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Economists: Tax Organic Products To Solve CA Water Crisis

Environmentally-savvy economists have a novel solution for tackling the California water crisis that may anger some on the left: tax organic products.

Why tax organic products? Organic farms, for example, don’t use water nearly as efficiently as conventional farms do, argue economists with the Property and Environment Research Center and the Hoover Institution. Price the inefficiencies into products and consumers will use less of it, the economists say.

Economists Terry Anderson and Henry Miller wrote that “water-policy analysts agree that California’s thirst for water won’t be significantly reduced until consumers are faced with a more realistic price for the ‘clear gold.’”

“In that spirit, we propose a revenue-neutral tax on all organic products — food, linens, clothing, pillows, tobacco, etc,” they wrote.

“How will taxing organic products help to conserve water? The answer is that organic agriculture uses more of critical inputs — labor, land, and water — than conventional agriculture,” Anderson and Miller wrote. “Taxation would reduce the demand for water-wasting organic products relative to non-organic alternatives, and thereby reduce some of the pressure on California’s dwindling water supplies.”

California is in the fourth year of a major drought that has left much of the state desperate for water supplies. Gov. Jerry Brown has imposed command and control solutions to conserving water by fining homes and businesses that use too much. Brown was seeking to fine Californian’s up to $10,000 a day for using too much water.

But Anderson and Miller argue that a water tax on organic products would be a much better idea than mandating water use.

“Organic agriculture is particularly insidious because it bans the cultivation of crop varieties crafted with molecular genetic-modification techniques, which are particularly relevant during droughts,” the two wrote. “Not only do genetically engineered crops offer higher yields with less use of insecticides, but they can be crafted to withstand droughts, and to be irrigable with lower-quality (such as brackish) water.”

“Pest- and disease-resistant genetically engineered crop varieties also indirectly improve water use. Because much of the loss to insects and diseases occurs after the plants are fully grown — that is, after most of the water required to grow a crop has already been applied — this means more agricultural output per unit of water invested,” the economists wrote.

“We aren’t holding our breath waiting for Governor Moonbeam and his followers, clad in tie-dyed, organic-cotton t-shirts, to adopt our proposal, even if it might result in more efficient agricultural production and water conservation,” the economist concluded. “But until California devises constructive incentives for water conservation, the vagaries of Mother Nature will continue to create water shortages.”

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