Grasping Reality on TypePad, by Brad DeLong

...That may be why so much of the debate about how to manage California's scarce water supply is misguided.... Palm Springs isn't emblematic of all California, the drought is not man-made and California's water problems stem at least partially from its role as breadbasket (or nut bowl) for the nation.... A better way is to give farmers the incentive to engage in sustainable water use. "I don't care if they're growing almonds," Gleick says, "if they're not overpumping groundwater and not contaminating water supplies."... Jerry Brown has taken heat for supposedly giving farmers a pass in the statewide water use restrictions he imposed April 1, especially since agriculture accounts for about 80% of use. But many farmers already have sustained draconian cutbacks in allocations from state and federal water projects. There's still plenty of excess to wring out of residential usage, even though daily urban consumption fell to 178 gallons per capita in 2010 from 232 in 1995.... The only lasting solutions include creating a better-functioning water market with transparent pricing and transfers, so that water supplies end up where they're most needed and most economically useful. The market will never be perfect, because it's not always simple to move water from one region to another. And regulatory oversight will always be needed to keep users with senior rights from hoarding water, and ensuring that dependent users, whether farmers or city dwellers, aren't left dry.