Water Rationing

[abcdefg]

From the TV news I've watched on Yunnan channels, it seems the people who are suffering the most are rural subsistence farmers. Their crops die, they must sell their pigs and ducks, they must walk many kilometers to carry cooking water from a nearly empty well each day. If I have to take fewer showers and wash dishes less often, it is mildly inconvenient, but obviously nowhere near as serious as their plight.

Economic issues and governance issues may have played a part in the current shortage, but the factor the public news reports are emphasizing is that it just has not rained in a long time. I have no doubt that it is more complex than that and am not arguing against the above posters. Better infrastructure would almost surely maximize the existing resources.

Last night the Yunnan channel had footage from a reporter in a helicopter flying over reservoirs and lakes pointing out the difference between their "usual" levels and their current levels. They also flew over several regions just to the west of Kunming where foliage was mostly brown instead of being spring green. Every day they show scenes from villages where people are struggling to meet basic living needs.

Makes me wonder what will happen if this year's rainy season (late spring and summer) is dry again. Will I want to return to Kunming next year? Not sure. Fresh flowers are two or three times what they cost in 2009. Of course, they are a luxury item one can do without. Fresh vegetables, rice and meat have also gone up a lot. I can still afford the increased prices, but my local friends earning 3,000 RMB a month are feeling the pinch.

This wretched drought is changing Yunnan and it is changing Kunming.

[icebear]

To #20: a lot of what you say makes sense, particularly that investment makes more sense when pooled, and that long term investment in public utilities requires intelligent policy to encourage it. But I still disagree with the overall tone that the right to water is sacrosanct and must be vigorously supported by government without any consideration of other important factors.

Regarding private citizen use, I see no reason why the fact that it is a necessity means it can't be priced to reflect its actual availability. Ok, so you don't want to hurt the poor - make the initial x liters per day priced in one way and the remainder priced in another. Or price commercial users far more aggressively. I also disagree that Chinese are so incredibly thrifty with water use; my experience is admittedly limited to first tier cities, but your exclusion of them is just as invalid as my exclusion of the rural hinterland, and some of those first tier cities are just as ineligible for water assistance based my arguments above (e.g. Beijing). And I'm not talking about people that drive S600s, but relatively poor working class in Beijing (admittedly, a rich city, but these friends were at the ~2000/month level you mention). Don't take that as me ganging up on the Chinese as a nation - I think most people in the world that live above a bare-bones level of development (i.e. anyone that would be reading this board) tend to be inefficient in their use of electricity, water, etc - its not a judgement call, its just an observation. I'm guilty of it too, as I suspect most people reading this message are - absent better incentives to save, few people are willing to take 30 second flash showers or reuse grey water in their home.

Also, I'd be interested in your thoughts on my comments regarding government policies that aim to aid water scare cities and industries when in fact a smarter long term move (similar to your investment position) would be to encourage citizens to relocate to cities where their lives are more easily sustained and discourage water intensive industry (e.g. chemicals and agriculture - sacred pillars of national security, unfortunately). Also, its curious that the poverty you mentioned may indeed be caused by aggressive policies by the government which limit the options of the poor - think labor mobility (to save those poor city folks from all the waidiren), (previously) enforced devaluations of the currency (to save all the poor factory owners exploiting the waidi), and questionable industrial policies that exacerbate the water shortages in some areas of the country (to save all the poor petrochemical facilities that need somewhere to emit effluence). Incentives matter, and of all the places they could be used to help alleviate water shortages, keeping water prices low [beyond some subsistence level of usage] isn't one of them.

[yialanliu]

To Icebear:

1) Water is tiered pricing where the more you use it, the more you pay per liter. At least this is true where I live right now.

2) Hukou was designed to actually help alleviate these situations. By limiting movement, people won't congest into the cities because cities tend to be impacted by shortages the most due to the concentration. However, with the laxing of the hukou this point is much more muted.

3) Many of the enforcement you metnioned while still existant that limit the poor cannot be taken out of context. Compared to 1980s, the options are much better. Back in the day, the iron rice bowl was a double edged sword. Yes your guaranteed a job, but at the same time you could never leave the job either...Beyond that, it's even clearer. For instance, back in the day, if you left your village, your rationing coupons couldn't be used iwthout permission saying you could leave. In addition to this, you were't allowed to work anywhere either without approval. All in all, these policies you are alluding to has shown significant change in helping reduce restrictions and helps the poor.

[heifeng]

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[abcdefg]

#21, @Heifeng, I see somebody gave you a negative point (it wasn't me.) This forum is a perilous place to make jokes, as I have found out. Wish it were not that way.

But this has been a very interesting discussion.

