interviews
Water and the American West
by Richard Frank
October 25, 2021
This interview with Richard Frank, professor of environmental practice at the UC Davis School of Law and Director of the California Environmental Law and Policy Center, was conducted and condensed by franknews.
frank | Can you tell me a little bit about the story of water and how it's tied to the West, and to California in particular?
Richard | A friend of mine who's a Court of Appeals Justice here in California wrote an opinion on a water law dispute and started it with the quote, "the history of California is written on its waters." And I think that the point is true of the entire American West.
Water policy and legal issues are inextricably tied to the development of the Western United States; water is the limiting factor in so many ways to settlement, to economic development, to prosperity, and to the environment and environmental preservation.
Can you talk about the difference between groundwater and surface water– and the policies that regulate each?
There are really two types of water when it comes to human consumption. There's surface water: that is the water that is transmitted by lakes, rivers, and streams. Then there is groundwater, and a substantial amount of water that Americans and the American West rely on is groundwater. That is water that is stored in groundwater aquifers, which are naturally occurring groundwater basins. Both groundwater and surface water are critical to the American West and its economy and its culture.
Traditionally a couple of things are important to note, first of all, water is finite. Second, water gets allocated in the Western United States generally at the state level. There's a limited federal role. Primarily, policy decisions about who gets how much water for what purpose are made state by state.
I think allocation is really interesting in that it's more state-level than federal. How was water and the allocation of water in California designed? Is it a public-private combination? What goes on in terms of the infrastructure of water?
Another very good question. The answer is it depends. Most of our water infrastructure is public in nature.
Again, in the American West, the regulation of water rights is generally done at the state level, but the federal government, historically, has a major water footprint in the American West because it has been federal dollars and federal design and management that really controlled much of the major water infrastructure in the American West — you know, Hoover Dam, and the complex system of dams and reservoirs on the Colorado River in California, with the Central Valley Project that was built and managed by the federal government with Shasta Dam on the upper Sacramento River as the centerpiece of that project. But we also have a California State Water Project, the key facility being the Oroville Dam and reservoir on the Southern River that is managed by state water managers. If we were starting over, that kind of parallel system would make no particular engineering or operational sense.
But, we are captive to our history.
And then you have these massive systems of aqueducts and canals that move water from one place to another throughout the American West. They are particularly responsible for moving water from surface water storage facilities to population centers. In the last 50 to 75 years, these population centers have really expanded dramatically, so you need massive infrastructure to deliver water from those storage facilities, the dams, and reservoirs, which generally are located in remote areas to the population centers. So it takes a lot of time and energy to transport the water, from where it is captured and stored to where it is needed for human use.
California has faced continuous drought – what measures is the state taking now to manage water?
Just to frame the issue a little bit — we have, as I mentioned, a growing population in the American Southwest at a time when the amount of available water is shrinking due to drought and due to the impacts of climate change. We have growing human demand for residential and commercial purposes and at the same time, we have a shrinking water supply. That is a huge looming crisis.
And it is beginning to play out in real-time. You see that playing out in real-time. For example, several different states and Mexico rely on Colorado River flows based on an allocation system that was created in the 1920s, which is overly optimistic about the amount of available water. From the 1920s until now, that water supply has decreased, and decreased, and decreased. Now you have interstate agreements, and in the case of Mexico, international agreements that allocate the finite Colorado river water supplies based on faulty, now obsolete, information. It is a real problem.
What measures do you take now, knowing this information?
If you look at the US Drought Monitor, it is obvious the problem is not limited to the Colorado River. We are in a mega-drought, so cutbacks are being imposed by federal and state water agencies to encourage agricultural, urban, and commercial water users to cut their water use and, and stretch finite supplies as much as possible through conservation efforts.
In California, we have the State Water Resources Control Board, the state water regulator in California, and they have issued curtailment orders. Meaning, they have told water rights holders, many of whom have had those water rights for over a hundred years, that, for the first time, the water that they feel they are entitled to, is not available. Local water districts are also issuing water conservation mandates; the San Francisco water department is doing that, in Los Angeles, the metropolitan water district, is urging urban users to curtail their efforts.
