Monday, June 17, 2013

"Intentions should not be confused with results"---this logic does not apply to Farm Bill policy---Subsidies for water saving equipment results in MORE water usage. Sigh...Predictable...

A nice example of an un-intended (but predictable) consequence of a policy designed to address a specific problem but ends up making things worse.  As I have read elsewhere, "you don't want to confuse intentions with results".  However, seems like much public policy is determined this way.

Subsidies are public transfer payments from the government to producers.  Subsidies reduce the cost of production of a final good or service so we end up with more of that good or service.

As discussed in this NYTIMES article, subsidies to farmers to purchase more water efficient, hence water saving, irrigation systems has encouraged the use of MORE water overall:

Farm Subsidies Leading to More Water Use

From Wyoming to the Texas Panhandle, water tables have fallen 150 feet in some areas — ranging from 15 percent to 75 percent — since the 1950s, scientists say, because the subsidies give farmers the incentive to irrigate more acres of land. Other areas, including several Midwestern states, have also been affected.The Environmental Quality Incentives Program, first authorized in the 1996 farm bill, was supposed to help farmers buy more efficient irrigation equipment — sprinklers and pipelines — to save water.But the new irrigation systems have not helped conserve water supplies, studies show. And researchers believe that the new equipment may be speeding up the depletion of groundwater supplies, which are crucial to agriculture and as a source of drinking water.  
This an example of the "Rebound Effect".
In conservation and energy economics, the rebound effect (or take-back effect) refers to the behavioral or other systemic responses to the introduction of new technologies that increase the efficiency of resource use. These responses tend to offset the beneficial effects of the new technology or other measures taken. While the literature on the rebound effect generally focuses on the effect of technological improvements on energy consumption, the theory can also be applied to the use of any natural resource or other input, such as labor. The rebound effect is generally expressed as a ratio of the lost benefit compared to the expected environmental benefit when holding consumption constant. For instance, if a 5% improvement in vehicle fuel efficiency results in only a 2% drop in fuel use, there is a 60% rebound effect (since (5-2)5 = 60%). The 'missing' 3% might have been consumed by driving faster or further than before.
Seems to me the only way this policy would have been effective is if they did not allow farmers to grow more food than before---same fixed land use with less water use equals less water use per acre.
Subsidies for water conservation equipment encourage more production of food not less (or constant).
Good intentions, bad results.  Usually we re-think doing things that produce this outcome.  
Not with Farm Policy, apparently...

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