Cisterns

The Next Idea 

for Economic Growth in New Mexico

In MeanMesa's previous posts about growing a demand economy in New Mexico we have focused our attention on the local manufacture of affordable, efficient, insulating windows.  In those posts a few fundamentals were repeatedly emphasized -- most notably, the idea of economic growth based on local demand.

The subject of this post continues with that central theme.  While the previous posts focused on conserving natural gas which is being wasted by inefficient windows, this post will focus on another commodity which impacts the monthly budgets of most New Mexicans:  water.

There is a very persuasive "cluster" of non-controversial issues surrounding this particular demand economy target.  When the monthly costs for water usage are reduced, discretionary consumer wealth -- in this case, the money left after paying the monthly bills -- will increase.  Expansion of the local demand economy is, of course, tied directly to how much money New Mexicans have in their pockets.

Making headway on monthly residential water bills can mean "freeing up" more money to drive the domestic demand economy.

Some Propositions in the "Cluster"

1. The general drought pattern for the State along with new concentrations of the population have increased the cost of residential water service.  This situation can probably be expected to not only continue, but grow even more severe as gradual climate change impacts historical weather conditions -- especially annual precipitation levels.

2.  Infrastructure improvements have eased Albuquerque's water supply problems, but now, the State of New Mexico is facing a lawsuit from Texas water users over the amount of water being diverted by the successful San Juan-Chalma drinking water project.

3.  The cost of water prevents other potential areas of economic growth which could have been possible with lower water costs.  One particular example of this is the encouragement of residential vegetable gardening.  This may seem to be a rather indulgent, flippant, urban idea, but the State of New Mexico has vast areas where it is simply not possible to purchase fresh vegetables.   

The cost of mitigating the effects of the subsequent wide spread malnutrition is currently draining State resources, inhibiting growth of discretionary spending -- especially in rural areas -- and limiting the growth of a local demand economy.  Of course there are health and developmental problems, but these are not the sole costs.  With very little imagination we can add the additional costs of substance abuse, incarceration, systemic depression, obesity, unwanted pregnancy and many others -- all indirectly connected with fundamental problems of nutrition.

The cost of water also impacts possibilities for direct economic development.  Local companies might have started if water costs had been lower.

4.  The allocation of State and County resources has, so far, completely avoided increases in water use efficiency and decreased costs which would be made possible by adopting the "two tiered" system.  "Tier One" would be for potable water used for drinking and residential home use while "Tier Two" water would be used for all the other water demands.

If this were to become the "new normal" for New Mexico's urban water use, the current demand volume and the current costs of water purification would be reduced considerably.  Implementing such a plan would not be "rocket science," but it would require a legislative commitment we haven't seen in the Round House.

Reducing the costs of day to day water purification and delaying or completely avoiding bond funded infrastructure additions to the water supply system would provide lower monthly costs to hundreds of thousands of New Mexico families, increased discretionary spending capacity and, of course, creating new, beneficial conditions which would be moving us toward our demand economy.

5. Our history isn't helping.  Years ago, New Mexico's local oligarchs -- perhaps a 19th Century version of our modern ALEC parasites -- handed a crippling gift of water rights to their friends in Texas.  The law suit mentioned above is one of the unfortunate consequences, but there are others.  The point here is that any rain water which lands in New Mexico belongs to New Mexico -- until it gets to the Rio Grande River.  Bear this in mind as we continue with this post.

[This suggests that a future posting at MeanMesa should cover the aquifer rehabilitation and replenishment project which proposes the re-injection of solar distilled, surficial run off into our diminishing local aquifer.]

We should also spend just one more moment reviewing a few of the common metrics for water supplies.

The size of reservoirs which are included in most "big picture" water projects are measured by the retained water in acre feet.  An acre is generally an area measure, and we can visualize an acre as a square with sides of 208.72 feet.  When this metric is applied to the amount of water which can, for example, be held behind a dam, it refers to a volume of water with a surface area of one acre and a depth of one foot.  This volume is called "one acre foot" of water and is equal to roughly 326,000 gallons of water.

To bring this home to New Mexico, we can look at the Elephant Butte reservoir as a near by example.  Surface water from around 30,000 square miles of land upstream from the reservoir drains into Elephant Butte.  When the reservoir there is filled, it contains around 2,000,000 [2 Mn] acre feet of water.

