Californians would be better off on average if all final users in the state paid the same price for water — adjusted for quality, place and time — even if, as a result, some food prices rose sharply and some farms failed.
Responses
Responses weighted by each expert's confidence
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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 Alberto Alesina |
Harvard | Did Not Answer | Bio/Vote History | |
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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The geographic price adjustments should reflect cost differences. Distributional effects need to be addressed in the transition.
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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Does not have to bankrupt farmers: they can be given water rights to resell. Coase Theorem applies.
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 Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Did Not Answer | Bio/Vote History | |
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 Raj Chetty |
Harvard | Bio/Vote History | ||
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 Judith Chevalier |
Yale | Bio/Vote History | ||
 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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Depends on who levies the taxes, but there are obvious gains to be had.
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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Price-based allocation usually works, absent externalities. I'm no expert on water, so open minded to learning what the externalities are.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Subject to usual caveats: SR dislocations have costs that disipate in LR; lump sum redistribution may require compensation.
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Austan Goolsbee |
Chicago | Did Not Answer | Bio/Vote History | |
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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reform shld remove restrictions on intra- & inter-state trading, clarifying property rights & investments in monitoring water withdrawals
-see background information here |
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 Robert Hall |
Stanford | Bio/Vote History | ||
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There would be winners and losers. A better policy would engineer a roughly Pareto improving change. Bu probably better than nothing.
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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Equal prices imply that all final users will value the last gallon they use the same, which ensures efficiency. Consumer rationing does not.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Law of 1 price would generate enormous gains (from trade)--much more than enough to compensate family farms hurt in transition to sanity.
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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The marginal value of water differs greatly across uses. Change in food output will be small; farm use would not decline by much.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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 Pete Klenow |
Stanford | Bio/Vote History | ||
 Jonathan Levin |
Stanford | Bio/Vote History | ||
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Basic economics would equate marginal prices for substitute users, but not at all clear if we're taking about average prices.
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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 William Nordhaus |
Yale | Bio/Vote History | ||
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Moving to market-based system will be painful but particularly important given stresses to come.
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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"On average" hides some serious adverse consequences for some people, but rationalizing water prices would be a great step forward.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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Disclosure: I am a member of the Board of Cosan Limited which is engaged in sugar and bioethanol production in Brazil.
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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There would be losers and serious adjustment costs, not all economic, so it is hard to be confident about "on average".
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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The only question is what "on average" means. One water price would make most Californians better off.
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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I may use this as one of the core examples for introduction to microeconomics: a simple example of misallocation and gains from trade.
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