And then agriculture. Agricultural users — farmers and ranchers — have had to get water rights in many cases through the federal government, as the federal government is the operator of these water projects. They have contracts with water users, individual farmers, ranchers, or districts, and they are now issuing curtailment orders. They're saying, we know you contracted for X amount of water for this calendar year, but we are telling you because of the drought shortages we don't have that water to supply. Our reservoirs are low at Lake Shasta or at the Oroville Dam.
When you drive from San Francisco to LA on the five, you see a lot of signage from the agricultural farming community about water. There's apparently some frustration about this. What are the other options for them?
About 80% of all human consumed water goes to agriculture. That is by far the biggest component of water use, as opposed to 20% used for urban and commercial, and industrial purposes.
Over the years, ranchers and farmers, and agricultural water districts assumed that the water would always be there — as we all do.
And the farmers and ranchers have, in hindsight, exacerbated the problem by bringing more and more land into production. You see on those drives between San Francisco and Los Angeles, particularly in the San Joaquin Valley, all these orchards are being planted. Orchards are more lucrative crops than row crops — cotton, alfalfa, and rice. But, if you are growing a row crop, you can leave the land fallow in times of drought.
We don't have to plant. If the water stopped there, or if it's too expensive to get, it may make economic sense, but if you have an orchard or a vineyard it's a high value, those are high value crops, you don't have that operational flexibility and they need to be irrigated in wet years and in dry years. Now, you see these orchards, which were only planted a few years ago, are now being uprooted because the farmers realized that they don't have the water necessary to keep those vineyards and orchards alive. For ranchers, the same thing is true with their herds. They don’t have enough water for their livestock.
The water shortage has never been drier than it is right now. Farmers and ranchers are being deprived of water that they traditionally believed was theirs and they're very understandably, very unhappy about it. They see it as a threat to their livelihood and to the livelihood of the folks who work for them. Their anger and frustration are to be expected, but it's nobody's fault.
To say, as some farmers do, that it is mismanagement by state and federal government officials, I think is overly simplistic and misplaced in the face of a mega-drought. Everybody's going to have to sacrifice. Everybody's going to have to be more efficient in how they use water. All sectors are going to need to be more efficient with the water that does exist.
Looking at this percentage breakdown of water use – is it actually important for individual users to change their water habits?
Well, every little bit helps. When you're talking about homeowners, about 70% of urban water use is for outdoor irrigation. So we're talking parks and cemeteries and golf courses and folks' yards. You know, that used to be considered part of that American dream and the California dream — you would have a big lawn in front of your house and behind your house. Truth be told, that has never made much sense in an arid environment. That's where the water savings in urban areas is critical in the way it really involves aesthetics rather than critical human needs, like water for drinking and bathing and sanitation purposes. There is a growing movement away from big lawns, and away from the type of landscaping that you see in the Eastern US — there is no drought in the Eastern United States. As Hurricane Ida and other recent storms have shown, the problem is too much water, or rather than too little in most of the Eastern United States. So it really is a tale of two countries.
We just need to recognize that the American West is an arid region. It has always been an arid region, we can't make the desert bloom with water that doesn't exist. We need to be more efficient in how we allocate those water supplies. And it seems to me in an urban area, the best way to conserve and most effective way is to reduce urban landscaping, which is the major component of urban water use.
You also write about water markets and making them better – for those who don’t know, what is the water market?
Water markets, that is, the voluntary transfer of water between water users, is more robust in some other Western states. Again Arizona and New Mexico come to mind. California somewhat surprisingly is behind the curve. We are in the dark ages compared to other states. Water markets are kind of anecdotal. There is not much of a statewide system. It is done at the local level, through individual transactions without much oversight and without much transparency. And I have concerns about all of those things.
I believe conceptually watermarks are a way to stretch scarce, finite water resources to make water use more efficient. I can, for example, allow farmers or ranchers to sell water to urban uses or commercial usage or factories in times of drought.
Farmers sometimes can make more money by farming water, than they can by farming crops.
There are efficiencies to be gained here.
