CHAPTER TEN
WATER, WOOD, WETLANDS--AND WHAT NEXT? CHAPTER TEN: TABLE OF 
CONTENTS
Nature of the Problem
Consumer Water Issues
Lumber
Wetlands
Conclusions

   Public concern about resources, the environment, and 
population growth constantly shifts its target.  When those who 
are worried about loss of farmland run out of arguments with 
which to rebut the data that land is growing less scarce, they 
are wont to say, "But what about water?  If we run out of water, 
the amount of land won't matter."  Worry about the "loss" of 
forests is another old bugaboo that has again become fashionable.  
Earlier in this century, people worried that timber would become 
scarce as forests were cut for lumber, yet wood is now in greater 
supply than ever.  (Another concern about forests--their 
availability as recreational land and as habitat for wildlife--is 
addressed in chapter 29.)  And now even wetlands, formerly known 
as swamps, have come to share the environmentalists' spotlight.
   Let's begin by briefly discussing the supposedly worsening 
water shortage, a topic that there was no need to address at the 
time of the first edition. The ridiculousness of such 
"conservation" measures as not putting water on the tables of 
restaurants or not flushing the toilet every time it is used is 
discussed in Chapter 20.

Nature of the Problem

   Water does not change into something else, as do fossil fuels 
that are burned.  Rain and seawater come back to us in the same 
form in which we originally used them, unlike (say) raw copper.  
And water never languishes in a dump, as scrap iron does.  
Furthermore, the quantity of water in the oceans is huge by any 
comparison.  The only possible water problems, then, are that (a) 
there is not enough water in a place that it is wanted at a given 
moment, and hence the price is too high; and (b) the available 
water is dirty. 
   Usable water is like other resources, however, in being a 
product of human labor and ingenuity.  People "create" usable 
water, and there are large opportunities to discover and utilize 
new sources.  Some additional sources are well-known and already 
in partial use:  transport by ship from one country to another, 
deeper wells, cleaning dirty water, towing icebergs to places 
where water is needed, and desalination.  But there also are 
entirely new possibilities, about some of which there already are 
hints, and about others which - inevitably - nothing is known.  
   An important example of a newly-discovered source is the 
aquifers in areas where the underlying rock has large faults.  In 
the past, geologists had assumed that the water in these large 
watersheds does not flow easily from place to place, and 
especially, does not flow vertically.  But scuba divers have been 
able to map the movement of the water in these aquifers, and to 
demonstrate that it does move vertically.  In this fashion, huge 
new supplies of groundwater have been found in the Red Sea 
Province of eastern Sudan, Florida, and elsewhere. 
   This new method has also revealed that massive watersheds are 
in greater danger of being polluted by ground water than had 
previously been known.  The direction is thereby pointed to 
pollution prevention.
Consumer Water Issues

