02/14/2009 05:12 am ET Updated May 25, 2011

Saudi Arabia's Water Woes

I recently returned from Saudi Arabia, a country that faces self-inflicted water challenges. I'm part of a team charged with drafting a water code for the Kingdom. In the 1980s, Saudi Arabia decided it wanted food security, so it encouraged farmers to grow wheat by drilling an unknown number of groundwater wells and pumping water deposited thousands of years ago. In short order, the water tables began to plummet and government ministries began to wonder how they'd be able to supply water for a fast-growing population.

In Saudi Arabia, government ministers told me that they are having a public relations nightmare in trying to persuade citizens that the Kingdom shouldn't mine water, as it does oil. At first blush, it seems as though the case for mining water is even stronger, given the hydrologic cycle. After all, humans use water but we don't destroy it. In the case of oil, we will eventually run out. Period.

But this analogy breaks down for two reasons. First, if we run out of oil, we can turn to natural gas, coal, or renewables, such as wind or solar. There is no replacement for water.

Second, for all practical purposes, water is a finite, exhaustible resource. Consider that every time a toilet flushes in Los Angeles, as much as six gallons of water is sent to a waste-water treatment plant, and then dumped, unceremoniously, into the Pacific Ocean. True, it's subject to the hydrologic cycle, but that water may not be available for reuse for hundreds of years.

In many parts of the U.S., we're facing the same dilemma as Saudi Arabia -- plummeting groundwater tables. Yet, many states continue to allow the unrestricted drilling of wells. In Georgia, there is no need to even get a well permit unless the user will pump more than 100,000 gallons per day -- or 36.5 million gallons per year.

Think of our water supply as a giant milkshake glass, and each well as a straw in the glass. What the law in many states allows is a limitless number of straws in the glass. It's a recipe for disaster that personifies the tragedy of the commons.

Both countries must halt the madness of incentives to use unsustainably a scarce and valuable resource. In subsequent posts, I'll explore some viable options for reform. But, as a teaser, what we in the U.S. should do, but haven't tried is to use price signals and market forces to encourage conservation, provide water for important high-value needs, and protect the environment.