The Water Social Contract | Opinion

No one ever seems to care about water, until water becomes scarce.

I grew up in southern Spain, the driest region of Europe. When I was a kid, water restrictions were recurrent. You would turn on your faucet, and nothing would come out. Restrictions would last for weeks during the summer, and you would only get water for a few hours a day. If this picture seems grim to you, this is the near future for large parts of the United States if we do not act now.

I wrote my thesis at Northwestern University, and later published articles in economics journals, studying water allocation in Spain and the U.S. My research focuses on water allocation and the conflict that arises from water scarcity. Throughout my career, I keep hearing the same tune, from colleagues, editors, and anonymous referees: "Who cares about water?"

The increase in weather volatility, due to climate change, means we are going to have more floodings and longer droughts, as evident by last summer's universal drought, and the recent floodings and hurricanes in both sides of the Atlantic. Moreover, as droughts become more recurrent, we are going to see increasing conflict over water, like the ones in India, Pakistan, and Bolivia. If you do not trust me, maybe you would trust doomsayer investor Michael Burry, who has been quietly investing in water for a decade, waiting for the reckoning day. Well, it is here, and we are not ready.

Conventional wisdom treats water as a renewable source: it rains, and water comes down the river. A large fraction of the water used nowadays, in the U.S. and elsewhere, is fossil water: water deposited in aquifers over thousands of years, and non-renewable like fossil fuels. Aquifers, such as the Ogallala Aquifer and Central Valley Aquifer, are being depleted as I write and they will take thousands of years to be refilled. The Ogallala Aquifer is being depleted at an annual volume equivalent to 18 Colorado Rivers. In the five minutes it takes you to read this article, 60,000 gallons of fossil water have been taken out of the Ogallala Aquifer. Farmers west of the Mississippi River are already suffering from corporate takeovers and thin margins. Running on a treadmill that is oiled by pumped water, bank loans, and federal farm subsidies. This vicious cycle of debt and waste is depleting fossil waters and choking the future of the region, and the rest of the country.

Current U.S. agricultural subsidies are based on output: the more you produce, the more money you get. This setting makes sense if you want to encourage productivity and water is not an issue. Subsidies based on output, however, are disastrous when farmers are pumping fossil water. We are using tax dollars to pay farmers to deplete a scarce natural resource. What would you think if I told you that we paying people to burn oil in the middle of the desert? That is exactly what is happening with water now.

The U.S. needs a new Water Social Contract between rural and urban areas. The old contract where urbanites subsidize farm production in exchange for cheap food, especially beef, is doomed. Overexploitation of aquifers is unsustainable and coming to an end. We need to change the rules so that farmers have incentives to use less water, especially if it is fossil water. We need to change the structure of farm subsidies, so that they reflect the private and social costs that pumping water produces. We need a new Water Social Contract where farming in the West is sustainable, both in environmental terms and so that farming families can thrive, and food in the Coasts is properly priced.

One food that is not properly priced is beef, which is impacted by incentives related to crops used to feed the animals. For example, alfalfa is arguably the less profitable crop per acre, despite having some of the highest water requirements, and it is only used to feed animals. The reason beef is so much cheaper in the U.S. than in other countries is not because of a comparative advantage, rather because of the perverse system of incentives that make farmers overuse water to produce cheap alfalfa, which is then used to produce cheap beef. Without subsidies, most of the alfalfa production would stop and beef prices would increase. The artificially subsidized beef price is not sustainable.

Some could argue that the value of water, at current prices, is so small that this should not be a concern. "Who cares about water?" We can always buy more water, cheaply. When I was in college, studying economics, one professor used to say: Solo un necio confunde valor y precio; Only a fool mistakes price for value. The price of water might be low, but its value is infinite. Without water to drink we die; without water we cannot grow food. The following decades are going to be key on water management. What we do now will matter for generations to come.

Dr. Jose-Antonio Espin-Sanchez is a Yale Public Voices Fellow and economic historian.

The views expressed in this article are the writer's own.