The problem in my view is really one of transparency. The water markets are not publicly regulated, and some of the people who are engaging in water transactions like it that way, frankly, they want to operate under the radar.
In my opinion, water markets need to be overseen by a public entity rather than private or nonprofit entities. We need oversight and transparency, so that folks like you and myself can follow the markets to see who's selling water to whom, for what purpose, and make sure that those water transfers serve the public interests and not just the private interests.
There have been a number of stories in the New York Times and the Wall Street Journal and the Salt Lake City Tribune about efforts in some parts to privatize water transfer. Hedge fund managers are buying and selling water, as a means of profiting. And it strikes me that when you're talking about an essential public resource — and in California, it is embedded in the law that public water is an inherently public resource, that water is owned by the public and it can be used for private purposes, but it is an inherently public resource — the idea of commoditizing water through the private, opaque markets is very troublesome to me. I think it represents a very dangerous trend and one that needs to be corrected and avoided.
Why is California so behind?
There's no good reason for it. It's largely inexplicable that since the state was created on September 9th, 1860, we've been fighting over water. In the 19th century, it was miners versus farmers ranchers. In the 20th century, with the growth of urban communities, the evolution of California into one of the most populous states with 40 million Californians, it has been a struggle between urban and agricultural uses of water.
In the second half of the 20th century, there was a recognition that some component of water had to be left in streams to protect ecosystems, landscape, and wildlife, including the threatened and endangered wildlife. That suggestion has made agricultural users in California angry. You will see those signs that allude to the idea that food and farming are more important than environmental values. I don't happen to believe that's true. I believe both are critically important to our society. But the advocates for the environment have a proverbial seat at the water table. So that's another demand for water allocation that exists.
Do you maintain optimism?
Yes. I think it's human nature to look on the bright side. I try to do that through research scholarships and teaching. There are models for how we can do this better in the United States. Israel and Saudi Arabia and Singapore are far more efficient with their water policies and efforts. Australia went through a severe megadrought. They came out of it a few years ago, but they used that opportunity to dramatically reform their water allocation systems. That's an additional model. I think most people would agree in hindsight that their previous system was antiquated, and not able to meet the challenges of climate change and the growing water shortage in some parts of the world.
Here in the United States, we can learn from those efforts. There are also some ways to expand the water supply. Desalination for one. Again, Singapore and Saudi Arabia have led the world in terms of removing the salt content from ocean water and increasing water supply that way. In Carlsbad, California, north of San Diego, we have the biggest desalination plant in the United States right now, and that is currently satisfying a significant component of the San Diego metropolitan areas’ water needs. It's more expensive than other water supplies, but the technology is getting more refined, so the cost of desalinated water is coming down at a time when other water supplies, due to shortages and the workings of the free market are going up.
At some point, they're going to meet or get closer. Unlike some of my environmental colleagues, I think desalination is an important part of the equation.
In a proposal that came up in the recall election, one of the candidates was talking about how we just need to build a canal from the Mississippi River to California to take care of all our problems. That ignores political problems associated with that effort, as well as the massive infrastructure costs that would be required to build and maintain a major aqueduct for 2000 miles from the Mississippi to California. That's just not going to happen. Some of those pie in the sky thoughts of how we expand the water supply, I think, are unrealistic.
interviews
Into The Fold
by Will Reeves
January 31, 2020
This interview with Will Reeves, CEO of Fold App, was conducted and condensed by frank news.
frank | I’d like to talk about how you found yourself at Fold, and the idea of incentivizing people to use Bitcoin.
WR | I've been working in technology, specifically building payments and consumer facing products, for a while now. I've been a founder creating startups around different ways of transacting. My first one was a recurring payments platform to allow anyone to Amazon Prime their business, give certain perks to your subscribers. From there, I spent time building out the Google store, another great example of creating great checkouts and great content to support Google's answer to the Apple store. Then I moved on to building peer-to-peer marketplaces where people can exchange goods without middlemen. Whether that’s their car or a house – high value transactions that require quite a bit of trust, and right now there’s quite a bit of infrastructure to support those types of transactions. How can we do that in a way that brings it to a place between just two people in a way that keeps everyone safe and happy and secure?
