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Comment by srott | Hacker News Reader

From my point of view, the only problem is that water is cheap.

Why don't they just rise the prices?

So rich people can still spend huge amounts, while low-income people have even more problems? We are not talking about luxury items or services here, water is a basic need for everyone.

So leave the lower price tiers where they are and raise the higher price tiers. That first glass of water each month will still be practically free, the millionth might cost you a quarter.

Wasn't there something in the state constitution forbidding that?

Food is a basic need for everyone too and we don't set the price artificially low because of that.

If the poor don't have enough money to buy the things they need, the correct thing to do is to give them money. Not artificially distort the prices of things. Doing the latter misaligns incentives and leads to inefficient allocation of resources.

>Food is a basic need for everyone too and we don't set the price artificially low because of that.

We kind of do through agriculture subsidies.

That's to protect entrenched interests, not to lower food prices. It dates back to FDR and his asinine economics, dumping perfectly good milk out, crop burns, slaughtering hogs and letting the meat go to waste. We still do crop burns and the government buys crops and lets them rot or just destroys them. It has nothing to do with food prices being low, it has to do with protecting profits for the big farms. We have taxes and tariffs on some crops coming from outside of the U.S., such as sugar cane. Has nothing to do with lowering food prices.

>Food is a basic need for everyone too and we don't set the price artificially low because of that.

We most certainly do. Taxpayers heavily subsidize corn and soy, two crops that facilitate the meat and processed food.

http://www.economist.com/news/united-states/21643191-crop-pr...

That doesn't mean that we should subsidize every other industry. End all corporate welfare, you aren't going to do that by subsidizing another industry with the excuse that it's been done in the past. That's how you get entrenched interests sloshing around in government funds.

1) It's not clear that these subsidies actually lower the costs on the shelves in grocery stores.

2) Almost everyone other than the recipients agrees that agricultural subsidies are almost always a bad idea.

The price issue isn't rich homes vs poor homes. It's agriculture vs homes. Municipalities are already paying many times more for water than farms.

A water market would allow municipal water systems to purchase water and provide lower water bills for all people -- residential use is a tiny, tiny minority of water use in the state.

The folks cutting back would be the alfalfa farmers in the central valley, who essentially transform water into grass and sell it (and export it out of state).

Residential prices are fine. The problem is the artificially low prices for agricultural use. A great deal of valuable California water is being transformed into less valuable plants because the price is low enough for that to be viable. Charge a price more in line with value and that will stop.

Unless we are talking about mad max level droughts, market rates for water would have little effect on water cost provided by utilities. The cost of treatment and distribution is the biggest cost by far.

You can also regulate the cost of bulk water differently than residential water. Make the first X gallons available cheapily and then charge more for usage over that amount.

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