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
Buyer Beware: Student Debt
by Julia Barnard
September 6, 2020
This interview with Julia Barnard, a researcher at the Center for Responsible Lending focusing on student lending and debt collection, was conducted and condensed by franknews.
Julia | At the Center for Responsible Lending, we fight predatory lending in all of its forms. I think the form of predatory lending most familiar to people is payday loans, which we certainly fight - and we also advocate for fairness around other debt products such as mortgages, student loan debt, and more. My work focuses on student loan debt repayment and canceling student loan debt.
frank | How did we get here?
Unfortunately, higher education today exacerbates and reinforces inequality and the racial wealth gap. It is important to acknowledge that higher education in the U.S. has never been “the great equalizer” due to systemic racism. Historically-black colleges and universities (HBCUs), for example, have been chronically and profoundly underfunded and underappreciated. These problems are still with us. Now, student loan debt also plays a major role in undermining some of the benefits of higher education.
In the past, federal and state commitments provided more funding and support to public institutions than they do today. This public support has been going on for decades but accelerated after the Great Recession. As states have pulled back on their budgets, institutions made up losses by charging higher tuition, and most students and families pay for this higher tuition by taking on some student loan debt.
Federal grant sources such as the Pell Grant also haven’t kept up with inflation. So, it has simply been a policy failure at all levels. We fear that the COVID-19 pandemic could also exacerbate and accelerate these trends.
It seems odd to me that student loans are the only loans you cannot discharge. Why is that the case?
A change in 2005 excluded private student loans from being discharged in bankruptcy. Federal student loans, which comprise about 90% of student loans, have a bit of a different situation.
This report explains that “a debtor can only overcome that presumption by proving that they would suffer undue hardship if the loans were not discharged,” and that has typically been an extremely difficult thing to prove in court.
However, courts are beginning to push back on this and some jurisdictions are starting to allow more bankruptcies to go through. We may even see the Supreme Court weigh in at some point on this issue. And there are other forms of discharge outside of bankruptcy that are available, namely Total and Permanent Disability Discharge (TPD), Public Service Loan Forgiveness (PSLF), and Closed School Discharge.
At the Center for Responsible Lending, we want to restore bankruptcy and a statute of limitations on the collection of defaulted student loan debt. And of course, we are working to protect existing options for discharge. We don’t want people who took out a loan as a 20-year-old to have their Social Security garnished as an adult because they haven’t been able to afford their loan payments.
When did the government take over as the primary lender of student loans?
It’s a long story. The short version is that student loans began in earnest with the Higher Education Act in 1965, which had the stated goal of expanding access to higher education. In that program (called the Federal Family Education Loan program, or FFEL), the federal government guaranteed loans that were made by private banks or nonprofit lenders. The accounting for such an arrangement was complicated and made it difficult to estimate and plan for costs over time, and in some ways, it was more simple for the federal government to lend directly to students for this reason. Others pointed out that the government spent a lot on subsidies to private lenders under the program and that guaranteed lending was more expensive than direct lending. So, direct lending began in 1992 as a pilot program but became the only type of federal student lending in 2010 with the Health Care and Education Reconciliation Act (which eliminated the FFEL program) after the Great Recession exposed the weaknesses in private credit markets. It saved over $65 billion, and the savings were used to increase the Pell Grant.
So, if there must be student debt, the fact that it is held by the federal government instead of private banks is not a concern for us. In fact, we actually think that's better because the government is meant to provide for the public good and we don't believe that there should be a profit motive associated with student loan debt. As we can see in some private loan products today, a profit motive can lead a banker to refuse a loan or charge a higher rate to a teacher or a social worker, and can even lock out certain borrowers who are not seen as creditworthy because of race, gender, or family background. Additionally, income share agreements(ISAs) and other private student loan products generally have worse terms. They don't have the same protections during repayment, such as income-driven repayment, that federal loans have.
Why do student loans matter?
Education is supposed to lead to higher wages and better life outcomes overall, but student debt threatens to undermine that possibility for millions of borrowers. It's one of many issues that feed into widespread financial insecurity in the US.
Since it's a relatively new shift towards this increase in borrowing, how do you see student loan debt affecting millennials?
The research on that is really bleak. Anecdotally, I'm sure we've all heard stories of people not having children, not buying houses, not going back to graduate school, or not starting a small business. I've done a lot of interviews with borrowers on the subject of student loans, and the thing that sticks out to me the most is the mental health impact. People report a lot of stress. The research is bleak, and the anecdotes can also be bleak.
It would give people the freedom to pursue the opportunities that they want to pursue. That's the most important thing, in my opinion.
The opportunity to engage in life-affirming activities is so depressing.
It's a bleak landscape. We know that student loans can be a real and profound burden for many borrowers. It is also causing a drag on the entire economy because it depresses spending. Freeing up the dollars is actually going to pump life into the economy in a time when we actually really need it. And I think that's true prior to COVID, and is it more true now.
How has COVID shifted the conversation?