My work has always been around building consumer products that introduce new ways of transacting. Whether it’s the idea that you pay for a service on a subscription on a recurring basis as opposed to one offs, or how do we do exchange in a peer-to-peer way as opposed to relying on middlemen, and how do we create new retail stores that are able to capture attention in a very crowded market.
I consider Fold a consumer first business. It's introducing new forms of payments and rewards to people that can give real benefits in people’s everyday lives. It just happens to be based a lot around Bitcoin. I've had an incredible history with this asset, learning about it, using it, seeing it being used in various circumstances that really point to the promise of it as a technology and a social phenomenon, and Fold is really all about accelerating that.
It’s about making it easier for more people to start learning about and start accumulating Bitcoin. The way we've chosen to do that is through rewards and payments. Everyone spends money every single day and there's an existing pattern of earning rewards for spending. We have taken that existing pattern and are introducing a new paradigm with a new asset, a new type of money to people in a way where they don't have to purchase it. They don't have to go through onerous KYC or go to an app that looks like a casino with money being made and lost, it’s a low commitment way to start learning about an asset which I believe can change the world.
You don’t even need a wallet to participate in Fold?
Our whole approach is to meet merchants and consumers where they are today. What do we know about consumers? They have a credit card or a debit card, which they spend with every single day. We have merchants that have existing POS systems, so Fold works in that reality and meets both consumers and merchants where they are today. With Fold, a consumer can download the app, load in their credit card or debit card, and they purchase credit at these retailers. Amazon, Uber, Starbucks – they might buy $50 worth of Starbucks credit that they spend down and earn 5% back in Bitcoin on that purchase. That Bitcoin is instantly deposited to their Fold account, which they can use on a future purchase or they can withdraw to a wallet. We are changing the whole idea of onboarding.
It used to be that to onboard into Bitcoin, you would need someone to, number one, go to an exchange where they can actually buy Bitcoin. They'd buy it, they'd go through the KYC, submit all their personal sensitive data, load a payment method, they would then buy some Bitcoin and then maybe get a wallet, set that up and then send that Bitcoin from that exchange to that wallet.
Fold changes the whole thing saying you don't need a wallet now. You don't need to buy Bitcoin now. You don't need an exchange. All you need is this app and you're going to be passively earning Bitcoin on every purchase. This gives Fold the opportunity to help people accumulate this asset, learn about it, and then when they're ready, we can suggest the right wallets that make it easy for them. We can help them use that Bitcoin to send it, to spend it, to save it – whatever pathway that user thinks is best for them.
Why are you so interested in promoting Bitcoin?
I think Bitcoin specifically is an unprecedented experiment that's happening in real time that I don't think many people understand the magnitude of.
The idea that no matter where you live or what you do, you can participate in an economic system where the rules are transparent and it cannot be manipulated by economic misfortunes of a certain country – really all of the problems that we've seen with mismanaged economies around the world. It is, in my opinion, an experiment that is very deserving of attention and focus. I want to do everything to help see this experiment through. However, I would say we're already at the point where this is looking a lot less like an experiment and more like an actual thing. An alternative system is starting to arise.
And why do I think that's great? Well I believe it gives individuals more freedom and ability to transact without censorship. I think it opens and makes our world a more connected place. It is more forgiving and open to people of all backgrounds, regardless of where they're from.
It’s hard for many people to wrap their heads around – both technologically and theoretically. Do you feel the barrier to entry is beatable?
I think on the macro level, Bitcoin is money. It can be sent to anybody, you can use it to buy things, you can put it away and, and use it as a savings just like the dollars in your savings account. Now, there are some differences – and that's because Bitcoin is the first successful native digital currency created. That requires new infrastructure, new wallets, new behaviors to arise to be able to make that money usable. What we're seeing right now is not a thing of insurmountable user experience challenges to get people to use Bitcoin. It's that we're actually building that infrastructure now. You can imagine the way you used to use your email back when that email provider first started.
