Kurt Johnson

From a Reuters article on Australia's water shortage:

Glenda Way turns on the shower tap and reaches for a bucket, catching drops until the water is warm enough for her wash.

 

Each day for the past year, Way, 58, has collected a bucket of fresh water which she later pours on the parched rose garden of her home north of Australia's largest city of Sydney.

 

"Everyone is doing it," Way told Reuters. "When you get a whole bucket of water from one shower, it makes you realize how much has been going down the drain."
Way is one of a growing army of Australian water misers, who are finding new ways to live with tough restrictions on water use as much of the nation enters its sixth year of drought.

 

Faced with record low dam levels, Australia's major cities have introduced limits on household water use, and city dwellers are sharing the pain of a drought that has devastated rural production and cut 0.5 percent from economic growth.
Householders are responsible for only 9 percent of Australia's water consumption but all major cities, except the rain-drenched tropical northern city of Darwin, have imposed restrictions on water use over the past five year.

Read the whole article.  Again we see city dwellers investing enormous resources (consumer  inconvenience plus the costs to enforce ordinances against car washing etc.) and capital (replanting gardens, installing low-flow fixtures).  Do the math: if Australia reduces household consumption by 20% it will impact total Australian water usage by only 2% - the same impact as reducing use in agriculture and industry by….2%*.  Which do you think is the logical place to invest resources in reducing consumption - targeting millions of households or a few large farming operations?  By the way, Australia is not simply farming for domestic consumption; it exports the majority of the wheat grown domestically and is one of the largest food exporters in the world.  Cutting back the land under cultivation would not only save a lot of time and money for Australia's urban dwellers but might have a huge benefit to low skill agricultural workers in South Asia by increasing agricultural employment and productivity there.

Australia is not alone by any stretch; Philadelphia recently made the news with a local skyscraper trying to install waterless urinals to save 1.6 million gallons per year. This sounds impressive until you again do the math and realize "we" encourage builders to spend $thousands on water saving appliances to save $100 per year in water ($~20 per acre foot for agricultural water * 5 acre feet)**.

*If elasticity is .48 you could accomplish this by raising the price of agricultural water by only 4%.  This doesn't seem unreasonable considering the degree to which agricultural water prices are already subsidized.

** To be fair it can still make sense to install waterless urinals in a new build (not a retrofit) if you value water at the building's marginal cost for water (the city rate).  All I'm saying is that it's insane for state policy to focus on reduction by urban users who already pay a high price rather than by farmers who use 10x as much at a very low price.

Update:   Also see this new report on the Colorado river:

Steadily rising population and increasing urban water demands in the Colorado River region will inevitably result in increasingly costly, controversial, and unavoidable trade-off choices to be made by water managers, politicians, and their constituents.

A significant trend in the quest to meet rising water demand has been the sale, lease, and transfer of agricultural water rights to municipalities, particularly in southern California and Colorado (in Arizona, tribal settlements, with transfers to municipalities, have also been important). With about 80 percent of western U.S. water supplies devoted to irrigated crop production, agricultural water appears to constitute the most important, and perhaps final, large source of available water for urban use in the arid U.S. West. Modest shifts of agricultural water to municipal and industrial uses can do much to help meet increasing urban water demands. At the same time, however, agricultural-urban transfers often entail “third party” effects that include costs for rural communities, ecosystems, and others indirectly dependent on water supplies affected by the transfers.

Boats stranded by the tide near Ha Long, Vietnam

The AirTrain at JFK airport cost $1.9 billion to build.  The new Chinese railway to Lhasa cost $3.8 billion to build.  Both took 5 years.

The Airtrain comprises 10 stations and 13km of track.  The Lhasa railway comprises 44 stations and 1,142km of track including 160km of bridges (675 bridges, mostly for areas with permafrost).  Additionally the Lhasa railway was built in extreme conditions include the highest altitude of any railway on earth (>5,000m) and sustained an 8.1 magnitude earthquake in 2001.

