate global energy consumption and CO2 emission rates, by T.J. Garret.

The rebound effect: a perennial controversy rises again, by Cameron Burns and Michael Potts.


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Water Management & Economics

Economic crisis is beating Spain severely and if one thing we must internalize for a better future is that public investments should be analyzed deeply in order to demonstrate its economic feasibility. Some may argue that not only economic reasons have to drive our future, but my point is that the economic assessment that I’m asking for can include also social or environmental costs and benefits that will improve our decision-making process. If we want to become a serious country we have to take reasonable and research-based decisions.

Talking about water management, Spain has traditionally based its water management policies on passionate feelings more than reason facts, and that led us to our particular water war taken on the first years of this 21st century. But we need to forget that sort of wars, and start a new period developing a framework to reduce the potential subjective decision-making that can be a venue for politics in order to kindle more fires. Researchers and professionals have a personal responsibility in this issue, and we have to take part in order to avoid decisions or behaviors that we know that are pernicious for our development.

European water framework directive set the cost recovery principle in our basic legislation but it is well known that in Spain most of irrigation modernization has been subsidized by public funds, and most of urban water prices does not compute financial or environmental costs. We have to start thinking in a new future where just feasible investments are sustainable and assessing correctly costs and benefits of investments reduces subjectivity of politic decisions, leading us to a more reliable and robust decision-process.