The Rime of the Ancient Mariner

Water, water, every where,

And all the boards did shrink;

Water, water, every where,

Nor any drop to drink.

The Rime of the Ancient Mariner

Samuel Taylor Coleridge

What a pickle we’re in here in California (and the western United States for that matter). The rest of the country overlooks their own various plagues, hurricanes, tornados, politicians, and ridiculous winters to chastise us for our drought. As if we caused it ourselves. Well, maybe there has been a small contribution. We have grown exponentially during the past fifty years from about twenty million people in the early 1970s to over 38.8 million today. Even though the rate of growth has slowed during the last few years it is projected to reach 50 million people by 2050. And more than half of these Californians will live in the lower quarter of the state from San Diego to Ventura, which is fundamentally desert. Even if this growth were reversed (see Oklahoma in the 1930s), the problem of water supply/use would not change.

In the thirty years since the publication of Marc Reisner’s Cadillac Desert, the problems of the state have only worsened. This post isn’t about the past, there are more than enough books, articles, speeches, and failed policies to show that we have done little to prepare for something that we knew would happen. Droughts come and go, but people don’t. The state will continue to grow – now we must deal with it. Wishing otherwise is simplistic and foolish.

There is one problem – supply, there are three basic responses: conservation, increase supply, reclamation.

Conservation is usually the easiest politically to impose. The effects are almost immediate. Reduce the flow of water through the spigot (usually annoying the user who must wait to fill a pan or a sink – and still eventually use the same amount of water), reduce the flow in toilets (resulting in filthier toilet bowls), and reduce water used for the garden. We call it irrigation here in the west; in the east it’s sprinklers – same issue. If there is one serious change that is starting to become socially acceptable is the removal of lawns and replacing them with more drought tolerant landscapes. All of these will have a dramatic impact on use – while there still is water.

Everyone hopes that next winter will be the one that changes everything – a winter of decent rainfall. The past four years have progressively gotten worse, less water each year. And the type of water (rain/snow) is even more to the problem. Agriculture uses more than 80% of the water in the state and much of this comes from reservoirs that store the snowmelt of the Sierras. This is the fundamental problem, warmer winters mean more rain than snow and less spring melt. This leads to deeper water wells in the Central Valley as the well water is drawn down. Some stories say that in some aquifers they are pumping prehistoric water that is hundreds of thousands years old – talk about draining your bank account.

We can increase the supply of water by:

Towing icebergs from the Arctic,

Buying water from Canada and shipping it in pipelines (kind of like Keystone?),

Building desalination plants on the coast and convert an endless supply of ocean water into potable water (expensive – see Coleridge header above),

Converting idle supertankers to carry water and fill them in Siberia or some other place with a surplus water supply (the environmentalists will go bonkers over many of these, I’m sure),

Prayer.

Most probably the better fix is appropriate water use. I am now required in some of my development projects (especially in the San Jose/Santa Clara County region) to use grey water to irrigate the landscape. This is because the people of that region put up the bonds to build the new infrastructure to take their processed and cleaned effluent and reuse it within the county. Normally this processed water is discharged into the environment through spray fields, creeks, deep-water outfalls (San Francisco), and other non-productive systems. When they discovered they could sell this processed water, a lot changed. This is a very expensive no-brainer. To distribute water back into the residential market requires millions if not billions of dollars in pipes, pumps, and new residential plumbing systems. Will people support this type of cost remains to be seen and how desperate we become?

Unquestionably the most controversial will be the direct injection of this treated water into the potable water supply, we are a long way from this eventuality but two or three years more of profound drought will force many changes in our water use.

Stay Tuned . . . . . . .

The Train To Nowhere

We were having dinner with close friends the other night. They are an extremely successful couple, now retired, and have seen more of the world than any other person I know. They like us, have jumped on and off trains, and boats, and trains all around this world (though they have gone a lot further and to places my wife says, “in your dreams.” The surprising thing was that we all came to the conclusion that Governor Brown’s high speed train is not just a joke but insanity.

“Put the money into the regional transits, like BART,” he said. “Put it where it would make the most sense. The freeways are becoming a joke around here – make these trains work, not make it easier for folks in LA to escape.” There’s some truth to that I think.

The infrastructure of the Bay Areas rapid transit is now more than forty year old. New rail cars are being added; it will finally reach San Jose in a few years; and may extend into the eastern outlying suburbs during my lifetime. But put fifteen or twenty billion into it and real money will grow from these roots extending out into the hinterlands—just like it did forty years ago.

High-speed rail is cool. I took it from London to Milan last year. It’s a wonder. And it’s also a wonder how those European economies paid for it. Probably sold the same bonds to the Chinese the Californians are getting ready to sell. It isn’t a question of spending billions of dollars, California will do that anyway; it’s where it’s spent.

People will live where they want, and it is usually driven by costs and value and fear and traditions. They may want to live in their old neighborhood but work forty miles away; all the urban planning and silly state laws won’t change that. The basic twenty-first urban planning is done in most American cities; we are now into the fifth and six rings of outward development surrounding cities. Serving and interconnecting these rings with each other and to the old urban core are what needs to be done. Not build tracks in the middle of nowhere hoping that money will be found to connect them eventually to where the people really are. Governor Brown can create one of his fantasies and in the end it will all turn out just right. Maybe we can use it to bring water from Canada—not that’s an idea.

Stay tuned. . . . . . . . . . .

