Monday, April 21, 2014

A Lesson in Economics for the Water Bureau

From the Oregonian (no link for I don't feel like wasting the hour it would take to find it):

"Portland Water Bureau officials say that draining 38 million gallons from Mt. Tabor Reservoir 5 won't cost the agency additional money.  The draining, cleaning and refilling of the reservoir is expected to cost a few thousand dollars for the salaries of the workers involved, but officials say it's factored into the bureau's budget and will not require any overtime."

Which, of course, is true in the accounting sense but not in the economics sense.  From an economics perspective there is a real cost to diverting workers to this task instead of others - the opportunity cost.  If these workers would shave been otherwise idle, then there is a real cost for the inefficiency of hiring more workers than needed.

The point being that it is silly to claim there is no cost to draining and refilling the reservoir - the cost is precisely all the work foregone by attending to this task instead.  It is economics 101 (or 201 in the case of OSU).

By the way I have this feeling of deja vu: I think I posted something almost identical during the Randy Leonard era when he claimed there was no 'cost' workers working on the "Water House."

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