The Economist recently published an article on the growing problem of water shortages and, calls for a system of tradable usage rights to allocate water resources to more productive use.
“Globally there is no shortage of water; the central problem is that so much water is wasted, mainly through agriculture. But farmers reject scarcity pricing for the reason that water falls from the skies. No government owns it, so no government should charge for it,” explains John Parker, author of the article.
Parker credits rainfall and snow as being the source of an endless supply of water, of which less than one-tenth is actually used. But while rainwater harvesting has recently started gaining popularity, one has to think about the implications of doing this in polluted cities. At this point, most water harvested from rainfall is recycled back into the ground rather than being used as a source of drinking water. However if the ground that receives it is growing food, then it raises the question as to whether the rainwater might actually toxify the plants. Perhaps in the same way that factory wastes toxify river water and oceans, resulting in high seafood mercury levels.
Water should be priced to reflect its value
The Economist maintains that in order achieve water efficiency, we must price water to reflect its value. But this idea has historically received powerful resistance from farmers. Water has always been free. As Parker says, no government owns it, so no government should charge for it. It is the very idea behind Article 31.
The Economist supports the Australian system that allows farmers the right to use a certain amount of water free. They can sell that right or buy it from a neighbor if in fact they want more. Australian farmers have responded by switching to less thirsty crops and water productivity has doubled as a result. But the fact that water is so closely related to the food crisis makes the issue particularly debatable. Farmers in arid regions in India have successfully been able to transform deserts into fertile and productive land, something that they would never be able to do if water was not free. In fact the, the ‘watering’ of desert lands has facilitated a gradual change in soil conditions, enabling a state of water efficiency over a period of time.
What if an economist’s opinion influences policy makers to actually put in place a cap and trade system for water? It would certainly make for a lively Economists vs. Activists debate.