Ethics at Work: When the tap runs dry

Government demonstrates admirable leadership on water shortage.

Water policy has placed a fascinating spotlighton a broad range of chronic Israeli policy illnesses and promisingsigns of convalescence. Debate over this issue has intensified inrecent weeks.

Waterpolicy in Israel has become a symbol of everything that it is wrongwith public policy. Sound water policy is not really very complicated.It's straightforward to calculate how much water falls each year andwhat the variance is: you choose a reservoir capacity and a price thatwill stabilize supply in the long term and make certain there are nosevere temporary shortfalls in the medium term. The approximate demandcurve for water is also pretty easy to calculate, so you have years tofine-tune setting the price to attain any particular demand level.

However, government after government resisted pressure to setwater prices at a level where demand would equal supply, with theinevitable result that reservoir levels declined year after year. Whenthe Kinneret reached the red line, which by law forbids furtherpumping, they just drew a new line a little lower.

Instead of managing water supply by the price, successivegovernments tried a simultaneous policy of supposedly discouragingwater use by ridiculous propaganda urging us to be careful washing ourhands, while at the same time actively encouraging waste by subsidizingagricultural through water allotments that guaranteed the subsidiescould be realized only by wasting water.

One piece of this policy picture has been improvingfor years: Subsidizing agriculture through water allotments hasremained, but the size of the allotments has decreased markedly.However, this adjustment was not enough to allow water levels torebound to a reasonable level.

Last summer, policy makers did an about-face. Instead ofsubsidizing water use, they decided to penalize it and imposed a"drought tax" that imposed fines on water users. Instead of moving theprice upward a bit to a fair market price, the fines reached a levelseveral times the fair price. "Excessive" water use, where "excessive"was defined in an arbitrary way and applied only to households, was nowa punishable offense.

Ultimately, following public pressure, thegovernment adopted a rational policy of a moderate and equitable priceincrease. That policy immediately came under attack from Knessetmembers who pointed out that poor families would bear adisproportionate share of the price raise.

This is certainly true and is a valid policy consideration. Butit somewhat contradicts the moralistic approach to water conservationthat dominated official policy in past years. If all poor familieswould follow all the water-conservation rules recommended by governmentpropaganda, I suspect their water bills would rise very little. In anycase, this problem could be solved by instituting a progressive priceschedule for water.

Based on this reservation, a Knesset committee requested thatState Comptroller Micha Lindenstrauss review the price-rise decision.The request was outrageous because the comptroller's mandate is toinvestigate irregularities, not policies that Knesset committeesdisagree with. There was absolutely nothing irregular about thedecision or the way it was arrived at; it was not made hastily and notin opposition to some expert consensus.

Lindenstrauss should really have come back and said there wasnothing to comment about. But I suppose that given the politicalpressure, he can hardly be blamed for making a rather noncommittalrecommendation that the price rise be reconsidered and in the meantimedelayed.

Appropriately, the government ignored his recommendations.After all, it is not the comptroller's job to second-guess the policydecisions of elected officials. Lindenstrauss's reaction was alsooutrageous. He attacked the government, saying it was "inconceivable"that it should ignore his recommendations.

I think it is inconceivable that the government should considerthem. If there were no substantive irregularities in the decision, thenLindenstrauss's criticisms are those of citizen Lindenstrauss, notcomptroller Lindenstrauss, and they should be ignored.

"If oversight involves itself in policy decisions, we will needsomeone to oversee the oversight," Finance Minister Yuval Steinitzsaid. The comptroller owes his effectiveness to his lack of power. Ifthe role were given any substantive powers, then all investigations andremarks would have to be subject to an equitable process and his moralimpact would be destroyed.

To this mix we add another classic Israeli policy gremlin: thepower of the public-sector unions. Just as the price hike was supposedto go into effect, unionized workers at the Water Commission went onstrike. I cannot comment on the validity of their grievances, but theymade a rather bizarre threat: that without the workers the priceincrease could not be implemented on time.

Evidently they imagined that the technical expertise necessaryto update the billing program was beyond the competence of thenonunionized managerial staff (or that management wouldn't dare todemonstrate how superfluous the workers really are). Their illusionswere shattered when Water Commissioner Uri Shani announced that thenecessary steps had been taken in time, without the need for theworkers.

A significant across-the-board increase in the marginal priceof water is a critical policy decision that is decades overdue. Icongratulate the government on overcoming the political obstacles andbringing this about. (If the policy makers conclude that it harms poorfamilies disproportionately, making the price increase progressive isan effective remedy.)

This is a rare and encouraging case where the appropriatelyconstituted organs of government carried out their functions inexemplary fashion, despite the efforts of the unions and the judges tointerfere.

Asher Meir is research director at the Business Ethics Centerof Jerusalem, an independent institute in the Jerusalem College ofTechnology (Machon Lev).