Without delving into the confounding numbers which describe the subsurface aquifer which still supplies Albuquerque with much of its potable water, let's just say that 1. that aquifer is being replenished at about half the rate at which it is being depleted, and 2. while some of the local rain fall seeps down to refill this aquifer, most of the surface flow which lands on Albuquerque when it rains drains into the Rio Grande River and flows on to San Antonio, Texas, and points beyond.

By the time the Rio Grande reaches the border of Mexico, one can literally step across it without getting one's shoes wet on most days.  The drought conditions which have visited the region for the past few years haven't helped.

Now that we've covered a few fundamentals, let's get to some solutions.  How can this present situation be transformed into something else which might support a demand economy while also solving some of these other problems at the same time?

 Making "Demand Economy Lemonade"

From the Water Shortage

Even though Albuquerque has taken steps to mitigate this problem -- water conservation policies and the San Juan-Chalma project, for example -- the monthly cost of water service has not only steadily increased but will continue to increase.

For this posting, the important aspect of this is simple.  The more money that residential customers pay for their monthly water bill, the less discretionary income they have left to spend, that is, the less purchasing power is left to drive a local demand economy.

 

Just as reduced heating bills resulting from the Windows Project can fuel a local demand economy by lowering monthly costs and increasing the purchasing power of New Mexicans, a similar reduction in water costs can add similar benefits to the local demand economy.

[Read MeanMesa posts about the Windows Project here:

Supply and Demand in the High Desert

New Mexico - Getting Serious About Economic Growth

New Mexico Windows and the New Mexico Legislature

On the Ground! The NM Windows Project ]

The structure of these programs would be the same.  In fact, much of the administrative costs for this suggestion can be integrated into the corresponding costs of the Windows Project.  Let's look at the details.

The New Mexico Residential Cistern Project

The over all idea is quite simple.  New Mexicans capture rain fall before it enters into the "water rights" problem when it becomes part of the Rio Grande River.  This is accomplished by the area wide installation of residential rain water cisterns.  The rain water collected in these can replace the far more expensive potable water currently used for all sorts of purposes -- everything from washing machines, lawn irrigation, car washing and, importantly, residential gardens.

While the example being cited here is primarily directed at the urban  Albuquerque area, the applicability of this idea extends quite readily to the most rural areas of our state, too. The wide spread introduction of "cistern reservoirs" can make the biggest impact on those areas where the water supply is already currently stressed.

The cisterns are designed to be low cost, durable and easily installed.  The design task is well suited for New Mexico's state universities.  Much like the design of the insulating windows, the cistern design could be presented as a contest rewarding the winning idea with a special scholarship.

The cisterns would be manufactured in state in a facility staffed with New Mexicans and initially subsidized by state money.  The cistern manufacturing workers can be trained in the same facility where the window manufacturing labor is trained.  This would be a "common sense" alternative to the complicated -- and suspiciously expensive -- "job training" expenditures currently being backed by the Governor and her ALEC cronies in the Round House.

Home owners across the state -- importantly including those with rental properties of all sizes -- could apply for a State guarantee on loans to purchase and install the cisterns.  These loan applications could be handled administratively by the same staff resources which handle the similar loans for efficient window purchase and installation.

The cistern design should include a variety of accessories tailored to fit individual residential installations.  For example, a low cost electric pump or a manual pump sized to meet the planned usage of the rain water should clearly be included.  Likewise, rain guttering and down spout materials should be available along with the cisterns as a necessary part of the installation and a part covered in the loan amount.

It would probably be best if all the cisterns were manufactured in one size.  Applications requiring a larger reservoir capacity would be handled by multiple cisterns rather than unworkably larger versions.  Cisterns could be installed below ground or on the surface, depending on the site application.

A reasonable design criteria would provide the complete cistern purchase and installation for less than $1,000.  This would include transportation.  For rural applications, transportation costs could be mitigated by "group installations" where a single truck could deliver multiple cisterns while also carrying whatever equipment and labor which might be required for the installations.

A rough estimate of a possible cistern size would be around 3 feet in diameter with a height of around six or seven feet.  Although corrugated, galvanized culvert tubing would be one option, there are almost certainly lighter weight, less expensive alternative in PVC or other material.  A simple particle screen filter, a wood cover and standard hardware to insert drain hubs and hose bibs would complete the "package."

Cistern Economics

Although 10,000 cistern installations filled with rain water would amount to only a couple of acre feet of water saved, the actual economy of such a project would only be just beginning. Naturally, we would want to assume that the cisterns would be filled numerous times throughout a year of service.

