|How much would you pay for this?|
Johnny (confiscation-protects-property) Howard has claimed that farmers who
have their water allocations taken away for environmental protection reasons
will be 'duly compensated'.
While the ownership of water-rights is complex, water-rights are effectively
privately owned in this country - they can be purchased, sold, traded and
So what does John (pro-nationalization) Howard think that an appropriate
compensation is? Is it the market price? Below the market price? Above the
If it is above the market price, then the taxpayer is paying more
than they could just buy the water-rights for - a stupid idea. If it
is the market price, then they could be just purchased on the free
market, and there would be no need for compulsory acquisition - hence the idea
is stupid. If it is less than the market price, it's theft.
Taking something from someone and giving them half the value of it is
stealing 50% of it (even when the morality of using force is discounted). Taking
something and giving 90% of the value is stealing 10% of it.
So the only just and fair way for the government to acquire water rights for
its environmental concerns is to purchase the water on the free market (and at the market value).
Interestingly, the market value also gives a pretty good idea of the
real cost of the policy. Suppose the market value for a mega-liter (Ml) of
water is $100.00 (currently it's higher, because of the drought), this is a
pretty good measure of the productivity that a farmer can use it for. Why?
Because if no farmer could make $100.00 of extra income from it, they wouldn't
pay, and the price would drop. And if lots of farmers could make more that
$100.00 extra income from it, then the price would increase. So $100 would be a
pretty good measure of the lost-income from taking it away from farmers.
Moderate conservationists are tipping that 3,000 giga-liters (Gl) of water per annum
are needed to save the Coorong at the Murray mouth. At $100/Ml, 3,000Gl will cost
$AU300,000,000 per annum (yup that's 300 million per annum).
Hence saving the Coorong will cost $300 million per year (more this year,
less others). Are the pelicans worth it? How many people could you feed with
$300 million worth of food each year?
Of course the government could also buy
the water outright - enduring allocations are currently fetching around $800/Ml. So a mere
$AU2,400,000,000 once-off cost (yup that's 2.4 billion dollars) can save the
Coorong. Of course if we were really serious about it we would take into
account the fact that only 3% of the water allocation is available this year
because of the drought, so we would have to buy 100,000Gl. The price? A bargain
at 72 billion dollars! Nearly half of the entire annual federal budget! Half as
much as the entire GDP of New Zealand! That's nearly
as much as the entire national debt racked up the by the last Labor Government's 13 year
Some people will think it's worth it, some won't - Australians will debate
these kinds of issues for as long as there is an Australia, but one thing seems
certain. The government
will avoid the rational
free market approach
like the plague. Having people able to objectively look at the cost of conservationist
policies would undermine the usefulness of the tried and true slogans 'Greens cost jobs!' and
'people before profits!'.
That wouldn't suit the agenda of either side of politics.