[skylee]

First of all, water is EXPENSIVE for the poor. It's not priced incorrectly. That's the reason why the poor in China use a drip method to get water. In old homes, dripped water was off the meter beause the meter is so old that they don't record drips. That shows that water is something that is already scarce in nondrought conditions for the poor.[/Quote]

A friend has told me that his mother used to do this. They were in HK and by comparison they were not that poor. I guess it was a habit to be frugal. Anyway before he told me this I had never heard of such a method. I myself have never paid for the water I use because I use so very little that it is within the household allowance so it is not charged (sometimes it seems that HK is a city of very good welfare like free water, free medical care and education with very low tax rate yet people are still not satisfied.) Childhood experience of water rationing has taught us not to waste water.

Icebear mentioned excessive bathing at #9. I wonder what that means.

PS - negative point gone.

[icebear]

1) Water is tiered pricing where the more you use it, the more you pay per liter. At least this is true where I live right now.

In that case most of what I'm saying would only apply to higher tiers or commercial users, which I don't think you'd disagree with either (if I understand your misgivings about floating prices correctly).

2) Hukou was designed to actually help alleviate these situations. By limiting movement, people won't congest into the cities because cities tend to be impacted by shortages the most due to the concentration. However, with the laxing of the hukou this point is much more muted.

In addition to avoiding congestion it also greatly reduces social mobility; those born poor and rural have a hard time changing things. Good office jobs in Beijing are still advertised with a note at the bottom that only Beijing hukou holders should apply.

3) Many of the enforcement you metnioned while still existant that limit the poor cannot be taken out of context. Compared to 1980s, the options are much better. Back in the day, the iron rice bowl was a double edged sword. Yes your guaranteed a job, but at the same time you could never leave the job either...Beyond that, it's even clearer. For instance, back in the day, if you left your village, your rationing coupons couldn't be used iwthout permission saying you could leave. In addition to this, you were't allowed to work anywhere either without approval. All in all, these policies you are alluding to has shown significant change in helping reduce restrictions and helps the poor.

Absolutely agree that back in the day things were worse (according to the accounts I've read). Going one step further, a lot of the poverty alleviation over the past few decades is the result of market liberalization and migrant workers moving to wealthy cities where the jobs are, despite the illegality of such moves. And things are getting better.

Still, I think far more aggressive pricing on water for high volume users would be a step towards solving the problem. Business that is heavily water dependent would probably move out of arid regions, and there would be difficult economic impacts from that; ideally, policy would help alleviate that transition rather than subsidizing water use in a desert (I'm speaking generally here, not just about Kunming/China). Unfortunately a lot of politics is driven by sentiment, pride and nostalgia, which is part of what spurred this whole discussion.

Icebear mentioned excessive bathing at #9

Most people could achieve sufficient cleanliness (from a hygienic point of view) in less than a minute of showering, but many people shower for 5-10 minutes (or more). I suspect that's among the biggest personal uses of water in most individuals' day. If that shower was essentially free for the first minute and cost $2 a minute after I'm certain personal water usage would drop markedly. As others have mentioned, personal water usage might be small potatoes compared to agriculture and industry, but it was just meant as an example that waste follows low pricing and the perception of unlimited availability.

[yialanliu]

I am laughing pretty hard about the excessive bathing. I guess I should say that bathing everyday is considered weird. Winter, bathing is once a week affair, and in the summer every other day. Alas I wish people at least used deodorant...

Anyways, back to more serious discussion.

What's most interesting is not what hukou allows you to apply for jobs, but rather the pay.

Working as a waitress is in my opinion a much better job when only looking at pay. For instance, a starting waitress can easily get 2k a month + food + room whereas white collar jobs without connections are 3k top average with no room or board. In all honesty, it might be comparable, but in reality, the standard of living in these dormitories are probably better than what you can get for 500 dollars a month (rest goes to food).

So yes, I understand the qualms about hukou, it's erroneous however to assume it's a reason for being poor.

Why I say this is because the richest people in China are all business owners. By business, I mean manufacturing owners. When Chinese people say Wenzhou people are rich, they are not talking about the educated city people. We are referring to the rural hukou holders of Wenzhou. The hukou doesn't make people poor anymore and that's a fact. the only reason why it's worth so much is because of the access of education. That's the only reason why Beijing hukou is worth around 300k RMB.

To elaborate further, my fiance gets a 700RMB a month subsidy for holding a rural hukou and that's pretty normal. So if you take the fact that not everyone gets it, it's still pretty good since kids are included as well. So for a family of 3 working with a 2.1k subsidy with 4k addition spending cash from your 2k job (room and board is included as mentioned, or else you can take the 600 RMB subsidy as cash per person and the family can live alone). That's a good amount of money right? Just a reminder education might be a problem but ignoring that, it's pretty good)

Anyways, with schools like Dandelion in Daxing, Beijing, even education can be debated as not costing too much for migrants. And the quality of Dandelion isn't that bad, but I am biased since I volunteered there for a while haha.