You're catching it at the time where the infrastructure is just starting to be ready for mainstream audiences to start to use. At the same time the idea of Bitcoin is being more and more solidified in mainstream people's heads as something real. It's been around for 10 years, it was the highest performing asset over the last decade. It's having some incredible use cases that have proven out several different values for it. But, at the end of the day, it's just money.
Imagine building our current monetary system from scratch. You have to build the banks, you have to build ways for people to loan money, send money, receive money. Think about how you have to send money.
All those things take time to develop and come to fruition. The interesting thing is that Bitcoin is different enough from our existing types of money that you can't just take a carbon copy of what we have in today's world and adopt it for bitcoin. Bitcoin has some very different things about it that are really great, but the infrastructure still needs to be built for it. When I really look at this stuff, it's just about the time horizon, I’m confident that all of the UX problems and engineering issues will be solved. That's not a doubt in my mind. It's just going to take some time to do so.
Blockchain will be able to move as quickly as Visa or MasterCard. It could run that many transactions that fast.
Yes. You know, when we think about crypto or Bitcoin there's many ways people have decided to judge the success of it as an asset. Initially what it was created to be an alternative money that wasn't controlled by a government. It wasn’t created to have a transaction throughput as fast as Visa or MasterCard because that's not what Bitcoin is. Bitcoin is the fundamental underlying money, it’s more like the treasury system than Visa and MasterCard. What we're building now are the credit card networks and banks of Bitcoin.
You start to see how even our existing traditional system is just layers and layers of different structures and operations to eventually get to a Visa. Really Bitcoin is going through this evolution. It has the raw material at the base and now what you're seeing is the infrastructure built on top of it that you will begin to recognize. How to use it, to spend it, to save it, to earn it to, to earn interest on it – all that is what we're currently building on top of what is fundamentally just a new type of money.
Regardless of theme when we look to big new ideas that fundamentally change existing infrastructures, like solar or wind replacing coal and gas, there’s an idea that a) regulation stifles innovation and b) new is good – especially when replacing something suspect. Money is central to so much of our lives, what’s keeping crypto ‘good’, why do we think Bitcoin replacing Fiat currency is definitively good?
Technology is fundamentally amoral and apolitical. However, it can be used in ways that promote certain morals and politics. Anytime we are looking at a new technology, I think you have to start from that perspective. If it wins and does take over, it will produce a whole set of new challenges, new inequities, new benefits, and new opportunities. The only thing that's going to change and decide whether it goes one way or the other is the people who are building and using it every day, and what they build it for. We can kind of see how Bitcoin would work because we've actually had periods of time where we've seen the qualities of it.
Bitcoin is peer-to-peer cash and we've actually had peer-to-peer cash for a long time. It can be exchanged privately amongst individuals. It can be used for whatever purpose you want. We know what happens when you have that. But, physical cash is increasingly being eliminated as a form of currency. Across the world the use of physical cash is going down, and it seems that that trajectory shows no signs of stopping. Physical cash gives us certain freedoms and ability to transact with one another, and that freedom is potentially going away in favor of more closed controlled systems that have much more restrictions.
We know what that is like, we know the freedoms afforded by it and the problems afforded by it. Bitcoin is saying, okay, if we are outlawing physical cash, Bitcoin can preserve the fundamental qualities that we have been able to enjoy with physical cash. We can think of bitcoin as a brand new technology, but also as a new technology that is securing older freedoms; it’s not an unknown future. We know that Bitcoin, like cash, can be used for good and for bad – the funny thing is a lot of criticisms can be equally applied to U.S. dollars and so you start to think about it, we actually have a really good blueprint of how it will work.
What we don't have a good blueprint for is what if Bitcoin doesn't exist and physical cash goes away? All of a sudden we have ceded an entire area of rights and freedom of transaction to corporations and governments that have the ability to censor all activity. In my mind, not doing something, not supporting a project like Bitcoin, is in fact leading to an unknown world, that has negative impacts that we haven’t seen before.
Do you think Bitcoin will stabilize enough to be used every day?
Right now, Bitcoin is volatile because people don't know how to value it yet. Some people look at it as digital gold where you don't use it, some people do believe it can be used as a form of digital cash, others see it more like real estate. Others think Bitcoin could become the standard of a new global monetary system. All three of those things address different markets with very different capitalizations.