On a per-kilometer basis the NYC railroad is about 45x as expensive ($146m per km vs $3.2m per km). Without claiming that the cost figures are directly comparable or even accurate, it is mind-boggling to me how expensive it is to get a public project done in NYC; spend a couple of minutes trying to rationalize spending 146 million dollars per 1,000 meters of track in Queens.  It is equally impressive to think about how the Chinese mobilized 20,000+ workers and pushed out the frontier of civil engineering in such a massive way in only a few years.

Sourced from Wikipedia: Qingzang Railway, AirTrain JFK 

Following my earlier posts on malaria a friend recommended The Coming Plauge, a pretty good read so far. One provocative paragraph:

In West Africa, yellow fever was so ubiquitous that most surviving adults were immune to the disease. Many historians have noted that [British and French colonialists’] acute vulnerability to yellow fever prevented them from attaining full control over West Africa. So obvious was this deterrence in some areas of Africa that it was celebrated in song and verse by people from the Sudan to Senegal. Well into the 1980s schoolchildren in Ibo areas of Nigeria still sang the praises of mosquitoes and the diseases they gave to French and British colonialists.

As a follow-on to the last post, see this Wikipedia article on controlling malaria and yellow fever during the construction of the Panama Canal. Malaria and Yellow Fever incidence was reduced dramatically without the benefit of any advanced pharmaceuticals or chemical treatments; instead workers eliminated standing water and sprayed simple chemical treatments where needed. The results are clear:

I find this interesting because Africa has such a skewed capital/labor ratio that the control methods used in 1906 are probably not completely inappropriate for Africa today; in other words, they don’t have a lot of capital to spend on new pharmaceutical treatments but they do have surplus labor (i.e., high unemployment rates and lots of people employed in unproductive jobs) that could be employed in the kind of massive civil engineering that the US used to control mosquitoes in Panama.
To solve the malaria problem in Africa, might we be better off employing Africans in civil engineering programs rather than paying for R&D to develop new drugs in US/European labs?

In the last few weeks Wharton has hosted a number of great speakers on international development topics. One of the large consulting firms presented their work on malaria in Africa which included this data:

First, I can’t find the primary article this data comes from (although the chart is repeated in several publications from WHO, RBM, and Harvard speakers). Second, I’m sure there are huge uncertainties in the acccuracy of malaria statistics in Africa today, let alone in 1930. With those disclaimers, Africa’s performance is shocking. While all other regions have been constantly reducing deaths from Malaria since 1930, Africa has experienced rising deaths with the most severe increases occurring since 1970. Put another way, Africa’s share of world malaria deaths has risen from 3% in 1900 to over 90% in 2000.
China and Asia experienced a precipitous decline in deaths over the period; presumably African nations had access to the same knowledge base of control techniques and treatments. What’s the explanation for Africa’s trends going the wrong way? Does it make sense to invest in R&D for new drug therapies before addressing why previous therapies failed in Africa?

Source

Today’s NY Times has an article that dovetails with my last post, i.e. how democracy in India might slow down development vs. a strong central planning authority.

On the first Monday morning of the year, four bulldozers, accompanied by nearly 300 police officers, arrived on a rocky patch of farmland on the edge of a wooded village and began leveling the earth. It was meant to be the first step in the construction of India’s third-largest steel mill.
…
In 2005, Orissa attracted the largest foreign investment ever in India, with the promise of a $12 billion steel plant by Posco, of South Korea. The same year, Orissa also held the record for the highest rate of poverty in India, which included nearly half its population, or 17 million people.
…
The Congress Party, which rules the central government but plays opposition here in Orissa state, has seized on the episode, flying in its party president, Sonia Gandhi, to console grieving tribal villagers - an important constituency for the party. Orissa authorities privately grumble that Maoist guerrillas, resurgent across the tribal belt, had a hand in the troubles.
…
On paper, at least, the government has acquired the land that makes up the Kalinganagar Industrial Area. On paper, too, the government has awarded varying amounts of compensation to some of the roughly 1,800 families who have been displaced, though the state’s industrial development agency now says an estimated 1,500 families are yet to be fully compensated. All plants in the industrial area are obliged to employ one member of each family displaced, but not all those jobs have yet materialized, the agency adds.
…
The villagers acknowledge that some of them got paid. Mr. Haibru, the village leader in Gobarghati, reaped $26,000 in compensation for his 28 acres, for instance. But those without legal claims to the land - and there seem to be a great many among the villagers here - got little or nothing. Some seem unaware that the land now belongs to Tata. Others are not entirely sure exactly what benefits they are entitled to.

