Tag Archives: California

California’s Constant Water Woes

Thesis: A better mechanism for reducing California’s water consumption would be to allow prices to rise, rather than to place a hard cap on utilities.  

It seems as if we hear the same thing every year – California is in the midst of a drought due to its dry climate and lack of rainfall.  This year is no different, as governor Jerry Brown called the drought to be “near-crisis proportions,” and issued a historic executive order mandating the state’s water utilities cut consumption by 25%, as the New York Times writes.  The governor cited a lack of snowfall on the Sierra Nevada range as the cause of the drought, but there’s reason to suggest that overuse may also be a factor.  As the graph below, provided by the Hamilton Project, demonstrates, California (and all the other western states) consumes water at a much higher rate than the rest of the nation.

caliwateruse

Obviously part of this comes from the fact that these states are dryer and hotter, and as such will naturally demand more water.  But do they really need that much more water?  People can be expected to use water for things like showering, plumbing, and washing machines at roughly the same rate whether they’re living in a hot climate or not.  As data from the California Water Blog points out, Australians, who live in a similar climate, manage to consume almost half as much water per capita.  Where the higher rate of consumption really comes in to play is when homeowners desire vibrant green lawns, which require far more irrigation in a western climate.  And if the water is cheap enough for households to afford to be able to maintain a high level of consumption, why wouldn’t they keep their lawn in tip top shape?

Short of an actual state of emergency, California does not need to place hard limits on water consumption.  What California needs to do is ease up on controlling water prices and allow the market to reflect the relative scarcity of water.  The higher prices would lead to more efficient use as households and farmers make an effort to save water, both by changing patterns of use (many might find that they no longer gain a positive net utility from that shiny green lawn), and by making investments in high-efficiency appliances more appealing.  Raising utility prices (especially a utility which is considered to be a basic human right by most) would be politically difficult.  But so is flat out telling people that they need to use less water.  At least the market allows consumers to decide for themselves what they need to prioritize.  Placing limitations on use merely acts as a stop-gap, while allowing prices to float addresses the problem at its root: cheap availability of water.

Revised Post 3: Skyrocketing Housing Prices in California

Mar 21st 2015

 cali_housing

(https://goldenstateoutlook.wordpress.com/2013/04/02/the-real-problem/)

Thesis: To resolve too expensive housing problems in California, its government should pass laws for construction and introduce various rent methods.

Because of the sub-prime mortgage shock in 2008, many people realize the significance of housing debt and its impact on the economic situation. In California, problems related to housing occur again, influencing on economic productivity, poverty rate, homeownership and commute time. According to Wall Street Journal, California has some of the most expensive housing market in the U.S. “The average home price in California, $440,000, is about 2½ times the national average, while California’s average monthly rent, $1,240, is about 50% higher than the average U.S. rent (Wall Street Journal).” Furthermore, the picture above shows the hours of minimum wage to afford a typical two-bedroom rent fee, describing that California is the most expensive state to live for workers. High cost of housing affects on the California economy because many employees try to avoid California to live, making companies difficult to hire and retain qualified employees.

To solve these problems, we should figure out why California has more expensive houses than other regions. Wall Street Journal points out that new home construction rate is much lower in California than the average in the U.S.; the rate in the state’s coastal metro areas increases by 32%, compared with 54% nationally. The low rate of new construction means the lack of supplies in housing, making the housing price increase. Also, some experts argue that the legislature should pass laws which would promote more density in urban areas, which is banned for the state’s environment. Randal O’Toole also contends the same statement that urban planners have crammed about 95% of Californians into just 5.1% of the state’s land area. Furthermore, according to Rothbard, there is a tendency that pro-development is bad for the environment, but that’s not necessarily the Californian case. “In a city with so much air pollution, more density-with people living closer to work and driving less-can be more environmentally friendly (Rothbard).”

cali_greenbelt

(http://en.wikipedia.org/wiki/California#/media/File:California_population_map.png)

I suggest three options to solve the density population problem in California. First one is reviewing the restrictions in development or construction. It is obvious that California has lower rate of new construction than the average rate in the U.S., because its government has strict rules in order to protect the environment. But, according to Randal O’Toole, if Californians could live at the same densities as the rest of the U.S., the state’s urban areas would cover 8.5% of the state, instead of 5.1%.

Another resolution is introducing various rent options to California. For example, Korea has a unique leasing option; tenants deposit a bunch of money (basically gives to the apartment agency) and pay less monthly rents than those who don’t deposit money. This option is flexible that monthly rents can vary depending on the amount of deposit. When tenants want to leave or the agreement terminates, homeowners should give back the deposits. This option can reduce the burdens of monthly rents for tenants while homeowners can invest that big pile money and get extra earnings.

Finally, the Californian government can support families by giving some subsidies. However, this option seems impossible because the government is almost broke; everyone knows that California State has severe problems in its budget.

Although I point out three options, the second and the third one only can be temporary solutions. The fundamental problem in California is the supply of houses is too low compared to its demand, increasing the housing prices. Some people may argue that it is the nature of the economics and should let it go. However, the pure economic theory doesn’t always fit to the reality which has numerous factors. If the Californian government shouldn’t solve this problem, middle and low income families in the state will be more suffering than others. And it already happened that that many workers, or middle class families (those who make less than $50,000 a year), left California.

Skyrocketing Housing Prices in California

Mar 18th 2015

 Thesis: To resolve too expensive housing problems in California, its government should pass laws for construction or introduce various rent methods.

Because of the subprime mortgage shock in 2008, many people realize the significance of housing debt and its impact on the economic situation. In California, problems related to housing occur again, influencing on economic productivity, poverty rate, homeownership and commute time. According to Wall Street Journal, California has some of the most expensive housing market in the U.S. “The average home price in California, $440,000, is about 2½ times the national average, while California’s average monthly rent, $1,240, is about 50% higher than the average U.S. rent (Wall Street Journal).” High cost of housing affects on the California economy because many employees try to avoid California to live, making companies difficult to hire and retain qualified employees.

To solve these problems, we should figure out why California has more expensive houses than other regions. Wall Street Journal points out that new home construction rate is much lower in California than the average in the U.S.; the rate in the state’s coastal metro areas increases by 32%, compared with 54% nationally. The low rate of new construction means the lack of supplies in housing, making the housing price increase. Also, some experts argue that the legislature should pass laws which would promote more density in urban areas, which is banned for the state’s environment. Randal O’Toole also contends the same statement that urban planners have crammed about 95% of Californians into just 5.1% of the state’s land area.

I suggest two options to solve the density population problem in California. First one is reviewing the restrictions in development or construction. It is obvious that California has lower rate of new construction than the average rate in the U.S., because its government has strict rules in order to protect the environment. But, according to Randal O’Toole, if Californians could live at the same densities as the rest of the U.S., the state’s urban areas would cover 8.5% of the state, instead of 5.1%.

Another resolution is introducing various rent options to California. For example, Korea has a unique leasing option; tenants deposit a bunch of money (basically gives to the apartment agency) and pay less monthly rents than those who don’t deposit money. This option is flexible that monthly rents can vary depending on the amount of deposit. When tenants want to leave or the agreement terminates, homeowners should give back the deposits. This option can reduce the burdens of monthly rents for tenants while homeowners can invest that big pile money and get extra earnings.

Although I point out two options, the later one only can be a temporary solution. The fundamental problem in California is the supply of houses is too low compared to its demand, increasing the housing prices. Some people may argue that it is the nature of the economics and should let it go. However, the pure economic theory doesn’t always fit to the reality which has numerous factors. If the Californian government shouldn’t solve this problem, middle and low income families in the state will be more suffering than others.