Privatization, creating the right incentives:

Privatizing goods is a great way to create powerful incentives that solve problems and ensure solutions. Take for instance what we were discussing today in class about water rights. Water rights are a very controversial subject, it is difficult to apply the three ‘D’’s in a sense because some individuals view it as a universal good rather than a property right. This just emphasizes the importance that rights must be defined. If water incorporated the three ‘d’s , it would be much easier to develop rules. Unfortunately, clarity seems to be nonexistent, and that is where we run into most of our problems.
But what do you do if a precedent has not already been created? In America, although we still have problems, water is seen as a private property right, but in the Middle East the state owns the water. This doesn’t allow for a market. Without those market forces working it is very difficult to come up with solutions to the water problems in the Middle East I don’t think the problem lies in market failure itself, rather the problem is in our inability to accurately define property rights and create the proper mechanism of incentives. I think this just makes us reexamine the importance of allowing ownership and privatizing natural resources.