Forbes reports that “California is perpetually portrayed as suffering from a shortage of water. Case in point: Gov. Arnold Schwarzenegger recently declared a statewide drought, telling citizens to prepare for rationing.” As any economist would tell you, the solution to the water shortage problem is simple: raise the price of water.
The largest culprits of receiving subsidized water are California farmers. As the San Francisco Chronicle reports (“Big Farms…“), some farm districts received water at a price which was 2% of price paid by Los Angeles residents.
Creating a market for water free of government subsidies will eliminate water shortages in California.