Thesis Corner | Spenser McDonald

Thanks to everyone that came out to the Senior Thesis Poster Colloquium last night, it was a great success! Anyone that would like to recommend one of the theses from last night can do so by emailing me at This week on Thesis Corner we have an interview from Spenser McDonald.

If you could give us a brief summary of your thesis.. 

I was writing on the California water market, trying to find if water was efficiently priced. If it was it would have been easy and since it wasn’t, why wasn’t it efficiently priced?

What would you say is the most important take away from your thesis?

For me the most important take from my results was how the best intentions when setting up these systems can cause horrible results. the system was set to be very responsive to local and statewide needs and pressures but it ended up being so complicated and complex that it ended up being responsive to neither. It was interesting to how the best of intentions can really screw up.

A lot of times, especially in undergraduate single semester research writers end up running up against limitations. What was your biggest limitation and if you could how would you overcome it?

The basic limitation for me was lack of data, or at least lack of relevant recent data. It was either not compiled in a useful fashion or was not moden, so was 10 or 20 years old. I was trying to talk about California’s recent drought and how that was affecting the market, but there was little to no data about that. If I had more time or was doing a grad research project there were data sets that could have been available if I was important enough to get certain people to email me back, or had the time to pester them until they email me back or my paper matter enough to places so they would want to contribute the data. I think the data exist but I’m not entirely sure. That would have definitely overcome my problem. The other way would have been to phrase my question differently from the beginning. The way I went into it I assumed there would have been a lot of data, and so my initial question was “How do we efficiently price water?” and what I ended up answering was what makes an effective market. I could have avoided the problem by starting with that question. The other way would have been to be persistent or annoying until someone gave me something that was useful.

If you were to redesign the water market in California, what would be some key components to your design?

I would definitely simplify the system first. I would remove a couple of the levels, right now there’s five. I think three would be sufficient. I would try to create a system that is more open so the users of water had more information on pricing and on the use of water around them and in the state as a whole and also where the water was coming from. I would have better systems in place to calculate water usage. There are certain holes in the data and some water doesn’t get accounted for. It’s kind of hard to calculate how much water people are using when certain water uses aren’t being included. I would modify the rights system and implement a system where you can buy certain kinds of rights and it’s not just hereditary. It’s currently almost like a European king system where you can inherit these great things and nobody else can do anything about it. I think it should be more of a free market and, if not a free market, a more free market where water is available more evenly to more people.

You talked a little bit about different levels of water control, could you explain that a little more?

Currently in California, and this doesn’t apply to every single section which makes it even more confusing, there’s the distributors of water, the districts, the counties, and the regions, and there’s a fifth that I debate about in my paper about whether it’s an actual level, that’s the state. Each of one these levels makes policies and distribution decisions, usually influenced by the levels above and below them. The counties for example which are in the middle of the five would be make decisions based on what the regional policy is and then also what the region below the district’s policies were. Then the level below this would make decisions based on what their distributors wanted and what the counties were saying but then add in their spin for what they thought was best. This system was designed to be responsive to local needs and that kind of stuff and then also what the state is asking them to do. But because there are so many levels and so many bureaucratic loop-holes and hoops to jump through it became what I call a whackhole. Nobody can tell what was going on and there was no real communication of what was going on in one side of the state to another. This is what caused so many market inefficiencies or at least in my opinion.

So would you advocate for a more centralized water planning regime? 

I think it just needs to be simpler. The idea that it needs to be responsive to both state and local is very important and it needs to be. Obvious the needs of southern California which is very arid are very different from the needs of the San Francisco area or the needs of the Central Valley. All those areas have very different needs and also are vastly different parts of the state. California is a state with almost every single different biome and so having a state legislate for an entire state but at the same time you can have so many levels that the counties can choose to follow state legislation or not. You cant have legislation that can be chosen to be followed or not.  It removes accountability. I think is simplified the system, centralised is a decent term for it. If you put the state on one end and the local on the other, with someone in the middle processing all that I think that would be a great place to start. Centralized would be a good word because it’s a place where legislation would be adjudicated, and we could come to common goals versus Sonoma county being like, we don’t have enough enough water right now.

If you could give advice to the Econ juniors right now, doing their theses in the fall, what would you say to them?

Start early. You’re going to have an idea and get excited and think “This is going to be great,” and you’re going to hear this a thousand times and it’s not going to make sense until you start working on it. But start working on it because it’s going to blow up in your face 90% of the time. Then you’re going to have to pick up the pieces and start on a different idea and it’s probably going to blow up again. If you leave it all to the last minute and think I know exactly how I want to attack it, because that’s exactly what I did, and then I realized I had no data to do any of the things I wanted to do. It doesn’t really matter how well planned out it is because until you start doing it you will never figure out what the problems are, so you just have to work on it and often.   Thanks Spenser and to everyone that came out to the poster session!

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