   For perspective on modern consumer water issues, consider that 
in a typical poor area in South Africa in the 1990s - which is 
how it also used to be only a century or so ago in what is now 
the rich world - the average household spends about three full 
hours of labor each day hauling water from the source to the 
house in order to supply its water needs. In comparison, typical 
households in middle class areas can pay for a day's worth of 
water with the pay from perhaps one or two minutes of work. And 
the price of water brought to the house by a water carrier in 
poor areas of South Africa is perhaps 25 or 30 times the price of 
water in a modern middle class area in South Africa.   So the 
long-run trend, as with all other natural resources, has been 
toward a much greater abundance of water, rather than toward 
greater scarcity.  This illustrates the basic theory of this 
book, the process by which new problems eventually leave us 
better off than if the problems had not arisen.  The opposite 
view - that we are exploiting the future and that retribution 
will inevitably destroy civilization - is discussed in chapter 
38.
   We can immediately simplify our subject by noting that water 
for residential use will never be a long-run problem in itself 
because even at the cost of the most expensive means of 
production - desalination - the cost of water used by households 
is small relative to household budgets in rich countries.  Let's 
say that an acre-foot of desalinated water - that is, 325,851 
gallons - costs $700 or $1,900 in 1992 dollars (depending on how 
you figure), as in Santa Barbara, California.   The average 
household in that affluent area uses perhaps 7,500 gallons per 
month (about the same as in the suburbs of Washington, D.C.), or 
90,000 gallons ($500 worth) a year.   Even if the price of water 
in Washington, D.C., rises at the source from zero to $1,900 per 
acre foot, the increase per household would only be about $500 
yearly.  This is not an insignificant amount, to be sure, but it 
represents the greatest possible increase; desalinated water will 
be available forever at a maximum of this price, so population 
can grow indefinitely without pushing the price of water beyond 
the desalinated cost.   The desalinated price probably will be 
much less as technology improves and the price of energy falls; 
for example, a desalination plant that uses waste heat from an 
existing power plant produces water for only about half of the 
cost cited above.   (The present price of water at the source is 
not zero, either; in Southern California the wholesale price of 
water is about $500 per acre-foot.  Furthermore, homes reduce 
their use of water as the price goes up.  In areas where water is 
metered even though not expensive, water use is only about half 
what it is per home as in areas where water is purchased at a 
flat monthly rate.   Figures 10-1a and 10-1b show how the amount 
of water used is responsive to the price. 
Figures 10-1a and 10-1b
   The most important fact for consumer water supply is that most 
water is used in agriculture.  For example, irrigation takes 80 
percent of the water used in Utah and 90 percent in New Mexico.   
And the amount of water used in agriculture is very sensitive to 
the price.  The reason that there are cases of absolute shortage 
and rationing is that price is not allowed to respond to market 
conditions, but rather is fixed at a low subsidized price in many 
agricultural areas.  For example, farmers near Fresno, California 
pay $17 for an acre-foot of water, while according to the U.S. 
General Accounting Office the "full cost" is $42 a foot.  In some 
areas in California farmers pay $5 per acre-foot whereas the Los 
Angeles water authorities pay $500 per acre-foot.   Such 
subsidies encourage farmers to plant crops that use water 
heavily, which diverts water from urban areas.
   Another difficulty is that agricultural and municipal rights 
to use water from rivers are complex legal structures that often 
do not fit modern needs.  Water economists are agreed that if 
governments stop subsidizing water to farmers, and allow water 