We know that the American economy has really not been working for many people for many years and that student debt burdens were already unmanageable for the majority of borrowers.
COVID has only exacerbated the financial crisis that families, especially families of color, were already in, and it has also pushed millions of other families into dire financial circumstances.
The conversation has come so far in a year - it has really been incredible to see. Joe Biden’s plan includes $10,000 in cancellation for some borrowers. The HEROES Act included $10,000 dollars in cancellation for some student borrowers - and others have even proposed canceling higher dollar amounts. And while that conversation is still ongoing, the political support for cancellation has grown incredibly in a year's time.
We have been polling the question, “Do you support reducing student loan debt by $20,000 for all borrowers?” And in a recent state poll in Pennsylvania we found 81% support among student borrowers. In another national poll of adults, not just those with student loan debt, we also found strong support for the policy.
Is that between both Republicans and Democrats?
We have Democrat and Republican numbers. There is net support in both parties, so more people support it than oppose it. In the Pennsylvania poll I mentioned, 68% of Republican student loan borrowers support reducing student loan debt. Even prior to COVID people of all political persuasions have been feeling economic, financial pressure.
I think people are hurting. And canceling debt is a pretty common-sense solution.
What is the legal authority that would allow the government to cancel student debt?
The type of legal authority that allows you to cancel debt is a really exciting policy conversation today. Congress can pass a law and cancel student debt and the legal mechanism is fairly straightforward. It is slightly more complicated for the President or their administration to do so. One example of this is President Trump's executive order, which extends the payment moratorium on student loans until the end of the year, as basically an extension of the CARES Act payment moratorium. This executive order used Settlement and Compromise Authority, which is just a specific type of authority that the Department of Education has. This could provide a blueprint going forward for how a President can suspend payments or interest using the power of the executive branch.
Is this financially feasible?
How can you quantify the benefits of education for our society and the tragedy of low-income students forgoing higher education because of the cost? It’s really a dream deferred for many people, which is impossible to shrink into an economic analysis.
However, there are economic analyses that also make the point that fully canceling student debt would release money into the economy through increased spending in the amount of around $100 billion per year over a 10-year period. The report I’m referring to also predicted increased employment as a result of total student loan cancellation.
I think when people think that this is not feasible, they are thinking that it is going to cost more than it actually costs. It’s kind of counterintuitive to most people, but over half of the debt in default is under $10,000. Anecdotally, most people think about a student borrower as a very highly paid professional with a mountain of debt, a medical student for example, but that's not actually the reality. For example, we are advocating for at least $20,000 of debt cancellation. That forgives the debt of 60% of student loan borrowers.
It is interesting to hear you say that we have such a misconception about what the reality of student debt looks like. Why do you think that is?
Right. So again, intuitively most people wouldn't think that relatively low student debt burdens like $5,000 would be the hardest amount to repay but, in fact, the students who have that amount of debt typically are students who started college but did not graduate. In those cases, the students aren’t really provided with any wage increase as a result of their education and so the loan burdens are often really unmanageable.
The stories you hear about people with $200,000 worth of debt are actually not representative at all. And the median student loan payment, in reality, is just over $200 a month. The problem with that language is that it diminishes the real burden that we know that $200 a month imposes on many people. For example, we know that only about one in three borrowers is actually successful in paying down even $1 of the principal of their loans over time. The other two in three borrowers are either not able to pay at all or are not paying enough to cover both interest and principal and so they are, in effect, just treading water.
The idea that 17, 18, 19-year-old people are taking out these loans as predatory in itself to me. You have no idea what it means to try and accumulate wealth or what it means to save or what the choke-hold of what debt really feels like.
And that sentiment also relates back to the policy conversation around “buyer beware”, which is the mindset that a lot of current policies are centered around. It means that it’s on the student to select the institution, and if the student selects an institution that's fraudulent, then that's really too bad. They didn’t do their research.
Whereas, we think that the federal government should have guardrails. They should signal to buyers that there are some investments that are bad. If an institution has been found to be fraudulent, that institution should no longer be doing business, and the federal government should not imply that that institution has a stamp of approval by giving you a student loan for that institution.
One disclosure mechanism that has been at the forefront recently is called the College Scorecard. It is considered to be the information source that students will consult when making their college decision. And it has things like the cohort default rate, which is how many students in a given graduating class have defaulted on their loans, how many people graduate, and data points like that. That's the information source that you consult before picking the school, according to the federal government.
Do you think the political will to embrace debt relief requires a larger cultural change?
The New Deal and the GI Bill were meant to provide access to a college education at low or no cost - though we know that these programs did not provide benefits for all students, they excluded students of color, particularly Black students. The Pell Grant has also been a critical source of grant aid for generations of students.
We need to correct our past mistakes while also holding on to the shared belief that education should be, and is for many, a way to access a good job, a fair wage, expand your horizons, and become a better citizen. It should not be the source of financial pain for a serious portion of a person’s adult life. And it also should not be the only way for a person to access a fair wage, but that is for another conversation.