Right away we can add more cost savings -- from not having to treat the cistern water, maintain potable water piping, or operate a water utility with the inevitable administrative costs such as billing and so on.  Before too long, all these savings would begin to manifest themselves as they gradually accumulated in lower monthly expenses and increased discretionary income for New Mexicans.

Next, we come to jobs.

At the on set, we will not only be hiring workers to manufacture the cisterns but also workers to build and maintain the facility, operate the warehouse and handle the business aspects of the new industry, including the sales and financing mentioned above.  Naturally, the project will involve significant trucking to move manufacturing materials to the site, too.  

Once our New Mexico cistern pant is producing cisterns and selling them to other New Mexicans [remember...a local demand economy], a good number of installation crews will be needed. These cistern installers will need to be trained, managed and paid.

The project will need trucks to transport cisterns, installation crews and equipment to installation sites, too.  Every one of those crews will require insurance, on site management and so on.

At the bottom line the New Mexico economy will not only be receiving the consumption of the money saved from lower monthly water bills, but it will also be receiving the purchasing power of all these pay checks every month. Further, the property tax increases needed to finance large water supply infrastructure costs may well also be reduced over time.

The Governor has just allocated another $10,000,000 dollars worth of state money for "job training."  [Read the MeanMesa post on this subject: NM Jobs: It's Not Working! Do It Some More! ]

Is any of this giving anyone any ideas?

Supply and Demand in the High Desert

Just a Bit About

 Supply and Demand Economies

Because this post is one of a series of ideas about the development of New Mexico's state economy, we will need to set a few "landmarks" right away.

Both the State of New Mexico and the City of Albuquerque have folks with the words "economic development" in their titles.  Bernalillo County may even have someone charged with "watching over" economic development.

Further, these efforts by local and state governments have initiated all manner of "economic development" proposals, spent plenty of public money, made a few well connected folks -- not all New Mexicans -- rich and ultimately delivered New Mexico to its questionable notoriety as the "poorest state in the United States."

The idea here is that there is clearly something fundamentally wrong with the approach we have taken.

 Given the incredible amount of money we have spent on "economic development," New Mexico should be literally crawling with success stories.  If we were looking for those successes, we would need go no further than spotting pockets of new jobs the "economic development" had created around our state.

New jobs.  There should, by this time, be lots of new jobs -- all made possible by the money we've spent for "economic development."

Now, instead of seeing all manner of new jobs around the state, we are left with a little more than the $1.3 Bn dollars -- per year -- which has been spent on "economic development."  This pile of public money has been transferred to the "economic developers" via a variety of channels.  Most notable are:

1. tax expenditures -- occurring when the taxes on the "start up" businesses organized for "economic development" have been temporarily "forgiven,"

and


2. infrastructure "give aways" -- occurring when roads, sewers, water supplies and the like have been provided as incentives to the businesses lured here by the "economic development."

There are, undoubtedly, others as well.

A few brave souls in the Round House actually asked Governor Martinez for an accounting of both the costs and results -- that is, the jobs created -- by these "economic development" expenditures.  The Governor's response was predictable.  She decided that the "accounting" would have to be conducted by staff in her office and not by the state's governmental accountability legislators.

[You can read about the Governor's "tax expenditure bait and switch" on a MeanMesa post: http://www.meanmesa.com/2012/07/recall-martinez.html ]

MeanMesa assumes that this "accounting task" will ultimately be contracted to an "accounting" firm in Texas because the "expertise" cannot be found here in New Mexico.  This has been the almost unalterable pattern for such matters so far.  It "solves" a lot of problems for the Governor.

However, it doesn't solve many problems for the citizens of New Mexico -- still the poorest state in the union.

A "Demand Economy:"

 One for Growth in New Mexico

MeanMesa's main criticism of the types of "economic development" we've tried here so far are not rocket science.  Naturally, with more than a billion dollars per year being spent with such bad results, the first criticism is that our current policy is both expensive and not very effective.  But even this leaves a few other issues which are also worthy of consideration.

1. A "demand economy" is not called that because everyone goes to the streets demanding something or other.  A demand economy is one which helps sustain itself because there is a demand for things being produced in that economy.

The components are simple.  On one side, there must be something produced which is "in demand" for consumption here in the state.  On the other hand, state citizens must have a chance to put enough money into their pockets to purchase whatever that is.

Not many New Mexicans can afford a personal jet, expensive German solar panels or equally expensive computer gear -- even if these products were made in New Mexico.

If the citizens are able to work to produce that "something," they may very well have money to spend to purchase it if it is, indeed, something they want or need.  Further, the state government -- if it can ever slip away from ALEC long enough -- can play a part in both the production and the "money in the pocket" [disposable income] parts of the plan.