You have the real estate industry, you have gold, you have payments, all of those are very large industries. But even amongst those, there's a huge disparity. What we're seeing is people making bets about what bitcoin is. What market does it actually fill? Does it fill multiple of these markets? It could be all of the above, or it could just be one or two of those. The world is grappling with something fundamentally new and trying to categorize it. And, the way they're categorizing it guides their investment.
Do I think this is the new property investment? Would you invest differently than if you thought this was a new Visa or MasterCard. People are all doing this independently of each other. And what Bitcoin's price represents is the sum total of all of those individual decisions coming together at once.
Right.
You have people investing in it like it's a really great startup. If Bitcoin was a startup it would be the most profitable successful startup over the last 10 years. Over Uber, over all of that. Is it a new mechanism for investing? All of those bring different market caps that have different implications. We're not going to see stability until all of that is figured out.
To me, the idea that it's volatile is actually what generates the interest. That's what gets people involved. They see the ups and the downs, but the downs are always higher than the previous year. You start to get more and more people in it.
This is where Fold comes in – to accelerate this price discovery by bringing and applying a product that can attract millions of customers to start holding Bitcoin. They start to make their own decisions about what type of asset this is. Is it just a better reward? That's how Fold brings them in, but Fold also introduces it as a form of money and payment or savings so we get to inject a million new users who are going to help us figure out what the price should be and what their coins should be used for.
Outside of your work what makes you excited in this space?
If we can imagine building an imaginary house, Bitcoin is a solid concrete foundation and it does little else, maybe a little electrical wiring, but there's no light bulbs, there's no light switches – the doors are a little hard to get to. You have to climb a ladder into it and then go down a spiral staircase and then a door appears. That's how it is now. I'm looking forward to the foundations and the plumbing, the electrical, as Bitcoin continues to improve. That's everything from a protocol level about making sure the protocol is secure and improved to have better privacy or efficient transactions. But I am also looking forward to better doorways.
We're building the foundation, the plumbing, better doorways and staircases like the Fiat to Bitcoin on ramps and off ramps. Then we need better signs above the door. We need better reasons why you would even want to come in this house. And that's what Fold is about. A sign on the door saying, hey, you earn airline miles, you earn points, you earn cash back. We have a better reward for you now.
Not only can you spend it like cash back, not only can you send it to friends and family like cash back, but now this cash is increasing in value. It was the best performing asset over the last decade. It's going to, on the whole, appreciate and value, and you can do all these other things with it. We believe fundamentally Bitcoin is a better type of money. I'm very confident we can win the argument that Bitcoin is a better reward than what we currently have. That's how we're going to bring people in, put that sign up, earn Bitcoin the best performing asset of the last decade on every purchase. People are going to come in and start accumulating it and start adding their little piece to the house that we call Bitcoin.
Right.
Cashback is also about building an electorate. What I mean by an electorate is that regulations will come and go, and it will all be dependent on the people who are using it, and how they want to defend it. Fold is about building a constituency that holds it and sees the value of it in a way they can understand to defend it. Any work that you're doing with frank news, even this whole crypto month is helping us demystify it, educate people about it, and the more that that happens, the easier my job is at Fold and the closer we are to making sure we don't miss out on this opportunity, that I think is a once in a very long time opportunity. I don't want to screw this one up.
At least from the small amount of time I've spent looking at it, people feel really determined to make it different – the approach is entirely 360.
I hope so. It's one of the industries where you can look around at one point, be like, "Oh my God, who the hell am I bedfellows with?"
It really has an incredibly large tent of people that may not always see eye to eye. But Bitcoin is intended to essentially become the universal measuring stick of value. We have the metric system to universally measure distance and clocks to measure time, and Bitcoin can do the same thing but for value. Because people see it as an equal playing field that can be used for their own self interest, Bitcoin is welcoming to a very diverse community. And I think that's what makes Bitcoin so interesting and strange at the same time, Bitcoin is equally a technological and sociological innovation.