Most here seem convinced of three things, however. First, that whatever relief they have received is not enough in exchange for abandoning their land forever. Second, that considering Kalinganagar’s ambitions, their sorry patches of land will soon be worth a great deal more than what they have been offered. And third, that the factories that have mushroomed across their lands have delivered few opportunities to their communities.

Again, my impression is that in China is a place where citizens have been taught to bow to the authority of the central government (via the Cultural Revolution, Tiananmen Square, etc). Consequently if the Chinese central government gets behind something it will probably get done quickly relative to India’s pluralistic democracy and “flexible” system of property rights and civil law enforcement.

Would you trade political representation for getting the lights on ten years sooner? I think this is what some of our speakers had in mind when they talked about the huge frictional cost that China may have to pay to transition from authoritarianism to representative government (which citizens will presumably demand as they become wealthier and better educated). It can take decades for a nation to figure out how to build a working coalition government or how to set up policies that work; the speaker’s contention was that India has a head start in this area.

The World Bank has published a study from India with interesting findings on public vs. private medical care:

The quality of medical care received by patients varies for two reasons: differences in doctors’ competence or differences in doctors’ incentives…The authors find three patterns in the data.

First, what doctors do is less than what they know they should do-doctors operate well inside their knowledge frontier.

Second, competence and effort are complementary so that doctors who know more also do more.

Third, the gap between what doctors do and what they know responds to incentives: doctors in the fee-for-service private sector are closer in practice to their knowledge frontier than those in the fixed-salary public sector. Under-qualified private sector doctors, even though they know less, provide better care on average than their better-qualified counterparts in the public sector.

These results indicate that to improve medical services, at least for poor people, there should be greater emphasis on changing the incentives of public providers rather than increasing provider competence through training.

Found via Adam Smithee.

On the advice of a classmate from Pakistan I’m reading Charlie Wilson’s War. Charlie Wilson was a US Congressman who championed the mujahideen and led the US government in boosting support for the war from a few million dollars per year to around a billion per year. Beyond the humorous stories about Charlie Wilson it’s a great exposition the “enemy-of-my-enemy is my friend” school of policymaking and the imperitives of the CIA in the developing world during the Cold War. More than anything it illustrates the moral relativism that politicians (and voters) display about war and guerilla tactics; the same things that were OK for the US to support in the past are now clearly unacceptable.

On the truculence of the Afghan mujahideen (p110) in a battlefield hospital:

To Wilson it was like a scene out of the Old Testament. When the elders invited the Texan to speak, he delivered what he thought would be just the right message. “I told them that they were the most courageous people in the world and I said, We’re going to help you. None of your families will suffer from lack of shelter and food. I pledged that their soldiers would not be left to die in agony and that we would give them millions in humanitarian assistance.

An old man rose to respond. He told Wilson he could keep his bandages and rice. What they needed was a weapon to the destroy the gunships…It was at this moment that Charlie Wilson knew he was in the presence of a people who didn’t care about sympathy. They didn’t want medicine or charity. They wanted revenge.

