Sustainable economics: A view through Colorado water.

Author:Binnings, Tom

ECONOMICS TENDS TO FLUCTUATE WITH the different "seasons" of the business cycle. More attention should be placed on longer lifecycles that take us from birth to growth to maturity to decline and eventually death over decades and centuries. The challenge in the long term is to discover regenerative opportunities to promote our intergenerational economic health and wellbeing.

This is where sustainable economics comes in. Most pundits of sustainability reference the triple bottom-line where we find balance between the realms of economics, environment and social justice. The perspective is that persistent growth is a fallacy if we destroy the environment or fail to sustain the standards of living achieved. On the political side, while capitalism and free markets may reward success, such structure can concentrate economic power thereby hindering democracy or some sense of reasonable wealth distribution.


Looking at Colorado water, our state's scarcest resource, provides a good example of sustainable economics. Resource abundance results in common goods where there is no problem sharing. We all just take a bit from the commons. But, as scarcity emerges, so do new ethics and laws. Originally, miners and farmers agreed the first to use water in a given place had senior rights, which continued as long as they made beneficial use of the water. This was identical to mining claims--work the claim or lose it. It gave birth to the law of prior appropriation.

As Colorado's economy moved to urban centers, first-in-time water rights were purchased and sold on the market. This is critical for economic growth, as it allows a resource to migrate to whomever values it the most. Urban economies generate more wealth, income, and jobs per acre foot of water use than agriculture and other uses, so it was a good market outcome that water be reallocated to urban areas. Much of the reallocated water has moved from west of the Continental Divide, where 70 percent of precipitation falls, to the Front Range, which accounts for more than 80 percent of the state's economy. Despite population growth from 800,000 people in 1910 to more than 5 million today, just under 90 percent of the state's water is still withdrawn and 56 percent consumed for agricultural purposes as compared to 7 percent for urban use.

Colorado's population will continue to grow, and water dynamics are shifting throughout the Colorado River Basin...

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