Hukou nowadays have no limit on social mobility. I don't see how it is true after 2001 when China entered the WTO. If you want to talk about education, as I mentioned earlier, if you can get into a migrant school, it's not that much worse. You can still take the gaokao, you just have to go back to your province. So I think it's a pretty mute point.

Now from an economic theoretical point of view about modern day Hukou. The Lewis curve that we are at right now might be seen as showing that the price of migrant worker should equal the amount a farmer makes plus the sacrifice of not being with the family. As can be seen that wages are still very low for most jobs in China, you can make the point that rural farmers are still poor. However, since about 2008 with the strikes for higher wages, I argue that this is all changing. Because of this, from a future outlook perspective, the surplus labor is nearly gone and wages will rise for the mgirants. That's why wages go up at least once a year for migrants and more often 3 times every 2 years just because of rising costs. Unemployment in Ningbo is 4% for instance. And it's true, the places I get take out just told me they couldn't find someone to deliver food so can't deliver to me.

[icebear]

Again, most of what you describe is reasonable, especially the first half there.

However, I strongly disagree with the statement that "Hukou nowadays have no limit on social mobility." and note that just because conditions for rural migrants have improved doesn't mean there are no limits on their social mobility relative to their urban counterparts. I'd suggest reading some of the work by Chan at UW, an urban geographer who specializes on the topic and writes pretty approachable academic articles on it (this is a link a layman's editorial by him).

Regarding the so called "Lewisian turning point", I think those kinds of proclamations are better made after a significant number of observations (years) are available to establish a real turning point/trend, rather than a couple during a time of global turmoil and immense domestic stimulus spending.

[yialanliu]

I don't understand the article you provided as there was no facts in there listing what benefits they don't get or they get.

You don't need hukous to own housing. I own apartments and corporate real estate myself and am a FOREIGN citizen. Although added caveat is now it's much harder for me to buy properties now but still is possible. My fiance is a rural hukou holder and the amount of property she owns is also greater than what she needs and all of them are in major cities, not her village.

In terms of education, even with hukou, you need to past tests to make it into high school. There are people who can't even pass those tests and are cut off from high school, even in the cities. However, with the advent of migrant schools and NGO's that gap is shrinking. In addition to this, top high schools dedicate a class per year for only admitting poor students from a designated western province. Zhenhai Zhongxue of Ningbo (97% Tier 1 graduation for college) does this along with many other schools that help allow people to get the education.

While one can argue it's not completely fair, as a Shanghainese(so biased) I'd like to argue that people who come from city education tend to do better in terms of leading successful lives and should have more access to college quotas. Likewise, it is our responsibility as well to provide opportunities to everyone who is a strong achiever hence these classes.

In terms of healthcare, you get it through work. China actually does provide fake universal healthcare. However, what you get at work is useful rather than what you get through the country which has little benefits. So the healthcare of an urban hukou is actually worthless. You might be able to argue that white collar jobs provide better healthcare, however, that can vary as well.

In addition to this, in China, education means only 1 thing. You can be employed for a white collar job. However, like I said, the rich are not coming from these jobs but rather from entrepreneurial position. More farmers are rising to the top 0.1% than college educated scholars. Because of the mentioned near 0 wage differential for college graduates and migrant workers, it shows how there is little in the ways of unfairness in social money. However, white collar jobs don't produce millionaires as easily as people starting their own companies. Hence why I mentioned there is social mobility that is quite easy.

I only mentioned the LTP because I was reading an entire issue(CER) dedicated to this issue and thought wow, this is an area of major concern for Chinese scholars. With the amount of research going on in the past 3 years, I think it's substantial enough to be mentioned here.

[studychinese]

Whenever there is a shortage of something, it is usually blamed on some act of god, drought, bad harvest, etc. Yet in all cases it is a matter of government interventions that are causing the shortages. Take North Korea today, where there are shortages of everything. Or China of the past.

Whatever good or service is priced below it's market value is considered subsidized, and anything subsidized will be consumed at a higher level. Ironically, because it is subsidized there is no money left over to increase supply. The important price signals are gone, and this leads to 'shortages'.

Remember the other 'essentials' like rice or bread in the socialist countries? It was deemed essential and thus had to be under government control. Yet there were shortages of rice and bread everywhere. Of course the shortages were blamed on bad harvest, drought, etc, but as soon as the government controls disappeared, so did the shortages.

[gato]

While one can argue it's not completely fair, as a Shanghainese(so biased) I'd like to argue that people who come from city education tend to do better in terms of leading successful lives and should have more access to college quotas.

