Economic Engines and Water Quality Protection

A headline caught my eye the other day....well, wait, before I go there, I should probably preface this by saying that I had the fortune, although at the time I thought it was the misfortune, to take 2 or 3 economics courses when I was in school.  My take away message from these classes was that the whole supply and demand thing is a sham.  The economy is not about providing what people want, it is about creating the want that makes people buy.  In my nutshell, the economy functions through incentives.  So back to what spurred this post. 

I was cruising news headlines in Oregon the other day and I came across one that piqued my interest:  "Rebates available for septic upgades."  Huh?  Well, I read the short bit (BTW, it was in the Bend Bulletin) and found that the county there wants to pay homeowners $3,750 to upgrade their septic systems to prevent groundwater contamination.  This sounds like a good thing to a person like me.  Some of the commons (public money) is being used to protect the commons (groundwater used for drinking water) and the public money is being directed straight at where the common resource is being threatened - the homes that are creating the pollution.  Simple.  I tend to think that the three thousand dollars will not cover the entire cost of the upgrade, but perhaps I think that because I like the idea of homeowners pitching in to help fix the problem as well - in any case the article didn't really say how much this was all going to cost. 

The article goes on to say that this rebate is part of a program to use money raised by developers to upgrade septic systems.  I read this as new development is paying to fix the pollution caused by old development.  Again, relatively simple.  The twist is that if developers can't somehow get homeowners to upgrade for the same $3,750 then they have to pay the county $7,500.  The $7,500 payments directly to the county go into a "financial assistance fund" which then can help people upgrade and the upgrades done by the homeowners prevent pollution and get checked off the list of homes needing upgrades.  I think the payment or upgrades somehow get the developers the right to build or some such thing.  I'll have to do more research if I want to understand this better in terms of the developers incentives. 

Meanwhile, I'm thinking about this scheme from the homeowner's perspective.  Right now, if I'm a homeowner, I've got a decent incentive (back to my intro) to upgrade.  Almost four thousand dollars is a healthy sum, especially if I'm faced with upgrading something that I really don't want to have to deal with.  What the county there has on the books will benefit about 80 homeowners.  I can't tell from the article what the total number of homeowners is that needs to upgrade but if it is even 500 homes, the county's funds are drop in the bucket.  The $7,500 payments from developers are intended to pump more cash into the process and generate more prevention of pollution.  Again, all this makes sense.  What I don't understand is the county commissioners wanting to lower the price paid by developers to $3,750 and thinking that will replenish their fund.   Who are the commissioners trying to help?  The developers, the homeowners, the drinking water supply?  It's pretty clear in the article that for the few upgrades the developers were able to purchase before the market crashed, the developers paid half the price they would have to pay the county.  If the county's price suddenly lowers, why would a developer pay more than half that new price?  There's no incentive for them to pay more.  If it were me, as a person concerned about water, how would I keep my eye on the prize?  I would keep the homeowner incentive as high as possible.  If I were a county commissioner that was stumping for re-election?  Again, I would keep the homeowner incentive as high as possible!  If I were somehow beholden to the development community?  Hmmmm.  I suppose someone would say that the developers are at the heart of a vibrant economy.   In response to that I say, have you  looked out the window lately?  The developers are not holding the cards right now, the buyers are.

Anyway, as a study in how the market can affect water resources, this is an interesting situation and I will have to do more learning to understand what's going on.  But on first glance, this is a situation where I would have to be a thorn in the side of the county commissioners and say, keep your eye on the prize and do what's right by the water and the homeowners.