"He's a snake in the grass, I tell ya guys; he may look dumb but that's just a disguise; he's a mastermind in the ways of espionage." Charlie Daniels, "Uneasy Rider" T. Boone Pickens accelerates the tragedy of the Western water commons - by connecting thirsty markets to unowned, common-pool resources - TT's Lost in Tokyo

T. Boone Pickens accelerates the tragedy of the Western water commons - by connecting thirsty markets to unowned, common-pool resources

The latest Business Week magazine sports the headline, "Is Water the New Oil?" and a caricature of T. Boone Pickens.  The cover story -"There Will Be Water: T. Boone Pickens thinks water is the new oil—and he's betting $100 million that he's right" - describes Pickens' plans to ship water to eager consumers in Dallas from his ranch and other water rights holdings in the Texas Panhandle region. 

While I'm all for water markets, there's one small problem that deserves attention:  essentially Pickens will simply be sticking a huge straw into the unowned Ogallala Aquifer and pumping for all he's worth.  Pickens will have to cover only his own costs (pumping and transportation), but he has no ownership stake in, or incentive to invest in maintaining or sustainably using, water resource itself.  As he draws down the water table, his neighbors will have to shell out more to dig and pump from deeper wells to maintain their own current draws, and if any of them wants to follow Pickens in shipping water to urban markets, then the race to drain the water commons in the Panhandle and other parts of the Ogallala will ratchet up further (it's already been underway for many years in other parts of Texas and other states in which the Ogallala Aquifer lies).

Pickens may not be planning to replicate the history of the wasteful, competitive pumping of the East Texas common pool oil resources (also seen in the elimination of the passenger pigeon, the Plains bison, the great whales, and the crashing of ocean fisheries), but his own rational self interest is surely leading in that direction.  I hope Pickens can see where this is headed and take a positive role in heading off a destructive tragedy of the commons, which may be in the cards, but is not inevitable.   As Bruce Yandle has noted:

People can build institutions that take the edge off frantic commons behavior. People have unwritten and written constitutions that help to establish social order. People can and do accumulate wealth. People communicate, invent lines of kinship, and develop customs, traditions, and rules of law that limit anti-social behavior. People define, enforce, and trade property rights. People can and do avoid the tragedy of the commons. Indeed, instead of living with tragedies, people triumph over the commons. But the triumphs are never perfect or complete. There is always another commons to manage. ...

At very low levels of income, what might be called stage one, human beings cannot afford to do much about property-rights enforcement and the commons. They live in a world where custom and tradition sustain them. As incomes rise and losses from the commons expand, stage two is entered. Fences go up, and rules are set for protecting the commons. Finally, in stage three, markets evolve along with rules of law that define spheres of private and public action. Private rights replace public control, and the triumph replaces the tragedy of the commons.

Life for mankind began on a commons where tragedies were commonplace and the incentive to improve was powerful. Out of the struggle to survive and accumulate wealth evolved markets, property rights, and the rule of law—a triumph on the commons. ...

Human beings can and do avoid the tragedy of the commons. But doing so requires property rights and markets, which must be defended if the triumph is to continue.

Easy pickins?  Easy, Pickens.

h/t David Zetland

Published Mon, Jun 16 2008 11:20 AM by TokyoTom

Comments

# Bootleggers and Baptists in Texas and DC: Texas sells Pickens eminent domain powers and wind power transmission rights for his personal 8-acre "water district", while Sierra Club helps to push wind subsidies

Saturday, August 9, 2008 10:49 PM by TT`s Lost in Tokyo

[Update: David Zetland at his Aquanomics blog has linked to my piece , astutely noting that if one applies

# Bootleggers and Baptists in Texas and DC: Texas sells Pickens eminent domain powers and wind power transmission rights for his personal 8-acre "water district", while Sierra Club helps to push wind subsidies

Monday, August 25, 2008 3:50 AM by TT`s Lost in Tokyo

[Update: David Zetland at his Aquanomics blog has linked to my piece , astutely noting that if one applies

# More on Pickens: FOX offers soapbox for Pickens mouthpiece; Milloy responds

Thursday, September 25, 2008 11:50 PM by TT`s Lost in Tokyo

FOX offers soapbox for Pickens mouthpiece Warren Mitchell (former chairman of Southern California Gas