Water--The "Oil" of the 21st Century?
The ongoing and increasing controversy related to water and water rights creates many opinions of how water should be regulated and allocated. I came across this article that discusses the idea of water being turned into an economic good.
The argument of this article is that by allowing water to become a good, such as land, it would allow water to be re-allocated more and have a price associated with it. Not only is water just an asset to agriculture, water is an valued good to urban areas, especially those like the Salt Lake valley, whose population and demand for water continues to grow. With demand, comes a suitable environment for a successful market. Another argument is that a water market would increase efficiency of water usage in both agriculture and urban development. Most Utahn's use more than their fair share of water per person, and those who do should have to pay the opportunity costs, similiarly to other goods, such as oil. Until a better solution is discussed, I would be in favor of a market where water would become an economic good. There is no doubt that this would increase productivity and conservation of water usage. Even is water consumption stayed the same, extra capital from increased prices could be used to fund the development of more efficient systems for irrigation, storage, and drainage.
posted by Chase @ 7:36 PM
3 Comments:
Benson argues that water should be made into an "economic good." While I am all for free market interactions and trading, I have some reservations regarding the privatization of water. Would the state sell the water to the highest bidder, and then allow them to allocate water as they deem fit? What happens to those people who already own water rights and choose not to sell them? I agree that we need a solution to out water problem. Better conservation techniques seem to be the key. Professor Simmons said in class today that the west has "lots of water." I agree with him. We do have lots of water, we need to learn how to conserve it better.
A private market for water satisfies at least two of the axioms of a perfectly competitive market; that is, a market that tends distribute utility to consumers. Until we start pumping gatorade from the ground there are no close substitutes for water, firms cannot modify their product to create a niche, so the price will always be pressured downward when new sellers enter the market. The entry costs would also not be prohibibtively high absent of certain government regulations.
When you say that the state would "allow them to allocate water as they deem fit" you forget that sellers don't face any incentives to discriminate. I have never seen Walmart turn down a customer on the basis of race, socioeconomic status, or even raging drunkeness - they just want to sell their product.
Consumers will never conserve when prices are low. When you say that "we need to learn how to conserve it better," I'm not quite sure what you mean. The public school system treats conservation as its religious mantra and propogates the doctrine as something sacred, but the indoctrination has been unsuccesful. Maybe we would 'learn' if price conditioned us like an electric shock conditions the labaratory rat...
Most of anything I worry about being able to impliment the system. It's relatively easy to change cable plans, but how would you be able to change a water provider. Chile has a privitized water system, and is one of the only countries in South America where you can drink the water from the tap(I know because I was there for two years). The only way you could change your water provider was to move. So there really was no market. No one could compete for my business. I do agree that there needs to be a solution, but simply privitizing the water will not do it.
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