2. The current programs have, actually, created some jobs, but not all that many.  However, the skilled machinists working in a solar panel factory or assembling private jets probably already had jobs before their current employer was "enticed" into New Mexico with "economic development" incentives.  Getting jobs for this type of New Mexicans has never been too difficult.

However, once we move beyond this population of skilled workers to the types of folks who are more common here, the "economic development" plans start to fizzle right away.  In fact, some "economic development" programs in recent years were based on the idea that all sorts of really skilled workers were here, not working and available at really low wages.

Predictably, these have not turned out "roses, simply roses."

3. The "economic development" plans have all touted themselves as "job creation" schemes while the funding for their respective incentives was being put together in Santa Fe or City Hall.  The projects which have been successful have put New Mexicans to work, but there has never been one of these plans which even offered the prospect of putting lots of New Mexicans to work.

Because we are the poorest state in the union, a few good paying jobs are always welcome, but our real problem isn't going to start being solved until we begin "job creation" on a much more massive scale.  Here, MeanMesa is proposing thousands of new jobs, not dozens.

Immediately we face the next dilemma.  There are just not many businesses roaming around the country looking for a state with thousands of unskilled, unemployed laborers.  Our "economic development" guys can look high and low for that kind of company to "entice" into investing in New Mexico, but the odds are not good.

In fact the odds are not good at all.  These days there is an abundant supply of unemployed workers everywhere.  Thanks to the Great Republican Recession of 2008, all those unemployed workers are now desperate.  They will all work for low wages and no benefits in crappy conditions.

New Mexico doesn't offer any particular advantage to this other than possibly even lower wages.

4.  These imported "job creation" businesses do not arrive alone.  Whenever one of these incentive laden "move to New Mexico" schemes unfolds, that company arriving to set up shop brings with it a demand -- a market for whatever it intends to produce here.

A demand.

A market.

Customers.

If there are two salient features of the failures of these imported companies, one is that, upon closer examination, there really wasn't the labor skill here that the business plan called for, and the other is that the, generally, out of state demand and  markets for the imported companies' products faltered.  The latter happens all the time in a national economy like this one.

At this juncture the "economic development" incentives face the same devaluing as the new car experiences when it's driven off the lot.  The road that was built with public money to the now empty building sitting on land made available as an incentive now goes no where.  The public school a mile closer to town -- the one which could have used that new road itself -- is still not getting the property tax money which was thrown in to "sweeten the pot" while the imported company was being wooed there.

The day after all this settles, New Mexico has successfully invested public incentive money in a road that goes to a plant that has been abandoned.  All that's left is for the "economic development" folks to patch together enough excuses to "explain" what happened to the Round House.

A Quick Glimpse at "Supply Economics"

Just for comparison

The idea of the supply economy hatched from its egg most recently during the Reagan administration.  It also "hatched" during a time when the national economy was doing much better than it is now.  The "hatchling" has received loving care every day since Reagan laid the groundwork for the conversion of the US economy into a "supply side" paradise.

The "supply side" idea is based on policies which lower production costs for consumer purchases which, more or less, remain constant through the changes. The increased profits which result from these lower costs of production flow to those who have managed to lower the costs.  The idea that levels of discretionary income remain constant -- even though consumers are now either earning less or nothing by working to produce the consumer goods they are consuming -- lasted for a while.

However, the intrinsic wealth "surplus" which existed in the country during the Reagan era was gradually depleted to maintain consumer purchasing power. That "wealth" was no longer being replenished by pay checks from working at the manufacture of those goods.  Profits remained high for what was still being sold, but the constantly diminishing purchasing power of consumer -- the constantly diminishing demand -- inevitably resulted in fewer and fewer sales and caused an economic contraction.

The rate of "economic contraction" at the end of the Bush W. autocracy was 9.6%.  The 2008 annual rate of GDP growth was

-9.6%.

Of course, the interim solution to this economic contraction was an expansion of credit access for consumers.  Consumers, still plagued by the habit of consuming at the same rate as when things were better, found that they could borrow money to sustain their standard of living.

This development was reckless when it first began, but when the scam ultimately fell completely apart, "reckless" became way too optimistic a term to describe what came next.

Way, way, way too optimistic.

"Supply Side" Policies in New Mexico's
"Economic Development"

Being strangled by 1960.

