The Pacific Institute has issued an impressive report on water demand trends in the Southwest. To my deep surprise though, I can’t find the word “water prices” anywhere in the report! To quote the report; “Almost every one of the water agencies included in the study experienced declines in per capita deliveries from 1990 to 2008. People and business are demanding less water than they did in 1990. This report does not attempt to determine the causes of these declines, but it does quantify these changes over time, giving a picture of trends for municipal water providers.”
Permit me to offer a conjecture. Demand curves slope down. Water prices have increased (for evidence click here) and households and firms have responded to this price incentive by wasting less water and adopting water efficient durables. Such demand creates incentives for durables suppliers to market even more efficient durables (a green “domino effect”). The net effects of these small ball individuals efforts is to limit the coming impact of climate change. To paraphrase John Lennon; “give the price mechanism a chance”! The Pacific Institute’s report displays facts that document how we gradually adapt to market signals. During a time of population growth and per-capita income growth, water demand has declined! That’s impressive.