Whatever you think about Rand Paul, you’ve got to admit that his off-the-cuff remarks provide an entertaining alternative to the snoozathons offered up by other senators. His latest rant to light the blogosphere concerned Big Brother’s presence in the bathroom. “Frankly, my toilets don’t work in my house,” he complained to Kathleen Hogan, the Energy Department’s deputy assistant secretary for energy efficiency, who had come to a senate hearing prepared to defend light bulb standards. “And I blame you and people like you who want to tell me what I can install in my house…”
Potty talk is always a hit with the media, of course. But there’s an interesting question hidden in all the smirks. Did it really make sense for the feds to decree (in a 1992 law supported by the first Bush Administration) that newly installed toilets use no more than 1.6 gallons of water per flush?
In an ideal world that exists only in textbooks, the answer would be an unambiguous “no.” The market price of water would equal the cost of producing another gallon. Then consumers would decide how much water was worth to them, and buy accordingly.
But in the real world, water is typically priced at average cost — enough to cover the water utility’s expenses, but typically far below the cost of meeting the demand for more water. Then there’s the problem of “externalities” – the reality that my use of water may damage the environment, or raise the cost of water for someone else. And since these external costs don’t show up on my water bill, I’m inclined to ignore them.
Actually, the water market is even messier. If water is priced below marginal cost, the makers of bathroom fixtures (among others) will lack adequate incentives to invest in new technology to make their appliances more efficient. Then there’s the issue of new home construction. Builders typically install relatively cheap, attractive appliances (rather than the most cost-effective ones) because they think home buyers lack the foresight or expertise to do the math. So, left to their own devices, builders are inclined to give short shrift to efficiency.
Taken at face value, all this adds up to a pretty good case for regulating water use directly. But there’s another side to the story. For starters, consider the fact that the degree of market failure varies from region to region: the difference between the price of water and its true marginal cost must be higher in dry places than wet ones. So whatever efficiency standard is right for Phoenix is surely wrong for Portland. Indeed, the fact that we have a single national standard probably reflects the wishes of the bathroom fixture industry, which didn’t want to make toilets to meet a dozen different standards.
There are other imponderables to reckon with here. Semi-arid California would seem a logical place to regulate water efficiency. But the apparent scarcity of water for thirsty cities and suburbs largely reflects its profligate use by farmers, who pay almost nothing for the stuff. If they didn’t grow cotton, rice and animal fodder in the desert, there might well be plenty of water to go around.
Truth is, the market for water is so messed up that it’s hard to know what to think about the low-flow toilets that have Sen. Rand in such a lather. What we can say is that water efficiency standards are a poor substitute for water prices that better reflect costs. But getting from here to there would require just the sort of market reforms that Americans can’t seem to manage these days. Think of it this way: If we aren’t willing to use market forces to solve a problem as threatening as climate change, what are the odds that Washington will ever take on interests ranging from farmers to home builders in the quest for greener lawns? Meanwhile, Sen. Rand, we suggest you flush twice and go easy on the Charmin.