I seriously disagree with that. It should be government's role to help the disadvantaged rather than the already advantaged. The government should step in when the free market isn't enough. Your support for price control on necessities was based on that principle. I don't understand why you would abandon that when it comes to education. Children in the cities already have access to better schools and more government funding in primary and secondary education. Why should the government continue to favor city students for higher education, as well, as it does today? I don't think it's justified. But because the decision-makers in the Chinese government all live in big cities, it's inevitable that they have a city bias.

[imron]

Yet in all cases it is a matter of government interventions that are causing the shortages.

I'm not sure I agree with this. Melbourne (and Victoria in general) recently went through basically 10 years of drought and had quite strong water restrictions both in the city and country areas (Melbourne was on stage 3a restrictions and narrowly avoided stage 4).

You could argue that perhaps the lack of government intervention in setting adequate pricing of water for agriculture and industry exacerbated the problem to some degree, but the fact is we just didn't have much in the way rain for a prolonged period of time, and over the course of several years water reserves dropped down to below 30% and some towns were in danger of running out of water completely.

Ironically, not long after the government decided to build a huge desalination plant, we had copious amounts of rain, including one of the wettest years on record, and now things have recovered somewhat.

I don't disagree that government policy can have an adverse affect on these things, but to suggest that "in all cases it is a matter of government interventions that are causing the shortages", is a little too simplistic.

[studychinese]

Imron,

Can you think of any other areas where a company provisioning a good or service is upset at increased demand by customers? Price signals send messages to consumers that are extremely important.

http://mises.org/econsense/ch27.asp

Melbourne has been a magnet for an inflow of migrants. Arguably, if water is so scarce, it should not be. However, the price of water was never allowed to reach a level reflecting supply and demand.

If water had been priced properly, there would have been plenty of entrepreneurs seeking to provide adequate supplies of water. There is no need for rationing or restrictions. Let the price reach it's market clearing level, and people will ration in their own way.

[xiaocai]

Melbourne has been a magnet for an inflow of migrants. Arguably, if water is so scarce, it should not be. However, the price of water was never allowed to reach a level reflecting supply and demand.

So in the end rich people who can afford water can stay in developed metropolitan Melbourne whereas old residents who are not able to will be forced to move out? I don't think this is what the government really wants to see.

[Silent]

Whenever there is a shortage of something, it is usually blamed on some act of god, drought, bad harvest, etc. Yet in all cases it is a matter of government interventions that are causing the shortages.

Sorry, but this is really nonsense. There is a natural variety in the supply of natural resources. When the resources are available for extensive periods of time one gets to count on these resources. When you hit an exceptional period of low supply for some key resource their will be shortages. This is true from times way before governments even existed. This is true for humans, but also for other live forms. This has nothing to do with government policy but everything with the natural variations and the habit to stretch it.

Sure, good policy and preperation may lighten the burden, bad policy and preperation may worsten it. Government policies that really cause shortages are extremely rare.

[icebear]

[shortages] have nothing to do with government policy but everything with the natural variations and the habit to stretch it.

When refuting extreme positions it would be best to avoid them also. There are many accounts of widespread shortages due to state planning, for example see nearly any Eastern European country during the 1980s.

Moreover, the situation you describe, wherein a natural disruption reduces available supply is exactly the case where you don't want flat pricing - you want people to conserve their use accordingly, and they will do so through price signals.

So in the end rich people who can afford water can stay in developed metropolitan Melbourne whereas old residents who are not able to will be forced to move out?

Living in a wealthy, vibrant downtown metropolitan area is not a right.

[imron]

The problem is when the surrounding country and rural areas are also out of water, as was the case with this recent drought, where Melbourne had it much better than surrounding (and less populated) areas. Then what do you do? Mass migration across to the other side of Australia for anyone who can't afford the new water prices?

[studychinese]

So what do we have here then? The defenders of government intervention saying that the government needs to intervene because without government intervention there will be shortages. There are shortages now under government control.

It is quite simple. Under the free market water would be available. If mother nature could not provide it, entrepreneurs would process it from the sea to make fresh water. And the best system of rationing is the system of prices.

[studychinese]

To give another example. Lets say a rolex was priced at $1. There would be lines at the stores for kilometers. Most people would go home disappointed because there was a 'shortage' of rolexes. This goes for anything else, including water.

If there is a water shortage in Melbourne (and I am not convinced there is) then prices should rise to their market clearing level so price signals can be sent to residents and potential migrants. Then residents can decide if they really want that lawn, or 30 minute shower, or car wash, and migrants can make a rational decision about whether to move there or go somewhere else in Australia.

If prices are allowed to move up and down, you will not have water shortages. In addition, I strongly suspect the free market will find a way to provision water at a lower cost than the government is able to, just like the free market has done with every other commodity.