How SNWA Tries to ‘Soak’ Taxpayers
Pretend for a moment that you operate a golf course in Clark County. To irrigate that course, you need water, and you have two choices about how to obtain it.
One choice is to buy ordinary tap water, suitable for drinking. It will cost you about $2 per 1,000 gallons, which reflects filtering and chlorinating costs, as well as those of pumping it from Lake Mead to your golf course.
Your other choice is to buy recycled water, which is suitable for irrigation but does not meet drinking water standards. As a bonus, this recycled water contains nitrogen and phosphorous, both of which are good fertilizers. Best of all, the recycled water will cost you only 20 to 40 cents per 1,000 gallons, one-fifth or less of the drinking water cost.
Which water do you choose? The answer is, of course, obvious.
Obvious, that is, unless you’re Patricia Mulroy, who heads both the Las Vegas Valley Water District and the Southern Nevada Water Authority, and who is currently seeking to add Nevada Power Company to her public utility empire.
In December, 1997, over Mulroy’s strenuous objections, the Las Vegas City Council approved a 50-year contract to sell recycled water to three golf courses in the southeast part of the Las Vegas Valley. The deal made sense not only to the owners of the golf course, but also to city officials, who pointed out that they would save $300,000 annually by not having to treat this wastewater, and in addition would collect $400,000 per year in revenue from the golf courses.
So why would Mulroy object to such a financially and environmentally beneficial arrangement? Her two principal arguments were (1) that the price was too low and might encourage waste, and 2) the deal might reduce Southern Nevada’s allocation of water from the Colorado River.
It is rather humorous to imagine Mulroy worrying about wasting wastewater. But humor aside, her first argument makes no sense. Faced with an annual water bill in six figures (Mulroy would prefer seven), what incentive would golf course owners have to waste any of it? On the contrary, modern golf courses invest heavily in computerized irrigation systems, and employ professional turf and irrigation specialists to see that they don’t have to pay for more water than they need.
Her second argument is a classic example of convoluted bureaucratic logic. According to Mulroy, the federal government allocates credits to Southern Nevada for water that it returns to Lake Mead. These credits can then be used to increase its share of Colorado River water, which it obtains from Lake Mead.
In real terms, what it comes down to is this. Pat Mulroy wishes to force golf course owners to irrigate their turf with expensive drinking water, so that her people will have additional wastewater to dump into Lake Mead. This will increase Southern Nevada’s water allocation, which in turn will allow Mulroy’s water utility to receive and expensively process more drinking water, which will then be sent to golf courses to be used for irrigation.
Everyone loses but Mulroy. The golf course owners have to pay five to ten times more for water that’s less suitable for irrigation (and pass that cost on in the form of higher golf fees). The City of Las Vegas has to spend an extra $300,000 to treat its surplus wastewater, while losing $400,000 in revenue from the golf courses. Lake Mead gets further polluted from wastewater that could have been used to irrigate the golf courses.
But Mulroy is rewarded with her higher allocation of Colorado River water, and increases revenue for the Water District by keeping her employees busy producing additional expensive drinking water that no one will ever drink.
It might be argued that Pat Mulroy cannot be held responsible for the nonsensical federal water allocation rules. But not only did Pat Mulroy not protest this assault on economic sanity, she actively sought to take advantage of the perverse incentives that it created. (And if Mulroy did have a hand in creating this monstrosity, what does this say about her judgment?)
The significance of this golf course irrigation episode is twofold. It demonstrates once more that Mulroy inhabits a bureaucratic fantasyland, where the rules of economics and common sense do not apply. And it is a disturbing example of the type of thinking and decision making we can expect from Mulroy if she succeeds in forcing Nevada Power Company to hand her the reins of power.
Steven B. Miller is policy director for the Nevada Policy Research Institute