rights to be bought and sold freely, water shortages would no 
longer appear.  But bureaucratic government restrictions often 
prevent those who have rights to more water than they need from 
selling their water rights to those who are willing to pay for 
the water; the bureaucrats fight a free market tooth and nail to 
protect their own powers, and the results are amazing stories of 
governmentally caused inefficiency and true scarcity leading to 
rationing.      
   The typical endpoint of this irrational structure of 
overcontrol, miscontrol, and price-fixing by government is 
"drought police" or "water cops" in California cities who ticket 
people for activities such as illegal lawn watering.  
   For more information, see Terry Anderson's forthcoming book.  
As to the cleanliness and purity of the water that we drink, see 
chapter 17.
LUMBER
   Lumber is an agricultural product.  As such it fits more 
neatly into this chapter on water and land use than into a 
chapter about energy, even though wood has been the main source 
of fuel in most places in the past.
   Americans have long worried about a lumber shortage. In 1905 
President Roosevelt said that "a timber famine is inevitable," a 
statement that culminated a national worry dating from as early 
as 1860.  There was special concern over such woods as hickory.  
And under titles like "Tree Slaughter", a typical commentator 
today laments the "nightmare of splintered stumps and ravaged 
land".  With too-typical disregard for the facts, that author 
talks about how the national forests are "now the great remaining 
repository of high quality softwood timber", when in fact 
privately-owned forests are the overwhelmingly important source 
of sawtimber, and growing more so with every year, as Figure 10-2 
shows.
FIGURE 10-2 from CEQ 86, p. C-98]
   In the first edition, I said that despite the heavy use of 
wood since Teddy Roosevelt's time, the picture was quite 
different in the 1970s than it was then. I quoted a report that a 
"glut of low grades of factory lumber exists [and] a lack of 
market opportunities continues to set severe limitations on 
improvement of state and national forests.... [By 1951] hickory 
trees were taking over the eastern hardwood forest. In spite of 
expanded uses of timber for pulp and paper, we are [in 1971] 
probably growing more cubic feet of wood annually than we were in 
1910".
   As the Council on Environmental Quality explained, "trends in 
net annual timber growth [total annual growth less mortality] 
show that the net annual growth of softwoods and hardwoods 
combined increased by 18 percent between 1952 and 1962 and 
another 14 percent between 1962 and 1970. This increase is a 
result of expanded programs in forest fire control, tree 
planting, and other forestry measures".  Since then, the amount 
of lumber being grown has continued to rise.  (See figure 10-3.)
                      FIGURE 10-3 [old 5-5.]
	Data on the trends in quantities of trees growing in various 
size classes of hardwoods and softwoods shows the basis for both 
the fears of the environmentalists and the reassurances of the 
forest industry.  The largest and oldest trees - the Douglas firs 
and other softwoods on the Pacific Northwest - were cut at an 
extraordinary rate from the 1960s to 1980s.  (The rate of cutting 
may have been increased by fear of coming regulations, one of the 
side effects of regulation.)  But the quantity of trees in just 
about every other category has been increasing rapidly.  And the 
rate of removal of the old growth in the Pacific Northwest has 
slowed almost to a crawl.
   Data on reforestation are shown in figure 10-4.  And 86 
percent of that reforestation is private, only 14 percent being 
done by government, testimony again to the role of private 
incentives in creating both wealth and ambiance.  Many trees are 
planted in order to be cut down - especially for paper.  Indeed, 
"87 percent of all paper in the United States is produced from 
trees planted and grown for that purpose by the paper industry."   
Hence regretting the cutting of trees for paper is like lamenting 
the cutting of corn in cornfields. 
                 FIGURE 10-4[CEQ 86 Table 4-26a]