The "economic development" plans which have been implemented in New Mexico have almost all had rather unimaginative "supply side" underpinnings, and, consequently, also very predictable, very shallow, negative "supply side" results.  We can lay plenty of blame on the "economic development" folks for proposing such a moribund collection of failed efforts -- at the very time the same policies were "growing horns" in the national economy.

It's almost as if someone had prevented every one of them from reading a news paper or a junior high school economics text any newer than the 1960's.  The world hadn't ever even seen anything like this then. This series of failures, each one lubricated by too much state money, was literally strewing mounds of abandoned "development" residue all over the state.

The central "incentive" for out of state businesses to come here has, aside from the "economic development" checks, of course, a proffered opportunity to increase profits by reducing costs -- especially labor.  The problem has been that there has not been a "demand" incentive. The "demands," customers and "markets" have consistently been located elsewhere.

The quality of the businesses attracted here has been, further, strangely associated with  very fickle demands, customers and markets.

All this may not sound all that bad, but there is, unavoidably, a darkly "stained streak" running through each one of these "economic development" projects. 

If there were to a "metric" by which the success of these proposals might be evaluated, it would consistently be the increased or decreased profitability which resulted from the move here.  The point is that if business profits increased because of a relocation to New Mexico, those would be a "supply side" success, and those increases would be attributable to decreased expenses of production.

Our State of New Mexico would have been, effectively, transformed into nothing beyond a low cost "labor source" -- not a market, not even a stake holder who might receive some of that profit.

The State's efforts for job creation and general prosperity have turned out to be an empty, hollowed out, worst case scenario as far as "economic development" goes.  Such results are typical of the "supply side" development model.

A frank, sober look at the results of New Mexico and Albuquerque "economic development" projects bears out MeanMesa's depressing appraisal.

Let's Get To Work

Not Eddie Schultz -- New Mexico

The NMW logo at the top of this post is labeled "Creating New Mexico's Demand Economy."  If MeanMesa intends to put forth alternative ideas to what has been so roundly criticized above, we'll have to get that done right here.

Let's describe "New Mexico's Demand Economy" -- how we can really develop it and where, exactly, we need to start.  Naturally, there are a few "moving parts," and those "moving parts" have not been "parts" of what we've tried so far.

1. The scope of job creation

When we speak to job creation through economic development, we need to be talking about thousands of jobs, not dozens.  New Mexicans are suffering just about every kind of poverty driven mischief right now.  When we look at the larger picture, the shortage of jobs here is causing everything from larger inmate populations, higher drug addiction, more teen age pregnancies, more high school drop outs -- you name it.

Worst of all, it's creating a social wrecking ball called hopelessness.

2. Keeping demand close to home

Generally, but especially in this economy, the demand market for what those jobs will produce needs to be a local, New Mexico demand market.  At first this seems to be an almost impossible requirement, but MeanMesa intends to hit this nail "squarely on the head" in the following posts.  New Mexicans do, actually, need things -- things which can be made and marketed right here in the state.

We're not talking turquoise belt buckles or bad water color paintings of imaginary mesas here.

3. Government has a role

Government is already playing a role in all of this.  Our problem is that the "role" the governments are playing isn't directed toward the right goals.  It's hard to imagine that the folks in the Round House have really separated themselves from day to day life here to such an extent that they continue to think that this is working.

What will be proposed here may, in fact, be rather frightening to our State legislature.  We need to move into the shaky new territory of taking risks, making investments, toughing our way through a few failures -- stepping up to the plate.  This also means not handing off responsibilities and not hiding behind consultants from Texas.

People who have been elected to operate the state are going to have to do just that.  New Mexico can't just keep "waiting patiently" for better days.

4. "Job Creation" vs. "Economic Development"

Preparing a foundation for a new prosperity in the state involves more than creating jobs -- lots more.  It involves creating demand.  

Sure, the well paid, high tech employee in the semi-conductor factory buys groceries, new tires and a better washing machine -- all of which create a "second cycle" of economic development.  But real economic development means that many thousands of New Mexicans get to participate in this.

Many thousands of New Mexicans will see not just a few specific opportunities for improving their economic conditions but instead, a steadily growing tide of improved opportunities.  One where more and more money is gradually becoming available -- everywhere -- all around them.

Not only that, either.  It means that all those "participants" get to continue to participate in this.  It means that the aggregate of discretionary income throughout all the regions and populations of the state continues to increase.

It means that New Mexico moves away from its current "poorest state in the union" status because New Mexicans have more money in their pockets.  And not just that.  It means that New Mexicans can spend that money in an economy which doesn't immediately simply drain all that money out of the state.