Florida, like every other jurisdiction, is eager to ensure that if additional federal resources become available in the future, that we get our fair share (and a little bit more).
But at this early stage of discussion, we are also eager to reflect on the larger questions of exactly what is the appropriate role of government in building water infrastructure.
Florida, at this moment in history, provides an important object lesson for the nation. We are in the worst drought in our state's history: a one-in-200 year experience that is drying up rivers, pushing family-owned businesses to the edge of bankruptcy, burning over 100,000 acres, and mobilizing an unprecedented strategy to secure emergency water supplies. If ever there was a political imperative for expanded government investments in new water supply infrastructure, this is it. Yet wise men and women are counseling caution.
Ironically, at this same moment, with the tremendous leadership of the Congress and particularly this Committee, we have launched the restoration of America's Everglades: an environmentally sustainable water resource plan that will help save 60 endangered species and will quench the thirst of 12 million Americans who are expected to call South Florida home.
The lesson to be drawn from these two experiences is plain: Government must take the long view, not the short view, or risk the fate of unintended consequences. In the area of water, this means understanding the difference between water resources and water supply.
It is appropriate and necessary for government to continue identifying, securing, protecting and conserving the public's water resources. They are a classic example of public commons demanding governmental stewardship. Government must care for our water resources - aquifers, rivers and lakes - because, among other reasons, they are our current and future public water supplies. The Everglades are an example of this on a grand scale. There are many reasons to restore the Everglades. The fact that the project will provide a long term, sustainable future water supply is among them. But the federal government is not, as part of the plan, paying for the pumps and pipes that will provide new water supply service made available as a result of Everglades restoration.
As we move from the stewardship of the public's common water resources and towards the development of specific water supplies for the provision of water service to individual citizens, government's role becomes less clear and eventually counterproductive.
Witness the drought.
Drought drives home the value of a robust water supply infrastructure. So too does it drive home the value of accurate price signals that lead to adjustments in demand. It is difficult to find any drought situation that has not been made worse by a failure on both counts.
The danger is that if government uses revenues from its general taxing authority to subsidize the expansion of a more robust water supply infrastructure, it risks making the next drought even more profound because price signals are further distorted while consumption has grown. This is truly unfortunate, because as critical as water is to life, demand for water is demonstrably inelastic. There are a multitude of cost-effective opportunities for increased efficiency and substitution.
Government should be a good steward of the public's water commons. Everyone benefits from and everyone should share in the cost of this stewardship. Protecting watersheds for current and future public water supplies is an appropriate use of generally collected tax revenues.
The investments that are necessary to collect, store, treat and distribute a water supply are best made by the actual water users, and how much they pay should be determined, at least in part, on how much they use.
Sound public policy would lower taxes collected for subsidizing water supply development and rationalize utility bills to more accurately reflect the cost of water service. I do not know anyone who, if given a choice, would rather pay a tax than a fee that he or she could control by adjusting his or her own behavior. This is also clearly the environmentally preferable choice, because in the end environmentalism is about the efficient use of natural resources.
(An interesting footnote is that in preparing for today's hearing, we attempted to research water bills to determine, on average, how much of the actual cost of water supply service is reflected in the bill and how much is paid through taxes. The fact that we found it nearly impossible to make even simple estimates, in the end, helps make the case for improving transparency to water consumers.)
If you accept the basic premise of this analysis, there are some simple steps that would help ensure that any new federal commitments to water move us closer to the pro-environment and pro-market vision many of us share.
First, focus on protecting and restoring basic water resources, not on supply system infrastructure.
Second, if there is a decision to apply some resources to subsidize supply system infrastructure, the money should be loaned not granted. Loans are more likely to be made transparent to the water consumer.
(Note: the subsidy should be aimed at redressing issues of affordability for those unable to pay, but not universally applicable to the point where true costs are camouflaged, price signals distorted, and control taken away from the consumers.)
Third, reward entities that have conservation-based water rate schedules.
Fourth, reward entities that close the loop and recycle water resources. The re-use of advance-treated domestic effluent for irrigation and other nonpotable uses must become a bigger part of our water future.
Fifth, recognize and support new and unconventional techniques for water resource management (e.g., aquifer storage recovery, engineered wetlands) wherever appropriate.
These steps are all aimed at creating sound public water policies that are fair and transparent to the taxpayer and water consumer and are good for the environment.
I genuinely appreciate the invitation to share these thoughts with this important committee today and hope you will find it helpful. I would be happy to answer any questions you may have.