By Ronald G. Cummings
Over the last year or so there has been considerable controversy in Georgia concerning policies related to the planning and management of Georgia’s water resources. Two key issues in this controversy relate to protecting public interests in water, and reliance on markets as a means for resolving critical problems in reallocating water over time. These two issues are often combined within the context of the question: “Are Georgia’s waters a public resource or a commodity to be bought and sold?”
This question is at best confusing and at worst misleading. The issue of whether or not Georgia’s water resources are a “public resource” is one that is independent of – not related to – the issue of whether or not water use permits issued by the Georgia Environmental Protection Division can be marketed, which is what we take the term “commodity” to imply.
An unfortunate aspect of the public resource versus commodity question is that it detracts from a focus on what are in fact important policy questions facing the state. Instead of this confusing choice, two clearly legitimate questions should be raised. First, to what extent does current Georgia law adequately protect public interests in the state’s water resources? Second, in water basins in which new water use permits cannot be obtained, how can changes in water use patterns over time be facilitated?
How strong are Georgia’s laws in protecting public interests in the state’s water resources? Comparing legislative declarations of state policy in Georgia with those in 36 other eastern states, we find that none of the states have expressions of this commitment that would reasonably be regarded as more strongly stated than Georgia law. In conclusion, we find that Georgia water law currently recognizes the public’s dependence on the state’s water resources and its commitment to policies and programs that assure that water is used prudently for the maximum benefit of the people.
Adding “public resource” language to the law would not substantively strengthen these existing policy declarations. In addition, since no precedent exists to determine what this phrase means, Georgia could be subjected to years of costly litigation with, arguably, no stronger protection for our water resources.
Attention then turns to the “water as a commodity” question. We would argue the “water as a commodity” issue is at best poorly framed. In our view, the relevant issue facing Georgia that relates to water as a commodity is how the state is to reallocate water over time in basins where new water use permits are no longer available, such as in the Savannah area and, eventually, in the metro Atlanta area. The debate should center on finding alternatives to balance the various uses of water (ecological, agricultural, domestic, industrial, etc.), and how this balance is to be adjusted over time in response to changes in social, environmental and climatic conditions.
As Georgia faces long-term changes in water use patterns, economic activity and our understanding of ecosystem requirements, the state will need to develop approaches that allow these adjustments to take place equitably, transparently and efficiently. One of several options for facilitating reallocation is some form of a market institution. We believe that the recognition that market institutions can provide flexibility, encourage conservation and help to prevent negative economic consequences will help Georgia meet this challenge.
Being “for” or “against” markets makes no more sense that being “for” or “against” water use permits—everything depends on the provisions and protections of specific laws and proposals. A market is simply a set of rules that govern how transactions take place between a buyer and seller. Markets solve problems about getting what one wants when things stand in the way.
We are not talking about making water an unregulated private commodity. A simple, unregulated market for water use permits would not best serve Georgia’s interests. We recommend consideration of a market design, unique among the states, where the public’s interests in water resources might be best protected. This debate is unaffected by how the state responds to the question of what new language, if any, is needed to safeguard the public’s interest in Georgia’s water resources.
Georgia already has laws on the books that provide very strong protection of its water resources. As the resources in Georgia’s water basins become fully allocated, as some already have, economic growth is limited. The most important water policy decision facing Georgia is reallocating water within these basins in an efficient and fair manner that protects, or even enhances, the state’s natural resources.
Dr. Ronald G. Cummings is Professor of Economics at Georgia State University and the Georgia Research Alliance’s Eminent Water Scholar and an adjunct scholar with the Georgia Public Policy Foundation. The Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
The Georgia Water Planning and Policy Center has published a study on this issue that is available on their Web site <www.h2opolicycenter.org>. The Center was formed in 1999 and comprises a three-university consortium of Georgia State, Albany State and Georgia Southern universities.
© Georgia Public Policy Foundation (February 14, 2003). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.