Financialization of Water: Conceptual Analysis of the California Water Crisis

Water is a rapidly shrinking commodity. As we continue to use water for industry, farming, and sustaining our own lives, we must realize its intrinsic value. In December of 2020, water was given a new value as a future on a commodities market. This paper aims to discuss the practical, ethical, and financial considerations of trading water in this manner. A thorough conceptual analysis of the literature and research from 2009 to 2020 related to commodities and their history was performed, and a more contemporary review of water policy and pricing. The goal is to develop a mixed solution that gives value to water without allowing it to be exploited to the detriment of the poor; water must be accessible and affordable if it is to be managed ethically. Approaching water as a high-value resource might create a market that makes it unobtainable for most of us; however, with a system that controls pricing, creates standards, and simultaneously works to increase the supply of water, we may be able to create a “market.” Our critique of the research and available solutions indicates rising water prices and mostly regressive policies. As a result, market controls need to be implemented to control pricing while ensuring water availability for all.

What Drives Water Utility Selection of Pricing Methods? Evidence from California

Water pricing is a demand management strategy to address the looming challenge of greater water scarcity in arid regions. Much of the literature on residential water rates focuses on evaluating the impact of pricing on household conservation. A separate, but rarely addressed question is what motivates a water utility to select a particular rate structure and the timing of doing so. We assess utilities’ decisions to adopt pro-conservation rate structures, such as increasing block rates and water budget rates. We develop a conceptual model of utility decision-making regarding the transition to pro-conservation rates and apply it to California.We examine the relationship between rate adoption and characteristics of utilities and customers using logistic regression and a balanced panel dataset of 323 California water systems from 2006-2015. We find a notable shift towards pro-conservation rates, which 71% of California utilities had by 2015, compared to 44% in 2006. Capacity factors associated with adoption include size of service population and customer income level, while motivating factors include peer adoption, greater customer engagement, and special district governance. Overall, this study provides insight into barriers to pro-conservation pricing, which can inform policies to enable transitions and advance conservation goals.

Missing power: Nostalgia and disillusionment among Southern California water engineers

California’s sprawling network of aqueducts and dams is often cited as the embodiment of a high-modernist approach to resource management. But while once widely celebrated, in recent decades this infrastructural system and the institutions that manage it have been the subject of growing criticism and shrinking funding streams. Based on ethnographic research among employees at several California water agencies, this article explores the sense of nostalgia and diminished power experienced by the workers tasked with overseeing these networks. These emic perspectives are frequently articulated in the form of unfavorable comparisons to an imagined past, when the workers believe that their agencies were better resourced and civil engineers’ technical expertise was more respected by the public that they served. Analyzing these stories of declining influence and capacity, the article shows how understandings of individual and institutional power can be conditioned by past paradigms of regional development and technocratic statecraft.

Groundwater Recharge for Water Security

The Arizona Water Banking Authority (AWBA) was established in 1996 to make full use of Arizona’s Colorado River entitlement. It aims to address groundwater depletion in central Arizona and to protect Colorado River water users against future shortages due to interannual variability in water availability. Each year, the AWBA pays the costs to deliver any of the state’s unused entitlement to Colorado River water into central and southern Arizona and to store that water underground. The AWBA stores water on behalf of Central Arizona Project municipal subcontractors, other mainstream municipal Colorado River water rights holders, and tribal entities. Through its interstate banking agreements, the AWBA can also store water on behalf of the states of Nevada and California. Water stored by the AWBA is accounted for using Arizona’s statutorily created system of long-term storage credits (LTSCs), which allow future pumping of stored water within the same hydrologic basin. During shortage conditions in the Lower Basin of the Colorado River, the AWBA will distribute the LTSCs, enabling recipients to pump groundwater that otherwise would not be permitted. In this way, the AWBA serves as a unique insurance mechanism against shortages for users of Colorado River water in Arizona and the Lower Basin. To date, the AWBA’s focus has been on storage, yet in the coming years, its activities will shift to recovery, and it will need to confront additional challenges associated with matching supplies with demands and limitations on water available for recharge.