   Figure 10-5 shows data on the decline in losses to wildfire - 
again, good news for tree lovers.
                FIGURE 10-5[W CEQ 86 Table 4-27]
   Despite the improving situation, as of the first edition, the 
data did not show a long-run decline in the price of wood - 
unlike all other natural resources. But by 1992, the price data 
show that the same pattern of price decline is taking place as 
with other natural resources.  The present situation is captured 
in a headline in a timber industry publication: "Bad News: Timber 
Prices Are Not Rising As Fast As Inflation Rate".  The decline in 
prices occurred for each of the eight kinds of sawtimber and 
pulpwood (including hardwood), for the entire U.S. South. 
   The situation in Europe is much the same. Forest resource 
surveys, which provide fairly reliable data, show that for 
Austria, Finland, France, Germany, Sweden, and Switzerland, there 
has been "a general increase of forest resources" in recent 
decades  (see figure 10-6).  Estimates for other European 
countries based on less accurate methods indicate that "All 
countries reported an increase of growing stock between 1950 and 
1980." 

                        FIGURE 10-6[4-t]

   These data are at odds with assertions that European trees 
have been adversely affected by air pollution.  The forestry 
specialists reporting in Science therefore adjudge that "The 
fertilization effects of pollutants override the adverse effects 
at least for the time being."  In fact, the rate of growth of 
tree size in Europe has been faster in more recent years than 
earlier in the century.  Of course there have been some cases of 
forest decline due to pollution, such as the 5 kilometers around 
a smelter at Kola in northwestern Russia.  The damaged areas 
total perhaps 2000 square kilometers in the former Soviet Union, 
and a total maximum of 8000 square kilometers in Europe, less 
than 0.5 percent of the total.   
   Why does the public believe that forests in Europe are 
declining when they are really increasing?  Part of the 
explanation is that researchers invalidly infer general effects 
from partial biological data.  For example, in an earlier issue 
of Science there appeared an article entitled "Air Pollution and 
Forest Decline in a Spruce Forest" in which the author inferred 
the conclusion of an overall decline. What he had actually 
observed were "symptoms of forest decline of spruce in Europe 
range from needle yellowing and loss to tree and stand 
mortality," to which he added theories about the effects of 
various gaseous pollutants.   Logical? Perhaps.  Correct? No. 
That has too often been true of environmental scares.
   Even taking the world as a whole - which includes poor 
countries that are still in the phase of deforesting (they will 
reforest when they become more affluent) - the total quantity of 
forests shows no evidence of declining, as seen in figure 10-7.
                   FIGURE 10-7[-S from Sedjo]
   The confounding of predictions, and the shift from an 
apparently impending "timber famine" to actual glut was not 
fortuitous.  It resulted from responses to perceived need.  One 
response was that more timber was purposely planted.  Another 
response has been higher productivity, so that an increasing 
number of trees grow on a shrinking area.  Perhaps most important 
have been conservation efforts due to higher prices, and research 
on wood and wood substitutes. We see the results in our homes - 
plastic bags substituted for paper bags; and newsprint made 
thinner and yet stronger, as in airmail editions of overseas 
newspapers. Perhaps wood will not even be used for paper in the 
future.  
   Kenaf and other plants show promise as alternative sources of 
newsprint.  Kenaf grows to a height of 12-15 feet in five months, 
and yields "about 12 tons of dry plant per acre...roughly nine 
times the yield of wood" per year.  It has disadvantages, such as 
a high cost of transportation that makes it necessary that the 
farms be close to the mill.  But the quality of paper made from 
it is better than paper from wood.  And it is already being used 
in the Far East. Ironically, greater use of kenaf would reduce 
the demand for trees to be grown, which outdoorspeople might 
regret. 
   Just as with food, fears in the past about running out of wood 
have not been realized.  And there is no reason to believe that 
the trends of earlier decades will suddenly reverse their 
direction. (Of course, we value forests for more reasons than 
timber.  The extent of forests in the U.S. and in the world as an 
amenity for people and as an environment for other species is 
discussed in Chapter 29.)

WETLANDS
   The preservation of "wetlands" - up to recent decades, known 
as "swamp ground" - is a remarkably clear-cut case of an activity 
having nothing to do with food production.  The prevention of 
urbanization is justified (wrongly) as saving land for food 
production in the future, but wetlands preservers make very clear 
that keeping land available for agriculture is not their reason. 
"If the price of soybeans gets high enough, there's no reason why 
the owner wouldn't sell them [wetlands] or convert them [to 
crops]" says Louisiana's chief habitat biologist.  The aim is to 
keep these lands out of production.  (Actually, the 
preservationists need not worry about agricultural encroachment, 
because the price of soybeans is likely to be dropping rather 
than increasing in future years, just as it has for all other 
foodstuffs; see chapter 5). 
   If our society deems it worthwhile to keep some lands wet or 
unurbanized or desert-like for the sake of the ambiance, or for 
the sake of animals, the economist can make no judgment about the 
wisdom of the policy.  If we want to have arid Gila National 
Forest in New Mexico the way that "forest biologists [think] the 
range should look," as the ranger in charge put it, or because, 
as the county executive in Montgomery County, Maryland, where I 
now live, said about farmland, "Most people find it attractive.  
It has good ambiance,"  that is a public choice.  Or as a 
Wilderness Society official says, we should "protect the land not 
just for wildlife and human recreation, but just to have it 
there."  
   Of course, if we want parks, or even land that no one will use 
or visit, we should be prepared to pay for them. We can also ask 
that the judgment be made on the basis of sound facts and 
analysis.  And civil libertarians can raise reasonable questions 
about whether private owners of these land should have their 
property rights taken away without compensation.
CONCLUSIONS

   Concerning water, there is complete agreement among water 
economists that all it takes to ensure an adequate supply for 
agriculture as well as for households in rich countries is that 
there be a rational structure of water law and market pricing.  
The problem is not too many people but rather defective laws and 
bureaucratic interventions; freeing up markets in water would 
eliminate just about all water problems forever.  
   Ever cheaper desalination and water transportation - in 
considerable part because of declining energy prices in the long 
run - will ease supply in the future.  In poor water-short 
countries the problem with water supply - as with so many other 
matters - is lack of wealth to create systems to supply water 
efficiently enough.  As these countries become richer, their 
water problems will become less difficult and more like those of 
the rich countries today, irrespective of population growth.
   [Similar comments to come on forests and wetlands.]

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