Tag Archives: Media

David Mitchell in the LA Times: As drought drives prices higher, millions of Californians struggle to pay for water

M.Cubed Partner David Mitchell was interviewed for an article on rising residential water rates in California in this October 24 article:

Across the state, water utility prices are escalating faster than other “big ticket” items such as college tuition or medical costs, according to David Mitchell, an economist specializing in water.

“Cost containment is going to become an important issue for the sector in the coming years” as climate change worsens drought and water scarcity, he said.

The price of water on the Nasdaq Veles California Water Index, which is used primarily for agriculture, hit $1,028.86 for an acre-foot on Oct. 20 — a roughly 40% increase since the start of the year. An acre-foot of water, or approximately 326,000 gallons, is enough to supply three Southern California households for a year.

Mitchell said there are short- and long-term factors contributing to rising water costs.

Long-term factors include the replacement of aging infrastructure, new treatment standards, and investments in insurance, projects and storage as hedges against drought.

In the short term, however, drought restrictions play a significant role. When water use drops, urban water utilities — which mostly have fixed costs — earn less revenue. They adjust their rates to recover that revenue, either during or after the drought.

“So it’s not right now a pretty picture,” Mitchell said.

David Mitchell’s practice areas include benefit-cost analysis, regional economic impact assessment, utility rate setting and financial planning, and natural resource valuation. Mr. Mitchell has in-depth knowledge of the water supply, water quality and environmental management challenges confronting natural resource management agencies.

Technology and a running breakthrough

On one weekend in October, Kip Kipchoge ran the first sub-two hour marathon, and Brigid Kosgei broke the women’s record. These races, and a spate of others, were won with versions of the Nike Vaporfly that apparently adds at least a carbon fiber plate and returns 4% to 5% more energy to a runner’s stride. (I have a particular interest in this sport, having set a some school records and trained with an Olympic medalist.) The media reaction has generally been to call for some sort of limitation on the use or development of the shoes.

I view these shoes as just another technological innovation on the continuum in track & field that stretches back to the first spiked shoes to starting blocks in the 1930s (Jesse Owens dug holes in the track) to fiberglass poles (that work much like these shoes) to synthetic tracks (which catalyzed the world record onslaught in Mexico City). We can’t imagine the sport today without these innovations. Of course, there also has been the unwelcome use of performance enhancing drugs (PEDs – think steroids) that threaten athletes’ health. The question is how should we decide what innovations are acceptable and which go to far or give an unfair advantage.

I propose that we use two criteria (which are consistent with the IAAF’s current rule):

  1. Is the innovation widely available at an affordable cost? While some of the past innovations had limited availability, that usually was for a short period. Most were available to all competitors as a specific competition and spread from there.
  2. Can the innovation create physical harm, either immediately or at a future date? PEDs are the most salient example of an innovation that fails this test. In the case of PEDs, that certain individuals decide to take on the health risk forces other athletes to take on the same risks if they want to be competitive.

Swimming faced a similar existential question when the LZR suits a decade ago. FINA effectively banned that innovation, on the basis that the suits added undue buoyancy.

The Vaporfly doesn’t appear to add any outside aid–it just makes the shoe more effective at returning the energy put into it. It’s just a step further in the long trail of new tracks and shoes that have made runners faster. At the heart of improving athletic performance is new technology, sometimes in new products and sometimes in new training methods. So on that basis the new shoe should be allowed.

But the other key question remains–will the technology be widely available at a reasonable cost? Nike holds the patent and has not announced whether it will license it to other manufacturers. If Nike decides that it will only allow runners that sign agreements with the company can wear the shoes, then the shoes should not be allowed. Such exclusivity clauses can lead to damaging the sport in other ways, such as narrowing the sponsorship base.

This issue highlights a larger problem in our world economy–the rise of the dominance by intellectual property owners. Patent and copyright laws are a core cause of the undue accumulation of wealth that has characterized the last four decades. It’s not clear why Walt Disney’s great grandchildren should still be benefiting from Fantasia 80 years later. Drug patents block important innovations, and may even be suppressing research and development. Does such longevity really incent innovation?

Nike’s control of this new running technology, while in a seemingly frivolous pursuit, highlights this issue as a society-wide problem.

Two parts to these questions: First, do you think that this technology breakthrough should be barred from running competition, and why? Second, do you think that current intellectual property protections are too strict and lead to undue accumulations of wealth? Let us know your thoughts and add any useful references.

 

 

Misunderstanding the Green New Deal

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The media and the public appears to have confused the Green Party’s platform calling for 100% renewable energy by 2030 with the goals in the Joint Resolution for a Green New Deal introduced by Senator Edward Markey (D-MA) and Representative Alexandria Ocasio-Cortez (D-NY). The Joint Resolution calls for a “10-year national mobilization,” but contains no deadlines other than zero greenhouse-gas emissions by 2050, which is 30+ years from now. Given that we went from horse and buggies and wood stoves to widespread automobile use and electrification in 30 years at the beginning of the twentieth century, such a transformation doesn’t seem imposing.