California, My California

 

1969 Ford Falcon

I moved to California, with my bride, in 1971. We crossed the Great Plains and the Rocky Mountains in a 1969 Ford Falcon (Metallic Green) towing a trailer full of marriage gifts and hope. We bought a new tire in Flagstaff, Arizona because someone at a gas station cut the sidewall. We saw Las Vegas when there were just a few "BIG" casinos on the strip and, when we crossed into California on I-15 in the Mojave Desert, there were 19,971,069 citizens in the Golden State. Most arrived the way we did, now they arrive by plane from places we have never heard of.

Now there are now 38,041,430 Californians, twice as many as in 1971. The game of demographics is fun and leaves one scratching their collective head. The region that surrounds San Francisco has grown exponentially. San Jose is now the second largest city in the state, towns that were counted in thousands are now tens of thousands, even hundreds, yet San Francisco has about 825,111 people (2% of the population), in 1971 it had 720,000 (3.6%). It's now become an adult Disneyland. Church's are closing, schools are closing, the streets are a mess, and home and apartment prices are higher than anywhere except maybe London.

In the other parts of the country Michigan's population in 1970 was 8,881,826; in 2010 it was 9,883,701, a growth of 1 million. Illinois in 1970, the state I left, was 11,110,285 and by 2010 had added 1.7 million. Both with about 10% growth. Overall the United States population in 1970 was 203,392,031, in 2010 in had grown by 33% to 308,745,538.

Why California? The post World War II growth of the state is unprecedented in America and most probably the world as well. The reason, most undoubtedly, is it's weather. For my readers in most of the rest of the US just look out your window – here, today in Northern California it will be 65 degrees and sunny and even thought there is a drought, this too will pass. Texas had one, the southeast had one, and parts of the Midwest had one. Inconvenient yes, Dust Bowl, Grapes of Wrath result – no. Weather is huge! It's attitude, it's convenience, and it's cost savings. We whine when it rains (or used to), and heaven forbid it gets below 30. Yes we are a state wimps and crybabies – with cancer prone tans.

This California Attitude lead to excesses by the state and local governments with pensions and salaries, but that is being corrected. It also led to a creative blast that changed the world – Silicon Valley. My wife calls it Silicone Valley – she may be more correct. I remember clearing prune orchards in the valleys west of San Jose for housing neighborhoods twenty years before Apple's headquarters dropped in across the street (and taking one of the last orchards). Millions of everything has been built in the region, manufacturing, research, retail, and office square footage. Southern California has grown to the east of LA so far that Palm Springs seems like a suburb of Riverside. The same with Sacramento and the south Central Valley – its growth has been in spurts (some disastrous), but growth nonetheless.

But critical issues remain as the state grows to 50 million people (and 15% of the country's population). Water is without a doubt the most critical both for agriculture as well as domestic use. Great strides in reuse (grey water) are helping especially in newer communities. So has the ongoing management in agriculture's usage with improved irrigation distribution and storage. But obviously more need's to be done – a lot more. Costs will be high but grey water systems need to be put into the older urban areas of LA, San Jose, and San Francisco. And more reservoirs and damns need to be built – especially in the far north of the state. Then again if Canada was smart they would plan, in addition to oil being pipelined to New Orleans for processing, piping crystal clear and clean drinking water from British Columbia, Canada at $100 a barrel (that's about $3.00 a gallon, in volume on par with oil). And how could you fight this kind of pipeline, won’t explode or pollute – just water the flowers if it cracked?

The current big battle of egos and dollars is the High Speed Rail – I've written extensively about this. One note to think about – in the WSJ today there was a short article that the airline industry may start flying their bigger jets with 300 plus seats between high volume short-haul airports because of the paucity of landing slots. One plane - almost twice as many people. This is how markets deal with demand not by assuming a 100 billion dollar debacle will fix a transportation problem. In future California, time will be an even more valuable commodity.

Another addendum before closing: One of my favorite writers on all things economic is John Mauldin GO HERE, his newsletter is free and his advice and insight priceless. In today's missive he calls out an article by Morgan Housel at Motley Fool titled "50 Reasons We're Living Through the Greatest Period in World History."    Here's a taste for you cynics:

4. In 1949, Popular Mechanics magazine made the bold prediction that someday a computer could weigh less than 1 ton. I wrote this sentence on an iPad that weighs 0.73 pounds.

5. The average American now retires at age 62. One hundred years ago, the average American died at age 51. Enjoy your golden years — your ancestors didn't get any of them.

6. In his 1770s book The Wealth of Nations, Adam Smith wrote: "It is not uncommon in the highlands of Scotland for a mother who has borne 20 children not to have 2 alive." Infant mortality in America has dropped from 58 per 1,000 births in 1933 to less than six per 1,000 births in 2010, according to the World Health Organization. There are about 11,000 births in America each day, so this improvement means more than 200,000 infants now survive each year who wouldn't have 80 years ago. That's like adding a city the size of Boise, Idaho, every year. 

7. America averaged 20,919 murders per year in the 1990s, and 16,211 per year in the 2000s, according to the FBI. If the murder rate had not fallen, 47,000 more Americans would have been killed in the last decade than actually were. That's more than the population of Biloxi, Miss.

Get the rest HERE.  http://www.fool.com/investing/general/2014/01/29/50-reasons-were-living-through-the-greatest-period.aspx

Stay Tuned . . . . . . . . .