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

*This is the last post related with the potential effects of the current California’s drought. In this one I will claim about the necessity of multidisciplinary research proposing promising research topics, and I will develop some conclusions from the research including some global considerations. Take a look at the previous posts (First, Second).

Crossing the edges

Beyond quantification of interactions, new approaches taking advantage of the synergies of these interrelated systems and thus avoiding the implications of isolated management strategies should be implemented to improve global efficiency. There are many promising fields where scientists from different disciplines are crossing the edges, searching for integrative approaches that take the system as a whole into account.

The relationship between urban water, energy and GHG emissions (Escriva-Bou et al., ongoing research); agricultural responses to shocks in water and energy prices and/or availability (Medellin-Azuara et al., 2011); reconciliation ecology (Rosenzweig, 2003); GHG emission reduction from agricultural practices (Smith et al., 2007) or environmental policies related with water, energy and food production are some of the encouraging fields where more multidisciplinary research is needed.

Beyond California: from local conclusions to global considerations

California’s intertied water network has improved the robustness of statewide water demands and its economic profits to protect against potential short-term shocks such as the current drought and even long-term trends such as climate change which may bring uncertain effects. As has been shown, one of the main features characterizing the system is that most of the demands have diversified their water source portfolio in order to increase their economic reliability, even creating institutional tools including water markets.

But when water fails, normality is altered, hydropower generation diminishes, the agricultural sector uses more energy to pump or convey water, raising GHG emissions at the same time, and food production input costs increases. Only through urban demand-side policies can water be saved without direct costs —just a temporal loss in the living-standards utility function— and achieving a significant water-related energy and GHG emissions savings.

All those interrelations have non-trivial economic implications: from the perspective of the ordinary citizen, urban water rates would increase if DSMP are implemented, and food and energy prices would have some price effect due to reduced hydropower production and increased input costs for the food production sector; water and energy utilities will incur some extra costs because of the drought, but they will be relatively small due to improved water and energy source portfolios; from the agricultural sector, and assuming that prices will vary slightly because of the international trade, the increased input costs will cause significant economic losses and a reduction in the labor market, especially in those counties that are largely dependent on the agricultural sector; and finally accounting for statewide general consequences, GHG emissions will increase from reduced hydropower production and increased urban and agricultural pumping and conveyance, whereas the expected decrease will depend on the effectiveness of the urban conservation policies taken.

The conclusions above are strictly determined by local water, energy and food production systems present in California today, but from these arguments we might develop some final thoughts relevant for other water-stressed regions where some of the assumptions do not hold exactly as in California:

  • Less developed countries with a greater share of the gross product determined by the agricultural sector should expect larger impacts of economic and labor market losses from water scarcity.
  • Countries highly dependent on hydropower could suffer significant problems of energy supply due to water shortages, and a severe drought could imply a significant effect on final energy prices. Therefore, improvements of the energy portfolio should be a priority for countries with uncertain climate projections.
  • Agricultural regions not shaped by the international trade are expected to suffer high price volatility for food commodities.
  • Less integrated water systems or those dependent on a unique water source will be more vulnerable to droughts.

Therefore, integrated approaches are essential to assess the interrelated effects of water, food production, energy and environment systems in more vulnerable regions to minimize economic losses and potential damages.


This study has been developed as a result of a mobility stay funded by the Erasmus Mundus Programme of the European Commission under the Transatlantic Partnership for Excellence in Engineering – TEE Project.

I would like to thank my advisors Dr. Jay R. Lund (University of California, Davis) and Dr. Manuel Pulido-Velazquez (Universitat Politècnica de València), as well as Dr. Josue Medellin-Azuara as well, for their thought-provoking comments.

Finally, I want to thank specially my friend Dr. Stephen Pearce, who reviewed the final version and contributed with helpful suggestions.


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

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

Rosenzweig ML (2003) Reconciliation ecology and the future of species diversity. Oryx 37:194-205.

Smith P, Martino D, Cai ZC, Gwary D, Janzen H, Kumar P, McCarl B, Ogle S, O’Mara F, Rice C, Scholes B, Sirotenko O, Howden M, McAllister T, Pan GX, Romanenkov V, Schneider U, Towprayoon S (2007) Policy and technological constraints to implementation of greenhouse gas mitigation options in agriculture. Agr Ecosyst Environ 118:6-28.


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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.


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.


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.


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).



AIC (2013) The measure of California agriculture. Highlights. University of California, Davis. Agricultural Issues Center. Available at 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 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.



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


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.


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.


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.


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.


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.


DWR (2009) California Water Plan. Update 2009. Available at 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 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 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.