On the Water Front » What would Adam Smith do? (part 1)
To be smart about how we manage any natural resource, it is important to "internalize the externalities", i.e. make sure the costs of pollution and environmental degradation are fully included in decision-making.
Under such a system, the famous "invisible hand" of economist Adam Smith would encourage rational use of limited resources without excessive environmental destruction. Water management in California and the west is the result, however, of a "first in time, first in right" policy that has little to do with economic efficiency.