Some prior art for the current crop of IED-makers (p 162):

In the 1960s this eminently forgettable-looking man [a CIA Office of Technical Services expert]…spent a year in Laos helping run the secret war and three years in Vietnam with thirteen devilish tinkerers serving under him at the old Saigon embassy. There he was given carte blanche to play dirty with the Vietcong. One of his favorite tactics was to secrete both a homing device and Semtex plastique [explosive] into typewriters offered for sale at shops the Vietcong were known to frequent. Alper was then able to follow the typewriter by its signal and identify the enemy nest. When ready, this American with the kindly face would detonate the Semtex charge with an electronic signal, strking a blow for the war effort.

On the balkanized nature of the Afghan people - does this sound like anywhere else we’ve got a military action? (p 224)

“Hart [the CIA field officer managing tactics in Afghanistan] understood that, like most Americans who’d discovered the Afghan war, Wilson was in the initial stages of unconditional adulation. Typically that meant seeing the mujahideen as pure of heart, brave, intensely religious, and worthy of total support. Like all newcomers, Wilson appeared even to have embraced the fantasy that these tribesmen could weld themselves into a single unified resistance.

Hart had gone down this path himself, but that had been long ago. “Akhtar and I used to sit around talking about how nice it would be if they could create the equivalent of the Free French and find themselves and Akbar de Gaulle” remembers Hart. “But the Afghans are hardly a people, much less a nation. They are a nation of tribes constantly at war with each other. They are very heterogeneous, with an extreme ethnocentricity which makes them not only hate or suspect foreigners but Afghans living two valleys away.”

Hart had made his peace with this profound flaw in the Afghans and had even come to believe that a large part of their potency as a guerilla force came from the fact that they were disunited. It made it hard for them to coordinate their military activities, but it also meant there was no single leader whose head could be cut off to destroy the insurgency. In fact, there was no centralized anything except a distribution system for weapons and support…

There’s a couple of interesting comments in the blogosphere worth checking out after you read the book; I also saw one at Amazon from a Soviet conscript who was in Afghanistan in 1984 and notes that from their perspective the “war” didn’t really exist as a war until the US boosted funding.

Coincidentally when I ordered this book Susanne was just finishing the novel “Kite Runner“, also about Afghanistan in the 1980s-present. She recommends it highly as one of the most moving novels she’s ever read; I’ll be getting to it soon.

From the Globalization Institute:

Some of the most spectacular changes for the good during the last few decades have come about in countries who opened up their economies to the outside world. China - home still to more malnourished children than any other country - saw a 49 per cent drop in underweight infants in the 1990s. Mexico, which signed up to the North American Free Trade Agreement (NAFTA) had a 46 per cent reduction.

Obviously correlation isn’t causation, but this seems like an enormous improvement in a short amount of time. What other factors could explain this besides liberalizing food markets in China and Mexico?

Stephen Pollard posted this interview with Hernando De Soto, author of “The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else“. An excerpt:

A great part of corruption is essentially the purchase of the law; that is, you pay somebody to stop looking your way or to draft the law in a certain direction. When I was working in the Middle East, there was an entrepreneur that I got to known so well that I could ask him about corruption and pay-offs —‘baksheesh’ is the local word. He explained: “I love baksheesh because it gives me certainty and predictability.” They change the law continually. We have calculated that the government brings out about 30,000 new rules every year. None of these is enacted in a transparent manner, with public participation. The result is that the law is totally unpredictable and only serves the powerful and those who have the means to remain informed. So, from this point of view, ‘baksheesh’ gives a kind of predictability. All the entrepreneur had to do was pay-off five key policemen either near his workplace, or where he made his transactions. And he knew what his outcome would be.

Now, traditionally that is what the law is supposed to do — give you predictability. However, if the law is inadequate, then your way of getting predictability is corruption. Therefore, when you have property rights — understanding “property rights” as your right to do business, hold shares and carry out business transactions —, it is clear that people will not look to corruption for security and predictability, wherever you go in the world.

It’s interesting to think about how well baksheesh scales up. In small enough business and large enough businesses baksheesh probably does buy predictability regardless of what bureaucrats do. However it seems like many medium size businesses would be vulnerable - too small to buy off top decision makers but large enough to attract attention from a whole host of parasitic rule-enforcers.